20
Feb

Blue Friday – Oil & Gas Slide Shows

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Yesterday In A Nutshell:  Bad natural gas number, better crude oil inventory numbers (see inventory break outs below). Weak action in the broad markets muted energy sector gains by the end of the day and a fear of the DJIA at 6 year lows will take precedence over any stock specific news thrown your way. Best to sit on cash.

 In Today’s Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Natural Gas Review - Pathetic withdrawal, gas tested $4. Should season won't be pretty.
  4. EIA Oil Inventory Review - Lower imports drive surprise crude draw.
  5. Stuff We Care About Today
  6. Odds & Ends

 

Holdings Watch:  No changes yesterday. Very tough market. I'm disappointed by the high number winning positions (as of one week ago) that turned to losers as the broad market reversed course sharply over the last week. As such, I will enter the new month with roughly 90% cash and only two March call positions.   

Commodity Watch:

Crude oil rallied sharply following an EIA report that showed the first meaningful decline in imports in recent memory yielding a draw on crude stocks when a sizable build was expected. The March contract, which expires today and is therefore subject to greater volatility than normal, ended the day up $4.86 at $39.48. More importantly, the 12 month strip recovered some of its recent losses ending up $2.58 at $45.56. This morning crude is trading off $1.50 ish in the first few months of the strip as equity futures are called sharply lower.

  • OPEC Watch: The Cartel appears to be downplaying its intentions for the March meeting. After weeks of suggestions that another cut was almost a sure thing, various oil ministers are saying they don't support a March cut. While you never know what will come out of their meetings my sense is that they are going for "under promise and over deliver" this time around.

Natural gas fell on a smaller than expected gas storage number (see next section) closing the day off $0.14 at $4.08. This morning gas is trading down over a dime (below $4) to a fresh six year low.

Natural Gas Review:

ZComment: Ugly number. The producing region actually saw a build in stocks as it was particularly warm in the South.  That gas was able to maintain $4 was more a function of the bullish crude report than traders spining up to the task of becoming bullish. The EIA released a gas storage withdrawal of 24 Bcf vs my 40 to 50 Bcf number and the Street's 51 Bcf target. As you can see from the table below, this withdrawal is well off the normal path for storage change this time of year. The second table below show that it is increasingly unlikely we see normal trough levels given the recent warm spell and the economy.  Its going to be a long shoulder season for gas as there will only be the occassional cataylst for prices with the Friday rig numbers (minor positive as those nose dive) and then the monthly gas supply reports. As those supply reports arrive at the end of each month and are 2 months delayed its a little early to expect much help there. 

 


Notes For The Following Graphs: This is what warm weather and continued strong production yield, outlier withdrawals as seen in D below and a rapid jump in the surplus to the 5 year average and year ago storage levels. Not prett but it will result in an even faster decline in the gas rig count and with any luck a continued strong decline in the horizontal count.

 

 

 

 

EIA Oil Inventory Review

CRUDE OIL - The surprise of the day with a draw instead of a build, attributalbe to lower imports and a slight uptick in refining. I don't expect refining to hold up for long as we are still not into the heart of refinery turn season yet and product demand remains on the weak side of normal. Imports must remain low for the mid $30s in WTI oil to hold up in the front months. On the flip side, another sub 9 mm bopd import figure would likely send oil back into the mid $40s. 

 

 

 

 

GASOLINE:  Demand appears to be increasingly price sensitive. Refiners have enjoyed improved gas cracks over the last several weeks as they have collectively restrained production while oil prices have fallen. I expect production to fall back off in the next few weeks for maintenance and margin support.

 

 

 

 

 

DISTILLATES - Overstocked.

 

 

 

 

 

Stuff We Care About Today

OII Wrapup - Good conference call. 

  • has contracts to place ROVs with roughly one-quarter of the newbuild deepwater fleet of 98 vessels on order through 2012.
  • perhaps more important for (RIG) and (DO), the company reported that work on 33 of the 98 floaters has not yet started, casting further doubt on the expected deepwater fleet growth and therefore supportive of dayrates as some projects are delayed.
  • they reported 2009 global subsea tree and umbilical demand is estimated to rise 40% and 18% respectively (good news for them and (FTI))
  • 2009 EPS range of $3 to $3.60 was a bit wider than normal out of caution over potential project delays, sounds like they expect ROV work to be up in all cases, but perhpas product and project work which are a lower margin to see some potential delays
  • strong dollar does not help them, conversely if it backs they can outperform some as they have a lot of work off Norway.

 

Odds & Ends

Analyst Watch: (DSX) up to Hold at BB&T.

Energy Sectretary Chu Predicts Higher Oil Demand.

Inserted Late For Bob. Large Cap E&P debt levels are manageable at this time. You don't want commodity prices to stay down here for  an extended period but all fo the larger E&P players, save DVN are spending an amount equal to or less than CF and have expressed a willingness to ratchet activity lower if needed.

They are also trading at relatively cheap multiples of anticipated 2009 EBITDA and sometime soon, investors will make the shift to talking about 2010 levels, which, as they utilize higher price decks for oil and gas and would incorporate a little more production are seen as higher (making them look even cheaper).

131 Responses to “Blue Friday – Oil & Gas Slide Shows”

  1. 1
    Sambone Says:

    By Nick Heath
    Of DOW JONES NEWSWIRES

    LONDON (Dow Jones)–Crude oil futures shed nearly $2 of Thursday’s steep gains
    Friday as ongoing fears over the impact of a weaker global economy on crude
    demand suppressed hopes of a sustained price recovery.
    Crude prices leapt Thursday after U.S. Energy Information Administration
    inventory data revealed a surprise 200,000 barrel draw in U.S. crude stocks,
    bucking a trend of seven straight weeks of draws.
    But a review of the data in light of ongoing economic conditions and still
    high U.S. stockpiles spurred traders to take profits Friday, with negative
    signals emerging again from sinking equity markets.
    “Yesterday’s EIA report was bullish, however it’s just one set of numbers, so
    we need to start seeing a reduction in crude stocks on a weekly basis towards
    the five-year averages before we can see a sustained rally in crude prices,”
    said Barbara Sullivan, analyst at Sucden Financial in London. “Until then,
    crude markets are likely to remain vulnerable to losses back down towards the
    lows,” she said.
    Anticipation of a volatile session ahead with the expiry of the Nymex March
    future also prompted those still holding the contract to head for the exits
    Friday.
    At 1228 GMT, the front-month April Brent contract on London’s ICE futures
    exchange was down $1.27 at $40.72 a barrel.
    The front-month March light, sweet, crude contract on the New York Mercantile
    Exchange was trading $1.43 lower at $38.05 a barrel.
    The ICE’s gasoil contract for March delivery was down $1.25 at $369.50 a
    metric ton, while Nymex gasoline for March delivery was down 313 points at
    106.73 cents a gallon.
    A slowdown in global economic growth remains the chief obstacle to a recovery
    in crude prices and has largely offset the impact of 4.2 million barrels a day
    of production cuts announced by the Organization of Petroleum Exporting
    Countries since last September.
    Analysts at J.P. Morgan predicted crude oil demand will wilt further after
    the bank’s economists predicted a 1.9% contraction in global GDP in 2009.
    “Armed with a more gloomy economic projection and preliminary data for January
    and fourth quarter oil demand, we now see world oil demand contracting by
    nearly 1.6 (million barrels a day) in 2009,” analysts, led by Lawrence
    Eagles,said. The bank had previously forecast a 1 million barrel-a-day
    contraction.
    But while demand concerns have largely capped price moves higher, OPEC’s
    announcements on production have helped provide a floor for prices. Analysts
    suggest that, given the opposing dynamics, prices are likely to hold within a
    range roughly between recent lows near $32 a barrel and highs in the region of
    $50 a barrel in the near to medium term.
    “The dismal global macro backdrop should cap any rallies above $50, while on
    the downside, the fact that OPEC is scrambling to cut production should provide
    prices with a measure of support,” said Edward Meir, analyst at MF Global in
    New York.
    -By Nick Heath, Dow Jones Newswires

