23
Apr

Thursday – Natural Gas Preview and Oil Inventory Review Plus Lots O’ Earnings

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In Today’s Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Natural Gas Preview
  4. EIA Oil Inventory Review
  5. Stuff We Care About Today
  6. Odds & Ends

 

Holdings Watch:

  •   Added GMXR common for $9.61 yesterday (with the stock up 19% at the time). Why?
    • We are transitioning from leverage is bad to leverage is not so bad as long as you have room to maneuver with your capital budget.  Debt to equity is high here at 53% but debt service is not that tight.
    • Cheap valuation at P/CF of 3.2x for 2009,
    • Bank line redetermination around the corner (two weeks out max), should be well received
    • Potential monetization of assets provides them with potential for additional liquidity
    • $/ Mcfe of provded on a TEV to Proved basis is low at just under $1 /Mcfe, should be higher given their long reserve life. In other words, they've been priced like they are going out of business.
    • "Potential" reserves are high relative to their bookings so you have long term upside potential as they delineate their Haynesville holdings.

Commodity Watch:

Crude oil rose $0.30 to close at $48.85 yesterday despite the fact that the EIA produced a bearish looking (on the surface) set of inventory numbers. See below for a closer examination of the numbers but suffice it to say (very cautiously) that a change appears to be in the offing on the demand side for U.S. crude. This morning oil is trading up on a somewhat weaker dollar and strong-ish equity markets.

Natural gas traded flat most of the day, closing up $0.02 at $3.53. We get the first of the really tepid weather injections today (see next section). This morning gas is trading flat with yesterday's close and I'm unlikely to make a move in the stocks until I see how a real lack of weather impacts gas. We do get the next read on natural gas supply with the release of the February 2009 production data next week.

Natural Gas Preview:

  • My number: 40 Bcf
    • History:
      • Last Week: 21 Bcf injection
      • Last Year: 25 Bcf  injection
      • 5 Year Average: 48  Bcf  injection

 

  • Weather
    • HDDs of 101 last week vs 124 in the prior week that gave us that 21 Bcf injection. Last week was slightly colder than last year and normal for this week of the year.
    • CDDs - nothing to speak of just yet.
  • Imports: Imports were up slightly (0.6 Bcfpgd) relative to the prior week so it probably will be hard to see in the numbers
  • Street Consensus: 42 bcf

EIA Oil Inventory Review:

CRUDE OIL - Another bigger than expected bump in inventories but its imports, which should be fleeting. The big story is that utilization finally got out of the gutter.

 

Imports - This number will either fall soon or it will give OPEC an excuse to cut production at their May 28th meeting.

Crude Stocks - Bottom line, we turn lower when refiners get even more "back to work".

 

GASOLINE: Demand picking up in the nick of time; need more to stave off a quick bloat in inventories.

 

 

Demand - Last week, as demand lagged the average levels for this time of year,  I said it was nut cutting time. Without an increase in the next two weeks I said we would be in for tough times for gasoline stocks which would quickly bloat as refiners come back from break and therefore tough for cracks.  So far, so good. No reason to jump up in down for the refining group or for crude (as gasoline demand will help to dictate oil prices in the coming months) but at least we did not see a further deterioration. That fear of further deterioration in demand has been pervasive and is tied to both the recent rally in prices at the pump but even more to the monthly jobs report.

 

Gasoline Stocks - In danger of getting really bloated as refiners come back if demand does not rally as normal into summer.

 

DISTILLATES: Too much in the tanks, too much being made, not enough being consumed.

 

 

 

 

 

Stuff We Care About Today

Short interest list. These are squeeze worthy names from our usual suspects.

Single Digit Midget Squadron. I'll have a little piece out tomorrow or over the weekend with bullets on four or five little guys (basically pennies) who I think make it (or get acquired) which could have good rallies from here. Think of them as call options without expirations. These are targets of opportunity and I may add them to my small cap stock holdings without further warning. For now here are the tickers to add to the watchlist: (ROSE), (KOG), (WRES), (TXCO - think they go away via acquisition), (PQ - already holding).

