03
Mar

Tuesday Morning

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CNBC Will Look Like CSPAN Today Watch: Fair warning, Treasury Secretary Tim Geithner will testify before the House Ways and Means Committee today defending tax hikes and a proposed carbon cap and trade program. Both issues are drawing bipartisan criticism. Also Ben Bernanke will be speaking to a Senate sub committee about the proposed budget.

Before You Read On: Click this link to a comment Wyoming posted last night regarding the Obama Administration's war on the U.S. oil and gas industry and the IPAA's response

I'll let you pick that link above apart as I ranted the other day on the logic of adding fees to non-producing Federal leases which have already been auctioned with no such "non-production" penalty attached.

I will add one thing to my rantings though with regard to the repeal of the marginal well tax credit:

  • This is the tax credit that allows stripper wells to eke out a meager existence.
  • A stripper well, in general is one that produces less than 10 barrels of oil per (bopd) for an oil well or 60 Mcf for a natural gas well and in general is "marginally" economic, hence the name of the tax credit.
  • Crude Oil:
    • There are over 400,000 oil stripper wells in the U.S., or about 80% of the oil well population
    • They produce roughly 900,000 bopd or 18% of U.S. daily oil production
    • As reminder, U.S. oil production looks like this (the U.S. needs all the help it can get): 

  • Natural Gas:
    • There are over 250,000 gas stripper wells
    • According to IPAA, they represent about 12% of U.S. gas production
  • The cancellation of the marginal well tax credit will result in substantial abandonment of these wells, especially at today's prices. Once abandoned many of them are unlikely to ever be exploited again as that would mean new pumps, new surface tanks, etc. to target very little in the way of reserves per well, even though the total reserves would be in the 10s to 100s of millions of barrels left behind. But, I guess I like higher oil prices so in the end, this is a good thing, right? OPEC has plenty of spare capacity and when these wells are plugged and abandoned I'm sure the Cartel will be happy to send more oil to the U.S., right?
  • But I Promise Not To Rant: Besides, this sounds familiar and this guy said it best.

In Today's Post

  1. Holdings Watch
  2. Commodity Watch
  3. Crack Spread Update
  4. Stuff We Care About Today - overnight mailbag plus coal thoughts
  5. Odds & Ends

Holdings Watch: No changes yesterday.

 

Commodity Watch

Crude oil got clobbered yesterday with widespread (global) doom and gloom in the equity markets and a comment from Iran saying OPEC won't cut production on March 15. Crude fell $4.61 (10%), to $40.16. OPEC is increasingly likely to act to shore up prices in the face of weakening U.S. and non-China, non-India foreign demand markets, and my sense is that the Iranian claim was a trial balloon to show group leadership what would happen if they refused to lower production quotas again.  This morning oil is trading up slightly.

  • OPEC Watch: A day after suggesting OPEC would not further cut production quota's at its March 15th meeting, Iran's oil minister Nozari said the Cartel would provide a new solution to boost oil prices. Without elaborating he did indicate that higher compliance would be at issue. According to a Reuters survey, compliance with the December cuts ran 81% last month, much higher than normal. That leaves nearly 800,000 bopd to go on the current quotas
  • Early Read On Crude Inventories (from the Bloomberg Survey)
    • Crude: UP 1.0 MM barrels
    • Gasoline: DOWN 750K barrels
    • Distillates: DOWN 1.35 MM barrels
  • Nigerian Oil Worker Strike Watch: The major oil workers in Nigeria is threatening another strike, this time with a March 24th deadline if security improvements are not made by the government.

Natural gas rallied on the back of a curtailment announcement from #1 U.S. gas producer Chesapeake and a eastern seaboard wide March winter storm that will boost gas demand at next week's inventory report. Gas fell $0.05 to close at $4.15. The front month chart looks fairly constructive but in front of the shoulder season that may be just a sucker's bet due to a colder than previously anticipated March. This morning gas is trading up a dime.

  • Imports Watch: Up 0.9 Bcfgpd from last week.
    • LNG crept back up to 1.1 Bcfgpd from 0.7 Bcfgpd last week. We're always watching for a turn here and this is the second week this year where LNG has topped the 1.0 Bcfgpd mark. Last time it fell back sharply and the rally was attributed to commisioning operations at Sabine Pass. This may be more of the same but I'll be watching for any sign of an extended pick up here as such evidence would likely frighten gas back towards the high the $3's.
    • Canadian volumes also crept higher rising to 8 Bcfgpd which is still 1 Bcfgpd below year ago levels. If you read the wrap you may have notice the smartly lower number of rigs running north of the border as well.

Crack Spread Update: Small weakness in cracks last week (see chart below) was reversed by yesterday's move. Gasoline continues to be the new strong product for early 2009. With low oil prices, curtailed industry utilization and demand that appears fairly stable despite the weak economy, estimates for the group (see table below chart) are starting to drift higher.

Refining Multiple ... Cheap.

Stuff We Care About Today

Coal Stocks Suddenly Falling Out of Bed. Just watching for having had a good run with BTU accross its 4Q earnings a couple of weeks back, the industry is now under a couple of stresses:

  1. Cap and Trade For Carbon. President Obama is looking to raise $646 billion over the next 10 years selling carbon emissions permits. The coal fired electricity industry (utilities) will be at the brunt of this charge. This will lead to higher electricity costs and perhaps reduce consumption of coal and electricity demand as prices rise.
  2. Electricity demand is clearly down. According to the Edison Electric Institute, U.S. electricity demand is off 2.4% year to date. The weak economy began to show up in the demand numbers last fall and appears to be gaining a little more ground now.
  3. Prices have suddenly re-weakened. Since the start of the year:
    1. Appalachian coal has tumbled 19%, trading yesterday at $48.50, a sharp contrast to the $140 per ton peak in August 2008.
    2. Western coal from the Powder River Basin has fallen below $10 per ton. Down 29% from the beginning of the year. This is the cleanest burning coal in the U.S. so the move makes a little less until you realize that it simply has held up better than Eastern coal prices and in this market that makes it a target.

On the plus side:

  1. Chinese demand for coal for turning iron into steel is rising.
  2. Chinese coal inventories are low
  3. U.S. producers are curtailing capapacity

Coal Multiple - Also appear extremely cheap but I'm just watching for now as the stocks may fall for some time until the specifics (burdens) of the proposed cap and trade program come to light and mine capacity shrinks back in the face of the global recession. After listening to several of the names during the 4Q season and having read as many call transcripts as I can find I see no reason to favor any company over my prior thoughts of like (BTU) best ...again, once the dust settles.  