    Dow Jones Newswires
    02-20-09 0754ET

  2. 2
    Sambone Says:

    Overall market;

    It’s gonna be ugly!

  3. 3
    zman Says:

    Yep, its no way to go into expiration or the weekend.

  4. 4
    zman Says:

    Art Cashin – looking for a test of S&P500 November low of 741 and if it holds, looking for a significant bounce.

  5. 5
    Sambone Says:

    Antsy Oil Market Eyes Stocks Dip, Not Glut

    By DAVID BIRD
    A DOW JONES NEWSWIRES COLUMN

    NEW YORK — U.S. crude oil prices jumped 14% Thursday in the biggest gain so far this year on news that swollen inventories dropped for the first time in eight weeks.

    Never mind that the dip in crude stocks represented only as much oil as the nation’s refineries process in just 45 seconds. Crude stocks stand at 351 million barrels, or 17.5% above a year ago. That’s enough to cover nearly 25 days worth of nationwide refinery needs, or four days more than the average over the past five years.

    “We don’t interpret crude’s non-build as bullish,” said Michael Wittner, head of global oil market research at Societe Generale in London.

    While the massive crude overhang remains a big concern, market participants are trying to assess whether indications of an uptick in U.S. oil products demand are real or a false bloom. The issues will weigh heavily when Organization of Petroleum Exporting Countries ministers discuss on March 15 whether to cut crude output further.

    Some traders are banking on the idea that the dip in stocks for the week ended Feb. 13 is the start of a trend toward declining inventories, after surging by more than 10% in the past seven weeks.

    They point to a decline in weekly crude oil imports of 8.9% to 8.8 million barrels a day — the lowest level for any February week in five years — as a sign that OPEC output cuts are starting to have an impact in the data.

    Surge In Gulf Coast Crude
    But others note that two-thirds of the decline in imports came on the East Coast, where refiners are expected to soon slash refinery runs for seasonal maintenance and in response to sluggish demand.

    Along the U.S. Gulf Coast, the main refining hub, the crude stocks picture is as bearish as its ever been in February. Data from the Energy Information Administration show that Gulf Coast stocks rose more than 2 million barrels in the latest week to 183.5 million barrels — the highest level in February on data back to 1990. Gulf crude oil stocks are more than 15% above a year ago and are sufficient to cover more than 28 days of refiner demand. That’s five days more than a year ago and the most ever in the month.

    Amid heavy skepticism that prices can sustain a recovery under the weight of the crude stocks glut, traders said the market’s course may become clearer after the expiration Friday of the March crude oil contract.

    Nymex light, sweet crude for March delivery settled up $4.86, at $39.48 a barrel Thursday in the biggest single-day rise this year and the highest settlement price since Feb. 9.

    April crude, which takes over as the front-month contract after Friday’s settlement, recovered from a life-of-contract low of $37.22 on Wednesday to rise 7.4% to settle at $40.18 a barrel Thursday. Thursday’s gain followed a seven-day thrashing in which the April contract lost 19% on continued worries over the global economic crisis and sliding oil demand.

    Crude Under $25 In The Cards?
    Heading into Thursday’s trading day, technical analysts at Barclays Capital warned of the risk of a further deep slide. “We expect the April contract to test the $24/$25 area in the weeks ahead,” the analysts said in a report. “In the absence of a closing break back above $41.00, bearish potential should remain intense.” Nymex front-month crude last settled below $25 a barrel in June 2002.

    Others, such as Tim Evans, analyst at Citi Futures Perspective, note that despite all of the bearish sentiment in the past two months, crude hasn’t broken below $32.40, the intraday low of Dec. 19, which was the weakest level since February 2004. “Are we breaking down or building a base of support? It depends on what chart you put up,” he said.

    U.S. oil demand in the past four weeks averaged 19.952 million barrels a day, just 0.1% below a year earlier, the latest EIA data show. That compares with a 4.7% year-on-year decline reported a month ago and a fall of 8.9% four months earlier.

    The latest figure, though a decline, would represent the strongest year-on-year demand comparison since May 2008, when four-week demand was up 0.1%. Analysts said they will be watching to see whether preliminary data hold up to often aggressive downward revisions in coming months.

    The EIA data show four-week gasoline demand rose 0.8% from a year earlier to 8.895 million barrels a day. Michael McNamara, vice president at SpendingPulse, a gasoline demand tracking service of MasterCard Advisors, said his survey shows gasoline sales rose 1% from a year earlier in the last four weeks, seemingly supporting the EIA data. But he noted that part of the gain may be attributed to comparison to weak year-earlier levels.

    (David Bird, senior energy correspondent for Dow Jones Newswires, has covered global oil markets for more than 20 years.)

  6. 6
    elduque Says:

    BDI +42 2099

    Hmmmm!!!

    TED +1.234 96.26

    If it goes back over 100 I will post it. Otherwise seems to be holding in a tight range. Looks to me like the central banks have the macro credit condition working. Now for the micro.

  7. 7
    zman Says:

    Thanks El-D.

  8. 8
    elduque Says:

    I was thinking last night that the financials, remind me of the Enron, MIR, CPN, EP, WMB, RRI saga of 2002. Everything was trading like they all were never going to be viable again. Yes a couple of them didn’t make it, but the majority did and all had substantial rises after the dust settled.

    Panics are great for the portfolio, bargains prevail; just hard on the stomach on the way through.

    Everybody, have a great day.

  9. 9
    zman Says:

    El -d I hear ya. DJIA at 6 year lows, Europe at 6 year lows, NG at … 6 year lows. All a little too simplistic at this point.

  10. 10
    zman Says:

    I say tank it at the open and then anything goes on triple witching Friday.

  11. 11
    Nicky Says:

    Morning all. Phil Flynn finally stopped out of his short oil yesterday. He had been short for five months and obviously and I guess credit where credit is due quite rightly so!