Over Night Mail Bag:

Question Regarding MLP (BBEP) and Their 33% Dividend late last night. My response:

I looked at them just before they released 4Q earnings as I was taking a harder look at their big brother in the upstream MLP group, (LINE). (BBEP) is well hedged too although their production guidance calls for more slippage than you will see at (LINE). They did not guide to a level of distributable cash flow which to me is a step from saying we don't know, based on our production declines if we will be able to maintain the quarterly $0.52 dividend for the year. With LINE this less of a question for 2009, given their expected production profile, hedges, and expected costs. Also, LINE is a lot bigger and will attract more capital than BBEP or its peers in sort of a last man standing scenario in the group. Finally, I didn't care for the convoluted organizational structure at BBEP. In this market, bigger is probably better as is simpler.

Odds & Ends

Analyst Watch: (BP) cut to Market Perform at Bernstein, (BPZ) target lowered from $3 to $2.25 at Jefferies.

Nicky's Elliot Wave On The DJIA:

 

163 Responses to “Tuesday Morning”

  1. 1
    zman Says:

    SU put up nice monthly numbers for February, of 300,000 bopd, rebounding from the 250,000 level in January, still targeting 300,000 bopd for 2009 volume guidance.

  2. 2
    BirdsofpreyRcool Says:

    Credit Market Comments — Up off of yesterday’s fall-off-the-cliff close. But, to put it in perspective, if the S&P500 were to reflect the level in credit, the SPX would already be at 600. Nature abhors a vaccum. Credit levels have to improve… or the SPX will fall to meet credit’s assessment of the economic outlook.

    But, today, we rally. For now.

    IG 237 -3bps from close

    HY 70.50 +.50 from close

  3. 3
    BirdsofpreyRcool Says:

    Technical Trader isn’t speaking to anyone today.

    Head Trader’s gut says — we open green, lose it, then regain it. Depending on the morning’s volatility, could be a strong finish.

  4. 4
    zman Says:

    Geithner, Bernanke, Orzag all on the Hill today, what fun.

    Crude up $1.70 now, reflex rally.

    NG up 15 cents, close to the morning highs yesterday as East coast gets snowed under.

    I’m with the head trader. Hearing even more calls for a bottom these days and a lasting (3 to 4 week rally). Been since August the major markets have had an up month. That’s just wow-bad.

  5. 5
    BirdsofpreyRcool Says:

    Saw a piece by Doug Kass this morning. It looks like he is calling some sort of a bottom… but unclear (near-term bottom? absolute bottom?). Doug references his appearance on Kudlow last night, where he gave the same advice.

    Did anyone happen to catch that show? Would like some clarification on what Doug is thinking.

  6. 6
    zman Says:

    BOP – thanks for the email on Kass. Did anyone see if he has now called a bottom.

  7. 7
    BirdsofpreyRcool Says:

    z — i feel like i have had “Wow-Bad” every morning for breakfast for the last year and a half. I would love to switch cereals.

  8. 8
    elduque Says:

    BDI +48 2034

  9. 9
    BirdsofpreyRcool Says:

    Just to add some more details to the Party Plans you laid out today, z…

    Some of the big events to watch coming up: CNBC said last Friday that the TALF should launch sometime this week. Also to watch – Feb retail sales (Wed night/Thurs morning), auto sales (Tues), BOE/ECB meetings (Thurs morning), and the Feb jobs report (this Fri morning). Congress will be holding a bunch of hearings this week on Obama’s budget – Bernanke will speak before the Senate budget committee Tues 3/3 (10amET), Geithner will testify to the House on Tues 3/3 (12:30pmET), Peter R. Orszag speaks to the Senate budget committee Wed 3/4 (9:30amET), Geithner speaks to the Senate Wed 3/4 (10amET), and Geithner is due to testify Thurs 3/5 (10amET). Kohn will speak to the Senate Banking Committee on Thurs 3/5 (not about the budget). On Tues 3/3, the eco calendar is quiet (pending home sales hit 19amET). Mortgage cramdown vote – a vote in the House is now likely to happen no earlier than Wednesday due to a snowstorm that disrupted the House schedule (it was due to happen on Tues 3/3).

  10. 10
    BirdsofpreyRcool Says:

    Earnings ests – As of a few weeks ago, analysts anticipated per-share operating earnings to come in around $69 in 2009, according to Thomson Reuters, but that figure has come down in the last few weeks, and now the expectation is for earnings of about $50 to $55 a share for the year. Goldman last week cut to $40 their ’09 sp500 earnings forecast – WSJ

  11. 11
    zman Says:

    Oil trying to reclaim $42, despite yesterday’s 10% drop we’ve seen some pretty good resilience over the last 2 weeks as we approach OPEC.

    More little names going bankrupt, EPL rumored, Hallwood on the tape filing.

    Thanks for the extensive list BOP.

    Dollar off slightly but still near recent highs, at some point 3/4s of a trillion here and 3/4s of a trillion there should have some impact. Lindsey think tank head this morning on CNBC said Asian appetite for U.S. treasuries is drying up.

    For the oil bulls that comment Wyoming posted last night and linked to in the post is a blessing in disguise. Want higher oil prices, take 20% of U.S. production off line. Seems to be an odd way to get off foreign oil. Also, wondering what the P&A liability is on all those stripper wells. Seems it would force a quite a few bankruptcies for the mom and pops operators as the are unable to pay the well abandonment costs…then that would be left to the government.

  12. 12
    zman Says:

    Thanks for #10 BOP. So S&P at a 17.5x of GS’ fwd number. That’s high in a non-growth market. 15x would imply 600 on the index which is probably more fair.

    Gotta miss the open, back in 20 minutes.

  13. 13
    BirdsofpreyRcool Says:

    Care to make a “C-Span” call? I think Ben’s testimony at 10am is a green event. But Timmy’s follow-up at 12:30 turns it red.

    Then, if Head Trader is right, we rally in the late afternoon.

  14. 14
    zman Says:

    I should miss the open more often.

    My guess is sideways trading up to Ben, then down into Geithner before a bounce. I think Tim will have a more solid plan to talk about this time…surely he will.

    Interesting to see only modest responses from stocks that were slammed for no real reasons yesterday. The deepwater names are stronger than not and coals are getting a smallish bounce. No recovery for the bulkers.

  15. 15
    BirdsofpreyRcool Says:

    This mortgage cramdown thing has got the private market in a tizzy. There were investors, venturing in, and buying up some mortgage paper with the intent of modifying/working out the loans. But by inserting a Judge into the process, who can unilaterally modify a “mortage” contract… this is chasing the private market to the sidelines. And pushing the recovery of the mortgage market out.

    The law of Unintended Consequences meets the Desire of Good Intentions. Mortage prices are headed up for everyone on this.

  16. 16
    zman Says:

    I’ve added a chart of the Dow from Nicky with EW annotations to the bottom of the post. It’s a bit big so if it does not fit your screen let me know and I’ll try to shrink it down a bit. I use a widescreen to write with so it shows up ok for me.

  17. 17
    BirdsofpreyRcool Says:

    Bernanke trying to put a positive spin on the credit markets… while still admitting that major stresses remain. Jobs outlook bad, home sales and prices still falling, manufacturing at lowest level since WWII. He’s walking a fine line…

  18. 18
    BirdsofpreyRcool Says:

    Ben —

    low, stable inflation = will help recovery
    fiscal and monetary stimulus + lower energy prices will help
    trying to put a positive spin on the stimulus package… while recognizing that its affect will be difficult to time

  19. 19
    BirdsofpreyRcool Says:

    Ben — toeing the party line on supporting a deficit that is expected to grow to the highest relative levels since the 1950s debt to repay the WWII effort.

  20. 20
    zman Says:

    Ben’s doing a decent job of laying things out, market just holding breath. Q&A starting.

  21. 21
    Nicky Says:

    Morning all. Just about to do the SPX short term chart showing the last leg down. Do you want me to make it smaller?

  22. 22
    zman Says:

    Nicky, if you can that would be great, just a bit narrower, does it appear ok on the site? Thanks.

  23. 23
    Nicky Says:

    Huge falls in gold in the last 7 days. Looks like it is completing a wave 5 down and we should now see a wave 2 correction.

  24. 24
    Nicky Says:

    Z – I can only see half of that Dow chart – but it may just be me.

  25. 25
    zman Says:

    Nicky – that’s what I was afraid of. I’ll see if I can shrink it and repost.

  26. 26
    zman Says:

    Take a look now.

  27. 27
    tater Says:

    BOP – #15
    That idea is so typical of people who have never had a job in the private sector. That is the reason why elected officials NEED private job experience. Law school (been there, done that) does NOT have anything to do with the real world. Probably the most “how many angels can dance on the head of a pin” experience in my whole life.
    So now here we are with a bunch of “public interest” lawyers running around telling private biz how best to run private biz. Maybe, just maybe, private biz is the most learned institution for determining how to run private biz, and government should concern itself with catching criminals (monopoly creators like say….Citi?) and facilitating an environment in which private industry can act?

  28. 28
    gaamblor Says:

    re Kass he called for a “yearly low in the S&P in the next few days”

    he has been buying a lot lately (a lot higher than this)

  29. 29
    BirdsofpreyRcool Says:

    tater — if/when you decide to run for President, I’ll quit my day job and campaign for you.

  30. 30
    zman Says:

    Q&A for Ben leading market all over the place. This is not the way to run a market. CNBC is doing the markets a disservice by taking the day off and just rolling tape while Senators grand stand. I listened to a Senator from Maryland open with comments on the new budget addressing energy independence and about lost my breakfast. Then I remembered the language of the statement. “Addressed” does not mean fixed or even put a plan in place. “Addressed” in this case means “shut the door on the possibility of energy independence. Now I’m biased I realize as I have many friends in the oil and gas industry but I have to ask why their jobs are less important than the sunjobs and airjobs to be created at their expense.

  31. 31
    BirdsofpreyRcool Says:

    The “independent” Senator from Vermont is grandstanding now… demonstrating just how LITTLE he knows about the Industry (banking) that he supposedly regulates.

    Where is the outrage?

  32. 32
    BirdsofpreyRcool Says:

    Answer — the “outrage” is demonstrated in the market sell off. No one wants to be repeatedly hit over the head with how stupid some of our “decision makers” are. It just hurts too much.

  33. 33
    Nicky Says:

    Hi Z – can see almost all of it – just not the complete right hand side

  34. 34
    zman Says:

    Oil has given up all of the morning gains…back to trading with the market.

    Energy largely green if only modestly so, mostly figured its being ignored but that won’t last if the market continues to roll lower.

    Thanks for the comment on Kass. He’s a smart guy. Hope he is not early.

  35. 35
    nifkin Says:

    crude flat now led by gasoline

  36. 36
    tater Says:

    I’m just getting frustrated with government getting in the way of ME employing people. They seem to want to employ everybody themselves.
    The reality is that all this goofiness in Washington manifests itself at people similarly situated to myself. I actually want to open businesses, create jobs, pay taxes, simply DO the things that Washington talks about. It’s what I do. In order to have a motivation to accomplish the above, I have to have a reason, a reward, for taking the risk. If I determine that the risk does not equate with the reward, I correctly decide to sit pat and not create a venture.
    That is the reality of private business, no matter what the ivory tower dwellers postulate.

  37. 37
    zman Says:

    Nicky – thanks, can you send a smaller one of that then as well? I can make it smaller but it will lose all resolution of the scale.

  38. 38
    zman Says:

    Re 36 – exactly. I now have two real world examples of bankers not willing to auction commercial and residential properties, with buyers in the room at the appointed time, because they feel they will get a better deal than just the debt owed on the properties. From the government. Sometime in the (near?) future.

  39. 39
    zman Says:

    I think Ben just said the White House’s look at the economy is a little dated and overly optimistic compared to the Fed’s.

  40. 40
    zman Says:

    Mimster – did you see my quick thoughts on BBEP. I can add more if you like but there is some room for their dividend to not be safe for this year, based on their production guidance range.

  41. 41
    1520sbroad Says:

    what is format for Geithner’s appearance today? Testimony then questions? just questions? general planning to plan?

  42. 42
    VTZ Says:

    The rhetoric coming out of the US regarding energy independance is completely backwards.

    When royalty rebate programs like EOR and low productivity are developed they are always heralded as progressive because they truly are in that they increase the net recovery, reduce capital outlays, etc.

    As much as the US likes to posture about CO2 and energy security they sure don’t like doing anything about it. Why doesn’t the US consider life-cycle CO2? Why is the only solution to energy dependancy solar/wind?

    If the US wants the world to do something about CO2 then they have to do it first. I’m going to go out on a limb and say start with US coal and reducing oil consumption, then maybe Obama and the US will have any credibility on a world stage.

  43. 43
    zman Says:

    1520 – he’s in front of the Senate I think. Format will be free flowing if history is a guide. The guy is camera and media shy according to that bloomberg article I posted a couple of weeks back. Shy, yep, that’s what we need right now. Shy leadership. Actually, it would be nice if they’d all just take a snow day.

  44. 44
    BirdsofpreyRcool Says:

    The Three Days of Timmy —

    Geithner will testify to the House on Tues 3/3 (12:30pmET)
    Geithner speaks to the Senate Wed 3/4 (10amET)
    Geithner is due to testify Thurs 3/5 (10amET).

  45. 45
    BirdsofpreyRcool Says:

    I have no idea that forum and format Day 3 of Timmy is… but, that is his current schedule, as I understand it.