    Oil I think was a one day rally event yesterday. I am STILL expecting us to take out the 32.75 low before we are done and if the indices turn into a real rout then $25 or lower is a real possibility.

    Z – agree with #10. Nasdaq has displayed the most bullish potential recently. It needs to hold 1132 on a closing basis today. If it does then there is still the chance of a rally for the broader market out of this area.
    If we can’t then armaggedon says 650 – 680 spx will be with us in short order.

  12. 12
    BirdsofpreyRcool Says:

    Credit Market following futures down…

    IG 216 +6bps from close

    HY 72.625 -0.5 from the close (ouch!)

    High Yield Index just above it’s November 21st low. In this environment, CHK (for one) would not have been able to term out their debt with those high yield offerings. They were wise to jump through the open window. Let’s hope (there’s that word again) the window does not slam shut. But, at these levels, it will be tough for anyone who HAS to issue debt.

  13. 13
    zman Says:

    Morning Nicky

    One small point of order, P.F. went short at $97 and stayed short to $147 and then to here.

    I remember writing what a bad thing $115 and $120 oil would be for the group as it attracts the wrong kind of money and you writing about $120 oil killing the economy or helping to kill it. You got that one right!

  14. 14
    Sambone Says:

    Network – 1976

    ‘I’M AS MAD AS HELL, AND I’M NOT GOING TO TAKE THIS ANYMORE!’ I want you to get up right now, sit up, go to your windows, open them and stick your head out and yell – ‘I’m as mad as hell and I’m not going to take this anymore!’ Things have got to change. But first, you’ve gotta get mad!… You’ve got to say, ‘I’m as mad as hell, and I’m not going to take this anymore!’ Then we’ll figure out what to do about the depression and the inflation and the oil crisis. But first get up out of your chairs, open the window, stick your head out, and yell, and say it:
    Howard Beale: [screaming at the top of his lungs] “I’M AS MAD AS HELL, AND I’M NOT GOING TO TAKE THIS ANYMORE!”

  15. 15
    1520sbroad Says:

    Z, Elduque – any thoughts on the DSX report from a couple of days ago? I’m still ramping up my knowledge base on ths shippers so any thoughts/other spots to go investigate appreciated

  16. 16
    BirdsofpreyRcool Says:

    HY 72.25 about .75 from the record low last November. This index trades in $s, by the way… so you can read it like a stock.

  17. 17
    Nicky Says:

    Z – I do remember him being short all the way up too! He kept shorting into it and i don’t remember him getting a single trade right even though we saw such a massive run up and he had many opportunities. Plus he kept saying the bull run would never end! Until he went short of course! Anyway he is recommending reshorting at 41.66.

  18. 18
    BirdsofpreyRcool Says:

    ok… 72.25 was just too cheap… lifted. now 72.50.

  19. 19
    Nicky Says:

    Gold imo is gonna catch many wrong here. When they pull the plug watch out below.

  20. 20
    BirdsofpreyRcool Says:

    seems like gold is acting like oil did last summer. you have the confluence of the gold-bugs, the inflation bears, the worry warts, and the mo-mo crowd… all agreeing that NOW is the time to buy. too many late night (bad) commercials on buying gold. Agreed, parabolic charts have a way of collapsing back on themselves.

  21. 21
    zman Says:

    Isle – Re DSX -It was a good call. Essentially everything hinges on iron ore shipments to China. From there you have steel going the other way and demand for coal. China’s stimulus package has already gotten steel moving. They are still the low debt, best positioned name in the group, with the flexibility to buy ships at half price or less. Sounds like they are playing it careful while a lot of their peers will be selling off ships at 10 cents on the dollar if the economy stays grounded for an extended period.

  22. 22
    zman Says:

    Irony Watch:

    http://news.yahoo.com/s/ap/20090220/ap_on_go_pr_wh/clinton_obama_economy

  23. 23
    zman Says:

    Re Gold. I’ve been thinking about a short there. Agree with previous comments and look out below at the first signs of leveling off as the hot money is definitely in play. Its more of a technical call than anything I do and would be very interested to hear the TA thoughts of Nicky, Tater or anyone else on the shiny metal.

  24. 24
    1520sbroad Says:

    #21 – thanks. Saw comments from Vale this morning that they see China demand returning. I like DSX’s low debt as well.

  25. 25
    douglas51 Says:

    For gold lovers, GLD now says they own 1072 metric tons of gold, and may surpass Switzerland today. GLD is the seventh largest owner of Gold.

  26. 26
    zman Says:

    1520. I liked these guys last year and they fell along with everyone else. But what you don’t see here is the self-dealing of a DRYS (where Economaugh (sp?)) routinely takes actions to line his family’s pockets), they are largely charter so you don’t get the crushing effect immediately when the spot market falls, and I did not hear any of the issues that some other carriers have reported of half rate payments upon arrival. I say you want to pay half at the end of the trip you get half your stuff and the rest is impounded. Or over the side, your choice.

  27. 27
    zman Says:

    S&P getting a little bounce here, honestly would have liked to see it punch lower so that everyone could say successful test, buy, buy, buy ala cramer.

    Any commentary out of your trading desk today BOP?

  28. 28
    zman Says:

    People not happy with the TSO report. Too little too late for my puts.

  29. 29
    BirdsofpreyRcool Says:

    Trading Desk had no opinion this morning. Their only comment on the market was “hurry up and go to zero, so we can start all over again.”

    Trading Desk has a sense of humor… i hope that’s what it is, anyway.

    I’ll check in and see if there is an update.

  30. 30
    zman Says:

    Thanks Douglas. Sounds like a lay up for a fall.

    BOP, yep, that’s pretty much my way of thinking too, rather see big LOD early and then a bounce then an end of day at LOD.

  31. 31
    BirdsofpreyRcool Says:

    Trading Desk Technical Colour — too complicated and full of stops recommendations to be useful to anyone other than someone who day-trades on 5 minute charts. Basically, sell the morning rally, at 10:05 with LOD expected at 1:40 EST. But, not pounding the table on it.

  32. 32
    zman Says:

    Movie quote of the day:

    “tone? my voice has no tone. I’m standing in the middle of a pile of rubble and don’t have the permits to unrubble it”

    Oil strip down about $1.70

    By the way, SLB on the tape having successfully underbid WFT for the first of two Chicontepec 500 well drilling contracts with Pemex. The willingness to go low, low bidder underscores their plight. Chicontepec is Pemex’s hope to offset declines at Cantarell a couple of years from now. Of course, by then Mexico is very likely to be a net importer of oil.

  33. 33
    BirdsofpreyRcool Says:

    Credit Desk seeing “mini-rally” right now.

  34. 34
    BirdsofpreyRcool Says:

    If technical colour is correct, you sell now and buy back at 1:40… but, it’s not an expecially convicted call for today. Will be interesting to see if it proves to be correct, tho. Personally, sitting on my hands, watching from the sidelines.