  46. 46
    zman Says:

    VTZ – good questions. Your last statement is absolutely true, U.S. must act first if they want people to get on board. Even then though, I think the mechanisms for monitoring China/India/Russia/East Europe are not in place and I think the Middle East will simply not go along with you on reducing carbon emissions.

    NFX having a better than usual day. Perhaps an analyst commenting that CHK reducing mid-continent gas will help NFX’s differentials coming out of the Woodford, their single biggest play. Besides, there’s almost only one way to go up from here when you look at the shattered mid-continent prices:
    http://intelligencepress.com/features/intcx/gas/

  47. 47
    1520sbroad Says:

    z- should be an interesting afternoon. I will restrain myself from commenting further.

    Thus far the new administration has alienated the following major sectors of our economy (using the 10 S&P sectors):
    Healthcare
    Energy
    Financials
    Utilities (coal burners in particular)

    Frustrating.

  48. 48
    zman Says:

    addendum to analyst watch:

    FSLR:

    Raymond James raises it to Strong Buy from Outperform.

    Citi cuts target from $160 to $130, rating stays at Hold.

    Lazard raises target from $140 to $145, ratings stays Buy.

  49. 49
    VTZ Says:

    Z – Re 46. If that’s what you think in terms of the world’s reluctancy, the US should stop posturing as though they are trying to make inroads because it’s a catch-22.

    Bottom line is that this experiment in energy policy is poorly timed and doesn’t even make sense with the prices the way they are.

  50. 50
    zman Says:

    VTZ – you’ll get no argument from me on a poor timing. I would suggest that the political capital is being spent to accomplish agenda items while it is still available.

  51. 51
    zman Says:

    Nicky – I reposted that chart if you’d care to comment on it. Thanks again.

  52. 52
    zman Says:

    Nicky – I put up both of those DJIA charts at the end of the post

  53. 53
    nifkin Says:

    Any Idea what type of “mechanism” other than war Iran is talking about?
    Iran to offer OPEC new ways to boost oil prices: min

    TEHRAN, Mar 03, 2009 (Xinhua via COMTEX) — Iran’s Oil Minister Gholam-Hossein Nozari said on Tuesday that Iran would offer the Organization of Petroleum Exporting Countries (OPEC) new ways to boost oil prices, the semi-official Fars news agency reported.

    OPEC would review the present status of world oil market during its meeting in Vienna on March 15 to decide whether or not to remove the present production ceiling or make any changes, Nozari said.

    Without providing any details, he said Iran was intending to present “a new package at the next OPEC summit to help increase the prices of oil.”

    “I do not think we move towards cutting production again. Instead, a mechanism should be defined to repair prices in the oil market…and OPEC will review the oil market and will decide about its production policy in view of the world economic growth in this year and 2010.”

  54. 54
    BirdsofpreyRcool Says:

    Ben — over and out.

    Timmy — on deck in 30 mins.

  55. 55
    VTZ Says:

    There isn’t enough outrage at the stupidity of it all. Obama has a license to say and do anything because people have alreayd exhausted their complaining.

  56. 56
    zman Says:

    Nifkin, not really, I puzzled over that in the post. My guess is they are gonig to talk up higher compliance and perhaps spotlight those members that are over producing to get the last 20% (800,000 bopd) off the market. A more united front for OPEC would likely stabilize prices. I also think they are likely to cut volumes again and that the comments yesterday from Iran were just testing the waters.

  57. 57
    zman Says:

    VTZ – what would you expect the average capacity to be of an oil sands operation, relative to nameplate? It seems to be mechanically difficult for continuous operation, more so than mining coal.

  58. 58
    VTZ Says:

    95% utilization for an upgrader is reasonable, excluding the extended planned shutdowns/turnarounds (on 3 or 4 year cycles).

    Mine is 85-90% but they are oversized in order to be able to meet the upgrader demands, although they can also be the culprits that contribute to the 95% onstream factor at the upgrader.

  59. 59
    VTZ Says:

    The main problems at the mine are truck reliability, weather related mining difficulties, and wear on equipment due to fines and solids.

    At the upgraders the problems are the result of dealing with heavier oil which cause coking in furnaces and heat exchangers. Mechanical fails are also more common than refineries for some servies. Sulphur processing/management and hydrogen manufacturing also contribute to reliability losses.

    Keep in mind that in general the whole process train (series of equipment) needs to be functional to produce synthetic oil, otherwise you will go to market with heavier/sour crude and you’ll take a huge $ hit per bbl.

  60. 60
    zman Says:

    Thanks – while I’ve got you, SU’s nameplate capacity is now 350,000 bopd. They are targeting 300,000 bopd +5%/-10%. That puts on pretty nice growth from 2008’s 265,000 bopd and seems pretty conservative in light of your utilization comment. I know they did 250,000 bopd in January and 300,000 bopd in Feb. Just wondering if you have any thoughts on the direction of cost reductions in ballpark percentages you might care to share. Just thinking there may be a little upside to the EPS estimates of 1.38 for 09 that are out there now as they have some hedges but I’m not certain the Street has given them much credit for cash cost reductions after a big rise in costs last year.

  61. 61
    nifkin Says:

    China considering purchase of crude oil as a way to diversify holdings away from US Treasuries — Nikkei

    The Wednesday edition of the Nikkei reports that the government is considering plans to tap its nearly $2T in foreign reserves, of which roughly 2/3 are said to be denominated in dollars, to purchase crude oil as a way to hedge against a possible decline in US Treasury prices. China plans to amass 100M barrels by next year as a first move. The article says any move would be done with caution, given that a sudden move would put pressure on the dollar.

  62. 62
    zman Says:

    FSLR is trying to do its thing.

  63. 63
    VTZ Says:

    One of these days I’ll add to my Oil Sands 101 with a bigger focus on environmental issues and economics.

  64. 64
    zman Says:

    Nifkin – thanks much, that’s what I’m looking for, evidence that Asia will stop buying treasuries and choke this rally in the dollar. The purchase of crude in lieu of treasuries is icing on the cake.

  65. 65
    Nicky Says:

    Okay Z I can see them perfectly now.

    I hope it helps people see the Elliott Wave count more clearly. The top one is the big picture from October 2007. It is absolutely textbook and we are now in the latter stages of 5 of 1.

    The second one is a ‘close up’ of the final wave we are in currently which commenced in January 2009 at the 9000 area. I could break it down more but I think it may get confusing! I still think we are likely to put in a low between 6000 and 6500 within the next two weeks.

  66. 66
    Nicky Says:

    Does anyone want the SPX?

  67. 67
    zman Says:

    Nicky – matching your charts to your words helps me see this much better. Thanks for the time spent there. I hate to trouble you but if you get time, I’d like to see the same thing on oil.

  68. 68
    zman Says:

    SPX would be good too, thanks.

  69. 69
    VTZ Says:

    I think Suncor might be targeting 300,000 rather than 350,000 because the old Steepbank mine has been retired and they had to move their extraction facilities to Millenium (the newer mine). This is probably causing some inefficiencies at the mine potentially due to longer haul distances. They could also be suffering from lower ore grades (the amount of bitumen per tonne of ore) and as a result are setting a realistic target for production.

    In my opinion they should be able to easily meet the 300,000 barring anything unexpected.

    In terms of cost reductions, they should be seeing those immediately because they stopped all engineering development work for Voyageur. On the opex side I guarantee there is a large amount of rationalization going on and because a large portion of the op costs are fixed, the higher production should reduce the cost per bbl.

  70. 70
    zman Says:

    Market gearing up for the G-man.

  71. 71
    VTZ Says:

    Gas prices are helping cut costs as well.

  72. 72
    zman Says:

    Thanks V – any idea if they also get some lower cost labor in their so you have more production and less dollars to spread it over?

  73. 73
    VTZ Says:

    No labour cost reductions yet. Fort MacMurray is so unionized it’s not even funny.

    Engineering contractors like Bantrel, Fluor, Jacobs are all taking pay cuts but general labour is still expensive. Some labour cost moderation is occuring although it’s not that significant and it’s only for some contract work.

    Equipment costs have been coming down though.

  74. 74
    zman Says:

    V – is natural gas the biggest op cost, followed by labor, then I’d guess electricity, diesel for the trucks…?

  75. 75
    BirdsofpreyRcool Says:

    Timmy — up to bat… taxes up, stabilization plans “might cost more,” stimulus to boost GDP by 1% this year, 3.2% next, economy projected to recover in 2011

  76. 76
    zman Says:

    Tater – FLSR looks like it is starting that move on the big gap. If we get a bear bounce (and we’re certainly due one), seems this guy could have a couple of $10 point up days.

  77. 77
    VTZ Says:

    Labour is generally considered a fixed cost because the steady demand is so high. Electricity is generally produced by cogeneration so I lump electricity with NG.

    In upgrading the main costs are NG, equipment maintenance, catalyst. At the mine the main costs are maintenance, NG, diesel.

    Overall NG is probably still the biggest cost although maintenance is probably a close second at these prices.

  78. 78
    Dman Says:

    Thanks for the charts Nicky! So you are seeing a bear market rally (wave 2) and then “into the abyss”.

    China looking at oil instead of US$. Wow. I’ve thought for a long time that energy would be the new reserve currency. Now they are being explicit.

  79. 79
    BirdsofpreyRcool Says:

    Timmy Testimony — Michigan Rep jumping right in and asking about the wisdom of the energy tax proposals.

  80. 80
    BirdsofpreyRcool Says:

    This part is worth watching… actually hearing some Common Sense in the room.

  81. 81
    BirdsofpreyRcool Says:

    Geithner leading off with his written opening statement. Back to politics and campaign speaches.

  82. 82
    zman Says:

    Adding to the list of things that are not so bad for crude.

    Pemex cuts Cantarell forecast from 756,000 bopd to 700,000 bopd for 2009. That prior estimate was made in January. Cantarell is Mexico’s biggest oil field.

  83. 83
    zman Says:

    Thanks V for the cost color. Will see if I can track down the $/barrel costs that analysts are gravitating toward for this year’s forecast.

  84. 84
    Bob Says:

    COG moving up on announcement of completion of 2nd and 3rd horizontal well in Marcellus. 8.8 and 8.3 mmcf/day

  85. 85
    zman Says:

    Bob – thanks, those are big wells, more than double the normal IP up there.

  86. 86
    zman Says:

    FSLR at $111

  87. 87
    Dman Says:

    Anyone know why the Canadian trusts are selling off with NG & the E&Ps green?

    VTZ ?

  88. 88
    BirdsofpreyRcool Says:

    Credit Markets freezing back up on the back of all this financial testimony.

    IG 242 +2 from yesterday and +6 from the tighter spread at open this morning.

  89. 89
    tater Says:

    FSLR

    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2933882

    Not much to add to the party from me. I may just be gun shy, but I am not so sure that it is going to play out as a basic gap strategy. Something seems wrong to me and I can’t quite make out what’s bugging me about the name. I actually think that it is a belief that it really should be trading higher than it is and it’s not. Why would the media darling not be owned by all the greens? Isn’t solar the savior’s little princess? Something’s wrong with the picture.
    Sorry, not my best work.

  90. 90
    VTZ Says:

    Z – If you get me the $/bbl targets and a production target, I can give you my opinion.

  91. 91
    Dman Says:

    tater – the greens don’t have any money and if they did, they wouldn’t put it in the evil stockmarket 🙂

  92. 92
    VTZ Says:

    D – No clue. Maybe just because the TSX is down and the Bank of Canada cut rates 0.5% and cited a worse economic forecast. I’m busy out for the rest of the day, but I’ll review later.

  93. 93
    zman Says:

    Tater – I didn’t mean ta bug ya. I read 6 pieces from 6 analysts following the quarter. One was negative, one was essentially wishy washy and 4 were gung ho, especially following the gap down. The fear just seems overdone here but at the same time I agree with you it is trading oddly and I think that speaks to the character (or lack thereof) of those that trade this mo-mo name. Be it a momentum stock or not, the fundamentals here are pretty darn strong.

  94. 94
    zman Says:

    V – thanks, it will probably take me a couple of days, don’t think there is much of a rush.

    Dman – the biggest source of revenues is the German government and they are fully on board with green projects, if becoming more than a little protectionist.

  95. 95
    zman Says:

    HK been drifting higher and better than group all day. Another 50 cents and we’ve erased yesterday. woopee.

  96. 96
    zman Says:

    JR – when you see this let me know what you think the impact on strippers will be of the cancellation of the marginal well tax credit will be. It’s a huge population of wells, almost 1 in 5 barrels of U.S. production, seems hard to believe nobody has thought that this will drive production down by something like a like amount if passed.

  97. 97
    BirdsofpreyRcool Says:

    z — solar panels getting a plug. With the tax credits, seems we are all going to rush out and install them!

  98. 98
    tater Says:

    No, you’re not bugging me. I’m just pissy because I’m not cracking the puzzle. Charts are a puzzle to me. I pretty much know if I’m getting it or not. That doesn’t mean that I can predict everything, it just means that I understand if my chart adequately describes the past. If I get the past, I have a base to work from.
    Maybe with FSLR I’m trying to make a bull case. I just looked back with an open mind and I really see a stock that has sold off May to the present from 310 to 100. Actually pretty much of bear story, chart wise.
    Anyway, no problem. It’s a hard name.