  35. 35
    zman Says:

    Thanks BOP, its moving hand in hand with the equities.

    May nibble on a little OII, off a buck here. Broker notes I’ve seen basically said “good quarter, no reason to chase it”. Deepwater names acting better than service….DO, RIG flat to up

  36. 36
    Nicky Says:

    Z – gold – I had anywhere up in this morning’s area as a short. Closer to 1020 the better. The chart to me doesn’t look like it will suddenly shoot up in a parabolic spike (I may be wrong) it has been more of a slow grind higher. Lots of possibilities unfortunately ie we fail to get to the previous high (very bearish), double top (also very bearish) or a slight new high.

    Silver is a good short candidate too.

  37. 37
    BirdsofpreyRcool Says:

    ha… “expecially” sounds like our former POTUS.

  38. 38
    Nicky Says:

    http://www.chartsedge.com/wp/

    note the dip into the close

  39. 39
    zman Says:

    Re – 38, that’s ugly.

  40. 40
    zman Says:

    Stifel cut OII from Buy to Hold

  41. 41
    BirdsofpreyRcool Says:

    Credit Desk musing that the mrkt might rally today, given how scared and bearish everyone is. They are thinking about taking the short off investment grade and going long the high yield index “for a quick trade.”

    IG 216 +6bps

    HY 72.625 +.125 cents

  42. 42
    BirdsofpreyRcool Says:

    sorry, make that

    HY 72.625 -0.625 cents

  43. 43
    zman Says:

    NG regained $4 which seems to be the new (maginot) line for gas

  44. 44
    zman Says:

    Obama speaking

    Looks like pinning action setting in. Would like to that rally pretty soon…volume really dropping off.

  45. 45
    elduque Says:

    Re dry bulkers.

    They are going to be a lead pony. The BDI has to be going up in order to see signs that things are turning around. What do they ship iron ore and grains. Lots of stories on iron ore, is China buying or not buying. You can see all the stories on http://www.hellenicshippingnews.com/.

    What confuses the story a little bit, is the newer cos. were sold as a yield play, which I bought into. Yield doesn’t mean anything if the perception is that the dividend isn’t secure. Turned out that for the most part cos. have either eliminated or cut sharply the div. I believe DSX was one of the first to eliminate the dividend. On the other hand NMM just increased theirs a little. I believe that most of them will survive and probably are at least a double from current depressed rates and probably will be a home run in the next 12 months.

    However, much like E and P’s each co.’s makeup can be significantly different. Their only appear to be a handful of analysts covering them and I believe that it is a niche that you could fill nicely. All you have to do is give up soccer practices and changing diapers.

  46. 46
    zman Says:

    Re Drybulks. I hear ya. The annual iron price negotiations are key to getting more moving. The comment from DSX yesterday that two Chinese ports have 9 day waits for berths which is up from the usual none, 1 or 2 day is pretty telling as well. I think the group has lost an analyst or two over the last 12 months, not well followed but closely tracked by the ones who cover it.

  47. 47
    elduque Says:

    Does anybody have any idea when the treasury is going to give us more details re banks? As long as there is uncertainty the market is going to remain in the crapper.

  48. 48
    zman Says:

    Eld – I get the sense that Treasury doesn’t know when it will have those details. Gotta wonder what Geither is doing right now.

  49. 49
    Bob Says:

    Z- Can you refresh my memory…which companies can make money or break even on $3 NG with current debt obligations, etc. Doing a quick check on debt(possibly not up to date), the debt/equity ratio for CHK is 0.87, SD is 0.83, HK is 0.47, GDP is 0.39, SWN is 0.34, and EOG is 0.21

  50. 50
    Nicky Says:

    Okay if we are now in v down having broken out of a wave iv triangle then the target for the Dow is 6300.

    that’s ‘if’….

  51. 51
    zman Says:

    Bob – when you say make money it implies net income. Not many. Your big names and mid cap names will for the most part be able to service their interest payments. Since its a cash flow business its not so much a matter of going out of business because you aren’t profitable as much as you will see reduced reserve adds as the companies have more limited budget with which to drill. Generally these guys are looked at from a net debt to total cap and as I was looking at that last night for the big caps since XTO and APA finished out the big cap list I will put a table in the bottom of the post shortly.

  52. 52
    Garyinhou Says:

    TGIF Comrades….

    Hitler is mad about the housing bubble…

  53. 53
    Bob Says:

    Z-Thanks for explanation

  54. 54
    Bob Says:

    BOP- That 2/15/15 CHK bond issue last week originally offered at 97.5 is slipping slowly each day. I bought a little bit yesterday at 97.5. Today, my discount broker spread is tight at 96.25 bid to 96.5 offered, offering a non callable yield of about 10.3 percent for 6 yrs. Any thoughts?

  55. 55
    BirdsofpreyRcool Says:

    Bob — let me check with the institutional desk and get back to you on a current market quote.

    I think it’s smart to lock in any risk-adjusted yield over 8%. I am not in the camp that sees “massive inflation” just over the hill. There is too much excess capacity in the world. You can’t have sustained inflation, when you have excess capacity.

  56. 56
    VTZ Says:

    RE gold: I think every is calling for a double top now and the open interest is still low leaving room for more longs. I see it breaking out. If not now then after the banking plan, or after eastern europe currency situations deteriorate.

    There’s lots of reasons to own gold right now. To me, it doesn’t look like they are going away any time soon… everything looks like it’s getting worse still.

    This rally on the Dow has been during a period where we have had some of the worst economic news yet. It had no business rallying other than maybe TA. I don’t know why everyone is surprised we are making new lows.

  57. 57
    VTZ Says:

    BOP- I see inflation as A) monetary and B) the product of the loss of confidence

    We are certainly seeing an explosion in the money base, and I think everyone can agree that taking security in bonds and USDs as a means of last resort is a bubble.

  58. 58
    BirdsofpreyRcool Says:

    Bob — who is your discount broker… I’d like to extend my “kudos.” The institutional mrkt for those bonds is 95.5 bid / 96.5 offered. You have a great broker.

    As to whether to buy those bonds (or the bonds of some other company or index), I leave that decision up to you. But, you are being offered a rare, fair price… which tells me that those bonds will probably fall further. But, pick a yield you can live with in a company that you think will make it through this downturn. The great thing about buying bonds (instead of a mutual fund) is that you don’t have to sell out at the bottom, to meet redemptions. You can ride it through the trough, clipping coupons as you go.

  59. 59
    zman Says:

    Bob – I added a couple of tables and comments to the odds and ends section of the post. I wanted to do a little more on them so they are a little raw and will be included in a bit more comprehensive look at the big cap E&Ps next week now that they have all reported reserves.