  99. 99
    zman Says:

    Geithner hearing talking about tax credits for solar manufacturers in the U.S.

  100. 100
    BirdsofpreyRcool Says:

    On the other hand, Geithner is saying “this is a serious economic crisis”… so, maybe that solar panel installation gets put on the back burner for a while for most people.

    More back-and-forth.

  101. 101
    zman Says:

    force momentum – good phrase. Referenced by Geithner as what’s happening in terms of damage by the slumping global economy.

    I’m adding a Big Picture macro page to the site. Sometimes it helps to have the basics at hand. Global oil demand, opec production, etc. Will be happy to take suggestions for big pix items for that page.

  102. 102
    zman Says:

    BOP – I don’t think so. Many of those solar factory floor jobs are in the $8.25 to $12 per hour range and we are going to need those to replace the $25 to $50 per oil jobs being lost out of the oil fields.

  103. 103
    ram Says:

    How can you rush out and buy anything that is not absolutely necessary if you are part of the millions that are unemployed? There is still no credibility that the billions and billions of dollars are going to create millions and millions of jobs with the private sector.

  104. 104
    john11 Says:

    Worth reading from one of my favorite energy ceo’s..Ken Peak of MCF as he updates Contango operations, not a “pump” more an industry insite/view.
    http://finance.yahoo.com/news/Contango-Updates-bw-14529057.html

  105. 105
    tater Says:

    Are you going to call it Fathead and have a huge life size replica of the Zman doing energy company models?

  106. 106
    BirdsofpreyRcool Says:

    z — Big Picture would be great! I’m tired of having to go to the BP website and download that spreadsheet all the time. Would love a 1 page reference sheet.

    Also, a friend of mine called me the other day, asking about production math. For example, he didn’t know how to connect nat gas prices to nat gas production. Believe it or not, there is not a good, public website (that I can find) that goes through production math. For example, if a well produces 4mmcf/d, how does that translate to $$s. (I gave him the key: 1mcf approx. equals 1mmBTU… he’s a smart guy, but he didn’t know that). So, for example, a well with 1Tcf of reserves is worth xxxx at $xx/mmBTU. It’s amazing how many sell-siders even get the production-math wrong when asked.

  107. 107
    zman Says:

    Thanks John – that is one of the most uniquely run E&Ps out there. Have always liked the go there own way attitude and they handled outsourcing the operations very well. Seems impossible to play from an options standpoint as they are so thin so I don’t pay enough attention to them, thanks for the presentation.

  108. 108
    zman Says:

    Ram – agreed. The only way government creates a job is do so at double the expense of the private sector at half the wages. Oh well…

    Tater – well I might just call it that. Its up there now in skeleton form on the left hand side bar. Really high level but its a KISS inspired page…just the facts, basics, what have you…

  109. 109
    BirdsofpreyRcool Says:

    z — re #102… more deflationary pressures at work… ugh.

  110. 110
    BirdsofpreyRcool Says:

    z — if you could put your production-math page out there in the public, you would show up in a lot of on-line searches. Just a thought.

  111. 111
    Dman Says:

    Z – #94 I was referring to FSLRs ownership base, not it’s customers. Just responding to tater’s question (#89) “Why would the media darling not be owned by all the greens?”

    As per my post yesterday, I was positive on FSLR yesterday at $102, both on charts and fundamentals. Just wish I’d put money behind that opinion. Whilst I like volatility, I’ve always had trouble trading the really high voltage (pun intended) stocks like FSLR. I know when to buy (yesterday) but find it hard to actually do it.

    As for tater’s unease … I take it seriously… but haven’t cracked the puzzle either.

  112. 112
    zman Says:

    BOP – I do have a definitions page already ya know, the dictionary at upper left which is my acronym storage bin.

    For Big Pix, I just thought I’d show some supply and demand figures, nothing along the lines of BP as that thing is too big. Just simple which when taken along with the wraps kind of connects a lot of the dots. Suggestions for additions are more than welcome.

  113. 113
    tater Says:

    You know I’m referring to the sports posters called Fatheads. Big picture…
    Long day.

  114. 114
    BirdsofpreyRcool Says:

    z — I know. I looked through it a while back. Didn’t see any “production math”… but, maybe I just missed it.

  115. 115
    zman Says:

    BOP – check your email.

    Tater – ohhhhh. Sorry, have one screen dedicated to talking fatheads right now. I tell you an easy job these days: being an anchor at CNBC. Only have to comment when some politician isn’t on the screen which is essentially never.

  116. 116
    Dman Says:

    #102

    650,000 stripper wells – if a decent fraction are abandoned, how many people are directly affected? All so that the same amount of oil/NG can be imported?

    I’m a solar enthusiast but I have to say that the Obama team seems muddled at best.
    I frankly think that’s an improvement on “wrong and determined to stay wrong” of the previous admin. But it’s not enough of an improvement to get the job done. The only bright spot is that they do seem in favor of learning from experience, so maybe they will improve over time.

  117. 117
    Jay Reynolds Says:

    Z – re 96

    The moment I read the “Obama Plans” re marginal operators I nearly had a stroke. I’m working on my response in pieces.

    One of many bottom lines:

    Wanna really hurt the enviornment?

    Run the stripper operators out of business who are currently responsible for Plugging a hundred thousand or so wells…. then they can all decay/leak/rust until the taxpayers ultimately end up with the bill.

  118. 118
    zman Says:

    116 – I too am a believer in solar. Just not overnight. Pun intended.

  119. 119
    Dman Says:

    #117 … and when oil gets back to $200, all those stripper wells will suddenly be an essential resource … in ruins.

  120. 120
    zman Says:

    Jay – what’s it cost, average, ballpark to plug a shallow old stripper well, remove the surface tanks etc? Sounds like a lot of personal bankruptcies to me.

  121. 121
    BirdsofpreyRcool Says:

    The Credit Market is very jumpy today. Worries about GE debt… when no one is used to worrying about GE debt. And a very large seller in high yield today made other people nervous (“what does someone know that I don’t know”), so they sold. HY ETFs trading below NAVs… which they haven’t really since mid-Dec. Everyone is waiting for another shoe to fall. With the market down so much in Feb and HFs reopening redemptions, thinking there must be another fund(s) facing forced selling. Might be an explanation for the torching of energy yesterday. Forced selling.

    Anway, Credit is jittery. Bouncing back a little with stocks, now.

  122. 122
    zman Says:

    Dman – exactly. Its not like you’ll run out with fresh pumps and tanks, even at that price trying to reactivate plugged wells.

    Jay – here’s another thing I don’t know. In Louisiana and Texas, how long could you shut in a well before you are supposed to plug it?

  123. 123
    zman Says:

    Wow, today would look like a great day if I didn’t remember yesterday.

    FSLR up $10. Small favor but I’ll take it.

    Oil jumped near the close of NYMEX to end up $1.50ish.

  124. 124
    BirdsofpreyRcool Says:

    Guess someone pointed out to the POTUS that a falling stock market isn’t going to help get his agenda across. Obama said today that falling stock prices may mean bargains for investors with a “long-term perspective.”

  125. 125
    ram Says:

    I emailed my opinion to my two CA senators as soon as I saw the peice from Wyoming posted yesterday. I’m still waiting for Fed Marshals to knock on my door. I’m not sure why Congress can not do the math on energy consumption necessary to keep the U.S. operating. Don’t they see the same statistics that you post ZMAN?

  126. 126
    zman Says:

    Shell reported a number of explosions over the weekend on a pipeline in Nigeria, no word yet on curtailment.

  127. 127
    Dman Says:

    Strong close in oil. Copper up 5%.

    Z – on the FSLR, I think basically you are going to be a lonely bull on it, until it hits $150 and then it will get crowded. After the last year in the market, people are just too freaked out to buy something that has seen a vicious downtrend.

    tater – on your unease: is it because you expect a chart to do something more dramatic to signal a true change in the downtrend?

  128. 128
    choices Says:

    What is the estimate of revenue to be raised by the “stripper well” provision? Seems to me from just reading the discussion here that it needs to be huge to outweigh the negatives.

  129. 129
    zman Says:

    Re 124. So falling stock prices are good for me. Ok, I feel better.

    Ram – its a mystery what these guys read.

  130. 130
    zman Says:

    Choices – the total net on all the changes, of which marginal well tax credit removal is a minority part is $31.4 billion over 10 years. Note that over the next 10 years the incremental budget of the EIA and Department of Interior is $27 billion. So, outside of growing 2 government agencies we have spare change of about $4 billion of non-govt revenue.

    On the flipside, if you assume the strippers just go away (and they won’t all but I would guess more than half) you are talking about 900,000 bopd (roughly). If oil averages $50 per barrel, that comes to $16.5 billion to buy foreign oil to replace it.

    I don’t think the $4 billion left over after we grow those two agencies (and that growth is in the 10 year plan) will be enough to fund breakthroughs to replace that oil through renewable sources.

  131. 131
    Dman Says:

    In a nutshell –

    China looks to buy oil instead of US dollars.

    The US looks to shutter a substantial part of its remaining oil production.

    What’s wrong with this picture??!!

  132. 132
    zman Says:

    If I was there I’d ask Tim about 130 myself but alas, I wasn’t invited. I’d ask my congressman who I know but he has proven to be less than amenable to anything even vaguely supportive of oil and gas industry.

  133. 133
    Jay Reynolds Says:

    OK: It costs me about $1,500 to plug a 1,000′ well w/ 4″ casing. It costs the state about 5-6X that much to do it through their process. Removal of tank batteries can vary enormously in cost. If there are tank bottoms (there will be) and soil to be disposed of – generally through land farming – maybe $50K to close each site, more if the gov’t does it. Each lease has it’s own tank battery and oil/water separation so it can get real spendy, real fast, in most stripper areas because the leaseholds were chopped up…

    I don’t know how it is in TX but in LA there is a LOT of latitude about how long a well can be shown “Shut In/Future Utility”. As commonly used in the stripper industry around here it just means you have some casing sticking up w/ a bucket over it.

    For the kind of production we have, < 1 BOPD, it would be HUGE prices indeed before it was affordable to reopen a plugged well. It’s almost not affordable to produce at $65/BBL.. not to mention redevelop.

    What someone with a brain ought to do would be to say: “If you can figure out how to increase production 3 X (compared to state audited figures on file) for the XYZ lease/field, then we’ll qualify you for Enhanced Oil Recovery Credits for as long as that threshold is maintained. Don’t pay for spec, just give some relief for performance.

    Add to that – economists say that our Mom and Pop Oil money is recirculated 15 X in the local community – that’s a hell of a multiplier.. more than you can get with any handout. Just incentivize entrepeneurship (like we need it! – we don’t really, just quit killing us!)

    It’s crazy…. in one formation here – shallow – we have about 45K BBL/AC unrecovered X 40 sq miles X 640 ac/sq mile. That’s a lot of moolah!

    Got to run… accountant here to help me figure out taxes..

  134. 134
    choices Says:

    Thanks, Z. These facts need to be provided to the “leadership” in Washington but somehow I’m do not believe anyone is listening or wants to listen. Probably only the lobbyists from the other end of the political spectrum are getting access.

  135. 135
    zman Says:

    Market doing better now. Frankly I’m tuning out of the Geithner testimony as they rotate between softballs and fastballs with little new detail coming to light. BOP or anyone, did you hear much new out of the TS?

  136. 136
    zman Says:

    Thanks Jay. The P&A liability is a little worse than I thought then. Ouch. Good point on the multiplier effect as well. By the way, I know you saw this but for others, the Enhanced Oil Recovery Credit you are talking about is on the chopping block as well as the Marginal Well tax credit.

  137. 137
    BirdsofpreyRcool Says:

    z — nothing new. It just sounded like warmed-over campaign speeches to me. The devils’ in the details. But, I did notice that every time there seemed to be a little push-back on any of the tax items, the market rallied a bit.

    Right now, Washington thinks the mrkt is down b/c of AIG. They have no idea that the free mrkts have given a razzzberry cheer to what they see in the “Budget.”

  138. 138
    zman Says:

    Thanks BOP – what I thought but have been multi-tasking a few things here and after hearing “we inherited this mess from 8 years of yada yada yada for the 8th time I sort of tuned out”.

  139. 139
    zman Says:

    One last regarding #130 and I’ll stop.

    That’s $4.4 billion over a 10 year period that’s left over in term of revenue.

    The $16.5 billion cost of oil is a per year figure.

  140. 140
    Dman Says:

    I think part of this admin’s problem is this:

    Obama has mostly hired warmed-over Clinton people (bad but comprehensible) and some warmed-over Bush people (incomprehensible).

    So the Bush retreads are pretty much doing what they were before (not helpful).

    But the larger faction, the Clinton retreads, seems to think that if they just could turn back the clock to the mid 90’s, everything will be fine. This is preventing them from really grasping the magnitude of what they are facing.

  141. 141
    Dman Says:

    WPRT interesting here.

  142. 142
    Denise Says:

    Greetings everyone
    Being the Mr K fan that I am -thought I would post his bottom call comments.
    Also he points out that 75% of The Stock Twits Blog disagrees with his call.

    (Naturally he thinks that is bullish)
    http://blog.stocktwits.com/post/83188739/is-this-the-bottom

    He is generally early

  143. 143
    zman Says:

    Thanks Denise, for what’s it worth, he’s often early but not often wrong, at least from what I recall.