  60. 60
    Bob Says:

    BOP- Today’s quote is e-trade. The 97.5 I paid yesterday was to Interactive Brokers. The spreads have typically been 2.0, and have just narrowed today. Possibly some of the original purchasers last week at 97.5 are already getting out? I am certainly happy with 10+ % yield. I have confidence that CHK won’t default, but not enough confidence to go overboard!

  61. 61
    zman Says:

    Bob – that’s how I feel about the equity side except its market risk I’m concerned with. Perfectly good name, well protected by hedges into 2010 (more in 2009 but they layer them in with time) but the broad markets can really sack you in here.

  62. 62
    Bob Says:

    Z- Thanks for the tables. Plz help with one of the calcs….Table 1 and 2 CHK debt is 14,184. Table 2 CHK Mkt Cap is 10,048. Where does the 47% Debt to Cap ratio come from for CAP in Table 1. (i.e. where does the denominator come from?) Is it related to the enterprise value? thanks

  63. 63
    Bob Says:

    Meant CHK, not “CAP in Table 1”

  64. 64
    BirdsofpreyRcool Says:

    VTZ — what is most interesting to me is that people define “inflation” differently. When the fed governors were beside themselves last Spring, wringing their hands over “inflation” and keeping monetary policy tight, I was practically sobbing at their ignorant stance. I felt (knew) the right approach was to drop interest rates, a lot, and fast.

    If you define “inflation” as any increase in price, they were correct. But, having lived through the inflation of the early 1980’s, I see inflation as defined by “wages.” If wages aren’t expected to climb any time soon, it is near impossible to have sustained price increases across the board… or true “inflation.” That said, supply/demand curves will drive some prices up, regardless of the overarching inflation environment (think — having to dig deeper to get something out of the ground… the price will naturally go up).

    As far as the inflation pressure being built up by our current low-interest rate policy (combined with massive massive spending), it would normally be inflationary, yes. But, in this case, the govt is stepping in at the same time the consumer is stepping back… and the consumer is delevering faster than the govt is levering. So, tough to have currency inflation in this environment.

    What happens when the nuclear winter for the consumer comes to an end? Well, that’s where excess capacity comes into play. Personally, I don’t think oil/gas will fall into that “excess capacity” bucket, so I do think you will see those commodities rise faster than GDP… but, that’s back to the supply/demand curves.

    I think govt yields go higher from here. But not massively higher. However, this assumes the govt steps back, once the private sector shows signs of life. A lot of moving parts in that assumption. So, I do allow for the very real possibility that I could be very wrong in the way I am looking at this.

    What I know: Corporate bonds are cheap. Energy companies are cheap. The American consumer will come back to the table someday. The US has the most diverse economy in the world, combined with a wealth of hard assets (nat gas, coal, water, land, railroads, riverways, manufacturing capacity, electrical grid) and intagible assets (native optimism, education, a “republic” form of govt, strong work ethic). 93% (ref: Larry Kudlow) of us pay our bills on time and stay out of trouble. I am not worried about becoming the next Weimar Republic. At least, not yet.

  65. 65
    zman Says:

    Bob – I see the confusion. It is equity off the balance sheet plus debt less cash. Generally E&Ps like to stay somewhere below 50%. Another measure is EBITDA to Interest and none of these guys have trouble service their interest payments. Generally in down cycles you want to be in the underleveraged names like an EOG as people worry about the debt and when commodities start rising, you want to be in the leveraged guy who is going to pushing the production envelop. This cycle is different since the markets are essentially broken. Normally you’d have seen a swarm of M&A buy now that would have put a floor in on the stocks…not so yet.

  66. 66
    Bob Says:

    Z-Thanks. Will keep the charts handy for reference

  67. 67
    zman Says:

    The good news is, if the XLF falls a similar amount for another 20 days it will be at 0 and then BOP can stop watching it, lol.

    Wow, 5 green energy names on my screen right now, need to thump it.

  68. 68
    zman Says:

    Bob, next week I will add the hedges, production growth, P/CF for 2008A, 2009, 2010 and historic p/CF and the reserve bubble to p/Cf charts. Then the Debt/Reserve ($/Mcfe which the bankers like to be below $0.75/Mcfe) and Implied Value of the Stock in Mcfe terms based on 1P Reserves. That gets you a better picture of where they all stand. Just didn’t get it wrapped up last night and didn’t want to post half of it today. Will stick on the E&P tab at that time.

  69. 69
    BirdsofpreyRcool Says:

    z — hey, z… i’d like to thump YOU… upside the head!! lol

    I am not obsessed with banks… I look forward to never having to worry/think about them again. I actually HATE following the banks. But, until they get fixed… yada, yada, yada…

  70. 70
    zman Says:

    69 – There’s a long line. And still I trudge on.

  71. 71
    john11 Says:

    bop..what is cusip on the chk senior notes?…tia

  72. 72
    zman Says:

    Truly craptastic market action today, going to an early lunch.

  73. 73
    BirdsofpreyRcool Says:

    Actually, I’d like to thump Alan Greenspan, Barney Fank, Chris Dodd, Henry Cisneros, all the subprime mortage “bankers, the “risk management” officers and compensation committee directors of the investment banks UPSIDE THE HEAD.

    But, that is waaaaay too much work, at this point.

  74. 74
    BirdsofpreyRcool Says:

    #70… truly LOL right now.

    John11, lemme check for ya.

  75. 75
    zman Says:

    You know its bad when the CNBC chart guy is talking about trend lines from 1982 for support for the S&P500. Really, a line started 27 years ago is supposed to matter right now? Hmmmm.

  76. 76
    Bob Says:

    john11: cusip 165167CD&

  77. 77
    BirdsofpreyRcool Says:

    CHK 9.5% Notes, non-call, due 2/15, rated Ba3/BB, issued at 97.75 —

    CUSIP 165167CD7

  78. 78
    Bob Says:

    John11 not & but 7: 165167CD7

  79. 79
    john11 Says:

    thank you very much

  80. 80
    BirdsofpreyRcool Says:

    z — actually, yes… if you throw demographics into it. 1982 was about the time when the bulk of the baby boomers started to invest in housing and their 401ks. what the boomers do with their money now, will have a pretty big influence on the mrkt, i would think.

  81. 81
    BirdsofpreyRcool Says:

    john11 — tag team answers. we love ya, man!

  82. 82
    VTZ Says:

    Z- Re 75 I’m with you… has absolutely no bearing on anything. Meaningless and things like that is one of the reasons the public can’t take bankers/analysts seriously. I remember connect-the-dots from kindergarten, it used to be fun.

  83. 83
    tater Says:

    Gold thoughts –
    I do not consider anything in the sector a strong short candidate. I feel comfortable with the whole concept of the $US being the world’s reserve currency and the supposed flight to safety and all those very valid arguments about inflation vs. deflation. I get it, and I believe that nobody knows exactly how it will eventually all play out.

    I also think that there are many misconceptions about what you are trading when you trade futures, the GLD, physical gold, the GDX, individual mining stocks, etc. I really don’t think it is fair to talk about “gold” any more than it is fair to group the refiners in with the E&P in the oil/gas sector.

    It’s also very difficult when you take into account that the very entity that manipulates the value of the US currency, also has a large stake in manipulating the many measures against which that value is determined.

    Getting very wordy, sorry. I just think that the gold sector could see a pullback, possibly a good 15% even. If you want to attempt to play a counter-trend trade, that is realistic. But I think that it is just that, a counter-trend trade. The longer term trend for the sector is up, not down. Counter-trend trades are some of the hardest to manage.

    Personally, I see more than just a few crappy sectors with very crappy companies that are going to trade all the way to zero. (Higher end “aspirational” brands come quickly to mind). Why not give those a look-see for a short?
    Gold has more than a few “crazies” that are going to help keep a floor underneath the price.
    Hell, didn’t TSO just get hit in the face today for the full amount that gold may pullback over the next couple months?

    The populace still has hope. They still believe this is just a temporary thing that will pass in a quarter or two. (I am not making judgement in that statement, anecdotally that is what I have gauged public sentiment to be). As long as there is hope, there are some very compelling shorts out there as things get bid up in the bear rallies.

  84. 84
    VTZ Says:

    I am talking about comex gold, for the record. But I also see gold stocks as moving up as a result.

  85. 85
    kyleandy Says:

    z – re 67 what 5 cannot find!!!

  86. 86
    BirdsofpreyRcool Says:

    Looking across the high yield universe of E&P bonds, the CHK’s at 10% do look compelling, on a relative-value basis.

    HK (B3/B) 10.74%
    KWK (B1/B-) 11.0%
    SD (B3/B-) 11.0%
    CHK (Ba3/BB) 10.0%

  87. 87
    elduque Says:

    You would think by now that the Treasury would figure out that their inaction is what is destablizing the market. Markets don’t like uncertainty.

  88. 88
    BirdsofpreyRcool Says:

    Bank uncertainty knocks Wall St to 6-yr low

    20 Feb 2009

    NEW YORK: Wall Street fell on Friday, sending the Dow Jones industrials to new six-year lows as investors around the world keep selling on pessimism about the global economy. Financial stocks led the market lower.

    Disappointing fourth-quarter earnings reports from Lowe’s and J.C. Penney provided new evidence that the recession is taking a heavy toll on US businesses. The pair also forecast 2009 earnings below analysts’ expectations.

    The reports came as investors are increasingly worried about the weakening banking industry and what the government is doing to stabilize it.

    The Dow fell 57.19, or 0.77 percent, to 7,408.76. On Thursday, the Dow fell to its lowest level since Oct. 9, 2002, the depths of the last bear market.

    The Standard & Poor’s 500 index tumbled 6.11, or 0.78 percent, Friday to 772.83, while the Nasdaq composite index fell 0.25, or 0.02 percent, to 1,442.57.

    Key financial stocks including Citigroup Inc. and Bank of America Corp. were falling again after being battered Thursday. Both Citi and Bank of America have been among the hardest hit by the ongoing turmoil in the industry and received multiple multibillion investments from the government to help stabilize their operations.

    Citi shares tumbled 50 cents, or 19.9 percent, to $2.01. Bank of America shares, which touched a 25-year low earlier in the day, sank 53 cents, or 13.5 percent, to $3.40.

    The KBW Banking Index, which tracks 24 of the nation’s largest bank, fell to more than 5 percent to 20.72, after hitting a record low of 20.35 earlier in the day.

    “There’s perceived disappointment from the lack of clarity from the Treasury (Department) for what it will do with the financial sector,” said Wasif Latif, portfolio manager at USAA Investment Management Co. “That’s hitting financials regularly.”

    Stocks have fallen steadily over the past two weeks as investors lost confidence in multiple Obama administration programs aimed at bolstering the economy. The market’s inability to rally signals that investors don’t have a sense of when the recession, already 14 months old, will end.

    “We’re going through a tug of war between optimism and pessimism,” Latif said. “When there is a lack of clarity, it becomes more of an emotional or psychological environment. The mood can sway on any given day based on the flow of news coming out.”

    Friday’s sell-off followed steep drops overseas. Japan’s Nikkei stock average fell 1.87 percent and Hong Kong’s Hang Seng fell 2.49 percent. In afternoon trading, Britain’s FTSE 100 declined 2.13 percent, Germany’s DAX index tumbled 3.47 percent, and France’s CAC-40 fell 3.10 percent.

    Investors received further evidence of the sagging economy as home improvement retailer Lowe’s said its fourth-quarter profit dropped 60 percent after customers cut back on spending. Lowe’s also provided a 2009 earnings forecast that was short of analysts’ expectations.

    Department store chain J.C. Penney said its fourth-quarter profit tumbled 51 percent, but beat analysts’ expectations. However, J.C. Penney forecast a first-quarter loss greater than what analysts are forecasting. Shares of Lowe’s fell 66 cents, or 3.9 percent, to $16.32. J.C. Penney shares fell 14 cents to $14.78.

    Meanwhile, the Labor Department said consumer prices rose 0.3 percent in January, matching the forecast of economists polled by Thomson Reuters. The rise in the Consumer Price Index, which is a key measure of inflation, was the largest gain since July. Over the past year, inflation has been flat, the lowest reading in more than a half-century.

    “The inflation numbers today suggest inflation is not an issue and deflation is not an issue either, which is a good thing,” said Michael Strauss, chief economist and market strategist at Commonfund.

    Core inflation, which excludes volatile food and energy prices, increased 0.2 percent. Economists were anticipating core inflation would rise 0.1 percent. Declining issues outnumbered advancers by about four to one on the New York Stock Exchange, where volume came to 455.8 million shares. The Russell 2000 index of smaller companies declined 4.24, or 1.02 percent, to 412.47.

    Bond prices rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.77 percent from 2.86 percent late Thursday. The yield on the three-month T-bill, considered one of the safest investments, fell to 0.28 percent from 0.30 percent late Thursday.

    The dollar mostly rose against other major currencies, while gold prices rose. Oil fell $1.66 to $37.82 per barrel in trading on the New York Mercantile Exchange.

  89. 89
    BirdsofpreyRcool Says:

    Chris Dodd talks out of both sides of his mouth. One thing’s for certain, when he opens it, stocks fall.

    Dodd Says Short-Term Bank Nationalization Might Be Necessary 2009-02-20 17:29:54.946 GMT

    By Alison Vekshin
    Feb. 20 (Bloomberg) — Senate Banking Committee Chairman Christopher Dodd said it may be necessary to nationalize some banks for a short time as Citigroup Inc. and Bank of America Corp. tumbled today on concern the U.S. may take over both banks.
    “I don’t welcome that at all, but I could see how it’s possible it may happen,” Dodd said in an interview on Bloomberg Television’s “Political Capital with Al Hunt” to be broadcast later today. “I’m concerned that we may end up having to do that, at least for a short time.”
    New York-based Citigroup and Charlotte, North Carolina-based Bank of America, which have received $90 billion in U.S. aid in the past four months, fell as much as 19 percent today.
    Dodd, who wrote a provision to limit executive pay for executives at companies receiving government aid, said the Treasury Department has “an awful lot of leeway” to administer the restrictions. It was included in the $787 billion stimulus legislation President Barack Obama signed into law this week.