    Nicky – your oil chart has been attached to the bottom of today’s post.

  144. 144
    Denise Says:

    Wyoming,
    Was reading about the pending stripper well legislation and thought I would suggest the IPAA put a web site/email protest together like Rev Shark did about the trader tax (heard that died a timely death) I heard that thousands
    responded. If it’s easy people will respond. If you missed my post that day
    here is what he did

    http://www.rallycongress.com/no2tradertax/1536/tell-congres-to-block-trader-tax/

  145. 145
    Nicky Says:

    Broader market – iv may give us another down (underway now) then up before rolling over in v.

  146. 146
    Denise Says:

    You might also be glad to hear Mr K covered his XOM short today

    Other bullish signs that might be good for a rally-“I leave this am without turning my computer on and spend the morning at Yoga! (for those who don’t know me I have spent the last 10 years glued to the screens.) That has to be in the camp of Helene Miesler’s mother calling to ask about the market signs.

  147. 147
    zman Says:

    Another sign of a potential rally. I find myself thinking things like “I won’t put on more trades of size or intended duration until the S&P touches 600…which at yesterday’s pace would be about 3 days”

  148. 148
    Nicky Says:

    A bit of light humor – it had the British Prime Ministers name on it so I changed it to make it more topical!

    Tim Geithner was visiting a primary school. In one class they were in the middle of a discussion related to words and their meanings. The teacher asked Mr. Geithner if he would like to lead the discussion on the word ‘tragedy’.

    So the illustrious leader asked the class for an example of a tragedy. A little boy stood up and offered: ‘If my best friend, who lives on a farm, is playing in the field & a tractor runs over him and kills him, that would be a tragedy’.

    No, said Tim – that would be an accident’.

    A little girl raised her hand: ‘If a school bus carrying fifty children drove over a cliff, killing everyone inside, that would be a tragedy’.

    ‘I’m afraid not,’ explained Tim, ‘that’s what we would call great loss’.

    The room went silent. No other children volunteered. Tim searched the room. ‘Isn’t there someone here who can give me an example of a tragedy?’.

    Finally, at the back of the room, little Johnny raised his hand.

    In a quiet voice he said ‘If a plane carrying you and Mr. Bernanke was struck by a ‘friendly fire’ missile & blown to smithereens, that would be a tragedy’.

    ‘Fantastic!’ exclaimed Tim. ‘That’s right. And can you tell me why that would be tragedy?’.

    ‘Well,’ says little Johnny ‘it has to be a tragedy, because it certainly wouldn’t be a great loss and it probably wouldn’t be ………………………………

    a f*cking accident either’

  149. 149
    Denise Says:

    Maybe this will help the energy sector

    “Dollar depreciation leads to higher inflation and ultimately forces foreign creditors to question their rationale and indeed their sanity for continuing purchases of U.S. Treasuries.” -Bill Gross

  150. 150
    Dman Says:

    Nice one Nicky 🙂

  151. 151
    ram Says:

    It’s always little Johnny.

  152. 152
    Nicky Says:

    You are so right Ram.

  153. 153
    zman Says:

    Gatoradethirty – off to soccer practice. If anyone has additional big pix stats for the big pix tab they want to see I’m open to suggestions. Leave here or email to zmanalpha@gmail.com

  154. 154
    BirdsofpreyRcool Says:

    At the end of the day… it was kind of a sh*tty day. Would have been better off in a 6 1/2 hr yoga class. At least I would have accomplished something.

    Watching Congressional hearings is just one step away from living in the padded room, if you ask me.

    Credit was so disgusted, it forgot to trade during the last hour. Last quote on Investment Grade was 238 1/2. No one can even begin to think that credit has thawed, as long as that index remains firmly north of 200.

    Tomorrow — Day 2 of Timmy.

  155. 155
    BirdsofpreyRcool Says:

    oops. Spoke too early. Late Day trade in the IG Index… pretty much at the wides for today.

    IG 243 bps

  156. 156
    choices Says:

    The war on coal:

    http://www.newsweek.com/id/187424

  157. 157
    sane Says:

    API

    Crude Down 463K
    Gasoline Down 642K
    Distillates UP 1.6M

    Imports Down 256K/day
    Refinery Runs Up 286K/day

  158. 158
    calvo Says:

    Nicky, thanks _a lot_ for your charts — this makes it so much easier to interpret your comments 🙂

  159. 159
    zman Says:

    Thanks much sane.

    Will look at choices, thanks.

  160. 160
    PackMan Says:

    Does He Know the Difference between “Bobbing” and “Freefall” ?

    Obama today:

    What I’m looking at is not the day-to-day gyrations of the stock market, but the long-term ability for the United States and the entire world economy to regain its footing. And, you know, the stock market is sort of like a tracking poll in politics. You know, it bobs up and down day to day. And if you spend all your time worrying about that, then you’re probably going to get the long-term strategy wrong.

  161. 161
    PackMan Says:

    148 Nicky — LOL !!

  162. 162
    Wyoming Says:

    Starting the evening read. Wanted to capture some of my thoughts as I go along:

    1. Stripper wells always have more being added to the list with Depletion. A lot still remaining in this category as leases are being held by production (HBP). Turn on and off just to keep leases and avoid plugging.

    2. Stripper wells, tax and incentives can be irrelevant when the revenue stream drops to uneconomical anyway. Will be critical when demand increases …

    3. Once a well is plugged, there is no getting back into it. Cement plugs are placed in casing.

    4. You can turnkey P&A for less than $2k/well, vendor takes the steel. Facility equipment )tanks, separators +) will be salvaged for repairing remaining wells as nobody will afford brand new.

    5. Environmental issues is another thing. Big Government will just declare superfund site. Then everyone who owned the asset will be sued to pay to clean it up. Google RC Cola and asbestos for more info. BTW – SWAT teams show up to your door if you are charged with environmental issues. Did not happen to me but I was warned, I have been delivered papers for a couple enviro. lawsuits, 1 Superfund.

    Denise,
    It is a good thought but I am thinking that it is in the best interest of our industry to let the Dem’s shut in the production, take the leases back and ban exploration of the unknown opportunities. I guarantee that next years buzz slogan will by Supply Destruction. This actually may cost me my lively hood in the short term, but $147 will look like loose change. The Dem’s need to understand that the correct answer to the energy problem is everything. We barely made the 87 mmbopd demand last go around, all fields will be that much more depleted when they crank the machines up next.

    I read somewhere that prices swing drastically when supply and demand are close. It may explain some of the reason why we are here today, I don’t know …

  163. 163
    mimster90 Says:

    zman thanks for your BBEP thoughts and for answering all my late night questions.

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