  90. 90
    zman Says:

    Big brother watch:

    Transportation Secretary Ray LaHood says he wants to consider taxing motorists based on how many miles they drive rather than how much gasoline they burn — an idea that has angered drivers in some states where it has been proposed.

    http://www.foxnews.com/story/0,2933,497286,00.html

  91. 91
    ram Says:

    I wonder if GM will survive the weekend?

  92. 92
    BirdsofpreyRcool Says:

    Dow falls below lowest close since 1997.

  93. 93
    tater Says:

    “Some socialists advocate complete nationalization of the means of production, distribution, and exchange; others advocate state control of capital within the framework of a market economy.”

    http://en.wikipedia.org/wiki/Socialism

  94. 94
    ram Says:

    Re90 – So, if my only job option is further away, and I am smart about buying a fuel effecient car, the U.S. gov’t …. What’s wrong with these guys in D.C.?

  95. 95
    BirdsofpreyRcool Says:

    well… if Technical Trader was right, we are about 20 minutes from the LOD. So far, TechTrader got the HOD correct.

  96. 96
    zman Says:

    Ram – someone at fueltracker ran it down the best:

    http://www.fueltracker.com/node/1000013

    Note the transportation secretary said he will not raise the fed tax at the pump. Its already a big slug of what you pay and more would get unwelcome attention. He favors changing it out for a more 21st century solution. How people cannot see that if there is a short fall of Federal tax revenues for roads now and that the new plan alleviates the need, how they can fail to see this as a tax hike which takes away much of the advantage of you buying a Prius, well…I don’t think they can miss that.

  97. 97
    zman Says:

    Good primer on what costs what in a gallon of gasoline:

    http://www.eia.doe.gov/bookshelf/brochures/gasolinepricesprimer/index.html

    Note the 2000 to 2007 average where 24% of the price of a gallon of gas was federal taxes vs 16% for costs and profits of the refiner.

  98. 98
    zman Says:

    BOP re 95, he’s been pretty spot on of late.

  99. 99
    cargocult Says:

    Re 90
    The tax on gas itself currently penalizes inefficient use and rewards efficiency. The tax on miles driven undermines a move towards efficiency. This is just a contrarian move to get conservatives calling for gas taxes.

  100. 100
    zman Says:

    Cargo – I was just on the phone with a buddy of mine who said the same thing. Hard to tell, its been around for years, but this is the first time I recall a treasury secretary actively advocating it. Knowing the American driver, the dip in the price at the pump will likely be seen as a gift and will result in increased driving because what I don’t pay now I won’t worry about until April 15.

  101. 101
    Fiveanddimer Says:

    Re #90 — Mass. is already considering taxing the miles we drive, using a GPS chip in our car.

    http://www.philly.com/philly/wires/ap/news/nation_world/20090217_ap_massachusettsmayconsideramileagecharge.html

    Great! The government already wants to know every financial transaction an individual makes. Now Big Brother wants to know about every mile we drive. Get out the pitchforks and torches! Enough is enough!

  102. 102
    BirdsofpreyRcool Says:

    OK… if TechTrader was right, should turn up here.

    Not saying “go green”… but, bounce off the LOD.

    Fingers crossed.

  103. 103
    Sambone Says:

    02/20 13:43 *DJ Venezuela Chavez: Social Spending To Go On Despite Crisis
    02/20 13:43 *DJ Venezuela Chavez: Oil Prices Remain Too Low

  104. 104
    Sambone Says:

    MEXICO CITY (Dow Jones)–Mexican oil production slid in January to its lowest
    level since 1995 at 2.69 million barrels a day as the country’s main oil field,
    Cantarell, continues to lose output, reported Petroleos Mexicanos on Friday.
    At the current pace, Mexico’s oil exports will disappear in six years, putting
    the world’s sixth-largest crude producer at risk of a fiscal crisis. Oil
    accounts for around a third of government revenue in Mexico.
    January output was down 1% from 2.72 million barrels a day in December and off
    9% from the year-earlier month. Crude exports were slightly higher than in
    December at 1.37 million barrels a day but down 4.2% from the year-earlier
    month.
    Pemex said Cantarell pumped 772,000 barrels a day in January, a third of the
    field’s peak production in 2003. Cantarell produced 852,909 barrels a day in
    December and 1.27 million barrels a day in the year-earlier month.
    The elephant offshore field is suffering from oil age and poor long-term
    planning by Pemex. Over the past three decades, Pemex has extracted 30 billion
    barrels of oil from Cantarell, more than twice Mexico’s current proven oil
    reserves.
    As the layer of oil in Cantarell’s source rock diminishes, water levels in the
    reservoir rise. For decades the wells at Cantarell produced no water, allowing
    Pemex to postpone installing needed surface infrastructure.
    Pemex has invested in water-separation equipment in recent years, but the
    infrastructure is still insufficient.
    One industry executive said Pemex had to shut in several Cantarell wells in
    January because it was unable to manage the water. In January, the nearby
    Ku-Maloob-Zaap field surpassed Cantarell in output for the first time, with
    787,000 barrels a day, said Pemex.
    Natural gas production was at 7.09 billion cubic feet, down from 7.36 billion
    cubic feet in December and the first monthly drop in gas output since July.
    Domestic gasoline sales were at 772,200 barrels a day, the lowest level in a
    year. Gasoline imports were up 8.3% on year at 329,700 barrels a day.

    -By Peter Millard; Dow Jones Newswires
    Dow Jones Newswires
    02-20-09 1249ET

  105. 105
    zman Says:

    Re 104 – thanks Sam, had not yet seen the latest figures. Cantarell is dying, will have workover work for years but they can barely slow the slide there. I think they become a net importer before that 6 year time frame unless they stop growing their own consumption.

  106. 106
    zman Says:

    Rig count watch

    U.S. gas rigs down another 36
    Horizontals down 22

  107. 107
    BirdsofpreyRcool Says:

    anybody watching BAC today?? Richard Bove came out and said it is one of the best buys he “has ever seen on the NYSE.”

    That seemed to turn it around….

  108. 108
    1520sbroad Says:

    BOP = #107 – i agree.

    Volume thin enough outside the financials that we could see a real swing here i think. loads of options folks trying to figure out how to play this last 2 hours.

  109. 109
    sportlock Says:

    Z, With the drop in horizontals and the cold weather in the midwest the next two weeks is there any chance we could hold $4.00? Seems like year ending storage is not going to be the horror show since here in Chicago it is way below normal and going to snow the next two days? Your thoughts are always appreciated.

    Thanks

    Bill

  110. 110
    BirdsofpreyRcool Says:

    well… kudos to john11’s broker… and kudos to anyone who bought BAC at 2.53 today.

    The govt is working too hard on the GM/Chrysler gordian knot this weekend to fill out the paperwork necessary to nationalize BAC or C by monday.

    (That’s a joke… kind of)

  111. 111
    zman Says:

    Bill – I think $3.50 holds pretty well. Storage will likely trough in the 1.6 to 1.7 Tcf range which is high but not catastrophic. A couple of weeks back I put a chart in of storage relative to price and the relationship is a loose one at best as we where at the same levels of storage at the same point in time and saw much higher prices two and three years ago than this year. It will however get squishy this March /April and I think what keeps the trough higher will be an earlier than normal injection (7 weeks left in the normal withdrawal season) which sends prices running lower one warm dark Thursday this Spring. I think that’s the bottom or a week or two from it.

    At the end of next month, we get supply for January (we get supply for December next week but I think that’s a non-event). Anyway, January should show some Rockies decline and some further roll in the mid-continent, other states, and maybe a little flattening in Texas. That’s going to be a big day (March 31). If not then then April 30. Until then I think we are in the fear zone for gas – brief spikes over $4 with weather or big negative rig counts.

    The idea most producers have in mind now is that when the economy picks up this fall (best guess) it will coincide with falling production and therefore you will get a sharp upward adjustment in prices. The degree to which LNG arrives will potentially mute that but I think the LNG story is as overplayed now as the Haynesville gas wave was last Fall.

    The other thing that can help will be working financial markets. Normally, companies with cash would have gone drilling on Wall Street buy now, picking up fallen companies like SD on the cheap and this would have helped support the commodity. So once things start working again in the capital markets, gas should get a boost that way as well. When you look at the majority of the E&P universe having posted greater than 100% reserve replacement this year just past versus the current stock prices, it means there is a lot more reserves now for each $ of market value than there has been for quite some time.

  112. 112
    BirdsofpreyRcool Says:

    z — i don’t want to jinx this… but, TechTrader’s calls today are scary-accurate… shhhhhhhhhhhhhhhhhhhhhhh.

  113. 113
    zman Says:

    I’d like to think it would have kept going when the DJIA reached par on the day. Everything I’m watching looks fairly pinned.

  114. 114
    zman Says:

    White House douses bank nationalization fears. “Oops, did I say that out loud” ~ Dodd.

    http://news.yahoo.com/s/ap/20090220/ap_on_bi_st_ma_re/wall_street

  115. 115
    elduque Says:

    BOP Any thoughts on the last half hour from the trading desk?

    Thank you

  116. 116
    BirdsofpreyRcool Says:

    ram – got our answer to last night’s states and taxes discussion… from Professor Laffer —

    We actually do not have a website. Our state research, though, is now done in conjunction with the American Legislative
    Exchange Council and is available online at alec.org. Just look for “Rich States, Poor States.”

  117. 117
    BirdsofpreyRcool Says:

    elduque… i’ll check. but, it’s just Head Trader’s gut, at this point…. TechTrader is done for the day.

  118. 118
    zman Says:

    Shell lending Nigeria $3B to shore up the government’s lack of funding for its share of oil and gas projects.

  119. 119
    BirdsofpreyRcool Says:

    ok… here’s the exchange:

    BOP — care to call the last 20 mins?

    HeadTrader — no

    You gotta appreciate the honesty!

  120. 120
    BirdsofpreyRcool Says:

    Head Trader cites “options expiry” as the reason he is not taking any sides here.

  121. 121
    zman Says:

    Can’t blame him there.

  122. 122
    BirdsofpreyRcool Says:

    Head Trader already thinking about “beer-thirty”

  123. 123
    zman Says:

    Me too. Hope fully team Obama can coordinate a little better over the weekend. Geithner is supposed to have something more concrete to say next week about the plan.

  124. 124
    BirdsofpreyRcool Says:

    what a day. what a week. what a year.

    enjoy the weekend, all!

  125. 125
    ram Says:

    BOP – Thanks. TENN ranks #5, MICH ranks #16 and CA ranks #41. I should at least move to MICH and improve my economic future.

  126. 126
    elduque Says:

    Where does Hawaii rank? It really is a nice place to live. Hours are just a little bit crazy.

    Enjoy the weekend.

  127. 127
    PackMan Says:

    Oy; what a day / week. BOP, you really nailed it about the credit bears earlier in the week. They went off on the banks and the markets.

    Its disgraceful.

    Z – haven’t read today’s comments yet; any thoughts / comments on TSO ? Why the big sell off ? VLO also.

    Thx.

  128. 128
    isleworth Says:

    U.S. Gas Production Seen Sliding for 4 Years

    By Joe Carroll

    Feb. 20 (Bloomberg) — U.S. production of natural gas, the most widely used furnace fuel in the world’s largest economy, may tumble through 2012 as low prices prompt producers to shut down drilling rigs from Louisiana to the Rocky Mountains.

    The CHART OF THE DAY shows the relationship between reductions in drilling by U.S. energy companies and output from gas wells. The red line shows the number of rigs drilling for gas in the U.S., as tracked by Baker Hughes Inc. In 2001-02, the so-called rig count declined for nine months in a row. Gas production, shown in white, declined for the next four years and didn’t return to the 2001 level until 2007.

    Energy companies probably will slash onshore U.S. gas drilling to 800 or 900 rigs this year from a peak of 1,606 in 2008 after prices for the fuel plunged 70 percent from their 2008 high, said Keith Hutton, chief executive officer at Fort Worth, Texas-based producer XTO Energy Inc. As a result, gas output probably will decline by 3 percent to 5 percent in 2009, Hutton told investors on a conference call yesterday.

    Idling rigs slows new discoveries and prevents companies from offsetting output declines that average 30 percent a year from established wells, Hutton said.

    “If your underlying decline rate is 30 percent and you drop your rig count in half, it’s hard as hell to catch back up,” said Hutton, 50. “If you start picking rig count up 10 or 15 percent a year and it takes you three or four years to get back to the old rig count, you’re going to decline almost the entire time. We’re set for falling gas production for quite awhile here.”

    London-based BP Plc is the largest producer of U.S. gas, followed by Oklahoma City-based Chesapeake Energy Corp. and ConocoPhillips of Houston, according to the Natural Gas Supply Association in Washington.

  129. 129
    zman Says:

    I’ve been sitting here, veging. Forced to do a little work now. Will have comments on 127 and especially 128 by morning.

  130. 130
    Wyoming Says:

    Lord help us:

    http://hotair.com/archives/2009/02/20/obamas-energy-secretary-surprised-to-learn-hes-in-charge-of-oil-policy/

  131. 131
    zman Says:

    Obama nixes the VMT (tax per mile instead of per gallon) during his administration:

    http://www.pantagraph.com/articles/2009/02/20/news/doc499ea5a1d5ed2205281036.txt

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