Overnight Mailbag Watch:

Any thoughts on KWK now that BBEP has suspended their payouts? ~ Mimster90

My first, second and third thoughts are:

  1. That the damage has already been done, the value of KWK's 21.3 mm shares is now just $138 mm, pretty small in comparison to the TEV of KWK at $3.8 B
  2. Once you back out their ownership in BBEP and another MLP they hold KWK's is being valued at about $1.55 per Mcfe of proved, which by recent history (up through year end) would have been exceedingly cheap, but is probably fair considering gas prices at present
  3. They have significant upside in their nascent plays.
  4. A final thought will be, downside is fairly limited from the BBEP exposure from here but it could pop if those guys are able to right their ship, and if KWK so desires they may be able to increase their ownership on favorable terms.
  5. A final final thought is simply that it will only really recover when gas prices do but that it is one of the better hedged names for 2010 (48% now) so that it will likely survive, despite its leverage, if gas remains depressed for an extended period.

Any comments on ECA earnings or comments about doubling spending in Haynesville? ~ VTZ

People liked the results, I noted it was up during the day but am not a big follower there. Just went over the transcript re their plans in the Haynesville.

  • Spending doubling to $580 mm, sounds like they borrowed some cash from another play, looks like they are adding acreage on the cheap, good call on their part. Aubrey mentioned yesterday how the play went from $1,000 an acre to $30,000 over the course of a few months and had fallen substantially since, don’t know what leases are going for lately, hard heard some were very cheap in outlying areas recently. They are already a large player here with at least 325,000 acres in the play. Part of this acceleration is the lease terms forcing their hand to get busy with the drill bit.
  • JR has been seeing some large-block deals in the $1,500 per acre arena, a far cry from those peak levels.
  • Anyway, spending on 50 wells probably costs you $400 to $450 million leaving quite a bit left over for additional land and gathering. In the big scheme of things, if you are thinking wow, extra gas, this is 25 more wells so while it’s extra gas in 2009, its not that much gas, maybe you get an extra 0.1 Bcfgpd in aggregate out of those adds.

Earnings Watch:

NFX Handily Beats 1Q09 Expectations

NFX continues to motor along like a well oiled gassed machine. Couple of key takeaways from the quarterly release and @NFX update before we delve into the quarter:

  • These guys are not growth for growth sake types, never have been, never will be. They are deliberately delaying completions in the Woodford due to low prices and will benefit from the continued reduction in completion costs when they do complete and will be selling gas from those wells likely at higher prices later in the year. At least that's the plan and its a recurring theme you will see more and more as the quarter goes by.
  • Improve differentials in the Bakken and Mid-Continent.
  • Their capital budget and guidance remain unchanged. You've got to like the all caps comment on the capital budget that it DOES NOT reflect the cost savings they are seeing...their dollars are going further than they thought. Just how much further their budget will go should be a topic of discussion on the call on Thursday.

On to the quarter and update:

  • The 1Q09 Numbers

    • Production: 696 MMcfepd which is just above the mid point of guidance, up 0.5% sequentially.
    • Costs:

      • Lifting costs were much better than expected at $0.95 per Mcfe
      • "major" LOE  which is basically workovers and repairs came in 2 cents high at $0.18 per Mcfe, not a big deal at all and not surprising as many operators are conducting more workovers to maintian production.
    • EPS of $0.85 (clean of a non cash impairment and a hedging market to market gain) vs $0.72 expected
    • CFPS of $2.67 vs $2.31 expected
  • Operating Highlights:

    • US Onshore:

      • Woodford Shale, Oklahoma (growth temporarily flattened):

        • Recurring theme watch: due to low prices they are deliberately curtailing production. They are fortunate to have 90% of their acreage held by production so they can say, "Where's the fire? Oh yeah, there isn't one."
        • 11 rigs, down from 12 at year end as previously annnounced; still their busiest region and fewer rigs WILL NOT mean few wells drilled as they have become more efficient in the play,
        • Net production is 240 MMcfepd, down slightly from the 250+ MMcfepd at year end due to the completion deferals and natural declines,
        • Despite the well completion delays, they are still reaffirming 20% growth guidance for 2009 here.
        • They have 300 MMcfepd of firm transportation on a new pipeline set to begin in operation in June that will link their Woodford system with Louisiana,
        • On the conference call look for a double digit percentage figure in terms of the decline in prices paid to drill and complete a Woodford well so look for some pretty impressive (ultra low) F&D cost numbers during the Q&A.
        • Also on the call, look for results from their first "super extended" lateral
      • Willston Basin: Bakken Oil Play:

        • 10 wells drilled to date with their most recent two middle Bakken completions of 1,328 and 1,256 BOEpd, being their best wells to date. They are currently drilling another Three Forks Test (the first two saw IPs just over 1,000 BOEpd.)
        • Differentials here have contracted sharply from close to $20 at year end to less than $6 per barrel now (thanks EOG)
        • continuing to slowly add acreage here, now at ~ 500,000 acres
        • On the call, look for questions regarding just how much of their acreage they think has TFS under it.
      • Granite Wash Play (Tx and Ok panhandle) - not a lot of deets here, but new record for production set of 145 MMcfepd (gross 80% WI) set vs 130 MMcfepd as of the last update. 
      • Monument Butte (Rockies
    • US - Gulf of Mexico - No update on their five development projects in the deepwater Gomex but they will see a significant ramp from this region in early 2010.
    • International:

      • Malaysia -
        • off slightly from 4q levels
        • they are sticking with the 10% 2009 production growth guidance here.
      • China -
        • up about as much on a gross basis as Malaysia was off for the quarter
        • looking for a rig to appraise last year's Pearl River Mouth Basin discovery.
  • Guidance:

    • Reaffirming prior 6 to 10% production growth guidance for 2009
    • 2Q09 Guidance: typically wide range of 692 to 758 MMcfped.
       
  • Impairment: 1Q reserve writedon, all quarter end price related, non cash and in my book a non event.
  • Nuthshell: Good quarter, despite recent run, stock remains cheap at 2.8x 2009 CFPS consensus that is likely to remain unchanged or adjusted slightly upward following the quarter.
  • Conference Call: Thursday, 9:30 EST. This pre call note will be archived on the ZEB Reports tab.

SU Beats Estimates;

  • 1Q09 Results:
    • Oil sands production of 278 MBopd, up from 248 MBopd in 1Q08
    • Cash operating costs eased up to $33.70 per barrel from $31.55 in 1Q08
    • EPS of $0.24 (clean number) vs $0.15 expected
  • Guidance: Looks unchanged.
  • Nutshell:The call will likely have as much to do with their merger with Petro-Canada than with the quarter's results and as such I'll be on the sidelines.
  • Conference Call: at 9:30 EST which overlaps with NFX so I will listen to this one on the replay.

 

DO Beats On Bottom Line; Need More Color From The Call

  • 1Q09 Results:
    • Revenue of $856 mm vs $878 expected
    • EPS of $2.51 vs $2.22.
  • Guidance: None and no color about current operations or future operations in the press release which is normal for them.
  • Special dividend: $1.875, plus the usual 12.5 cents ... this has become a habit a guy could get used to.
  • Nutshell: I think this drags the sector higher, especially ATW, and NE.  You can see cost cutting efforts in the numbers across their fleet (operating margins improved by nearly 230 basis points). While Jack-up revenue remained strong, utilization did not, falling from 92% last quarter to 73% this quarter. The higher revenue in this segment may be a function of termination fees. Also their high spec floater area group saw a sharply decline in utilization from 89% last quarter to 80% this quarter which is surprising.
  • Conference Call: 10 EST.

NE Beats Street

  • 1Q09 Results:
    • Revenue of $872 mm vs $898 mm expected
    • EPS of $1.58 vs $1.46.
  • Highlights:
    • still repurchasing shares, authorized for another 16.6 mm  (6% of outstanding but they will do it slowly)
    • new rig contracts starting up on schedule,
    • margins: also seeing higher margins
  • Conference Call: 1 pm, I'll be on the call.

NOV Beats Reduced Numbers

  • Revenue of $3.48 B vs $3.29 B expected
  • EPS of $1.13 vs $1.06 expected
  • Backlog still building but more slowly as you'd expect in this environment
  • Conference Call: 10 EST

 

SPWRA reports after the close

Names Reporting Tomorrow That We Care About: (SLB) and (ACI)

 

Odds & Ends

Analyst Watch: FBR re-initiates coverage with an Outperform rating on (CHK).

 

160 Responses to “Thursday – Natural Gas Preview and Oil Inventory Review Plus Lots O’ Earnings”

  1. 1
    Sambone Says:

    By Lananh Nguyen
    Of DOW JONES NEWSWIRES

    LONDON (Dow Jones)–Crude oil futures moved higher in London Thursday, boosted
    by a weaker dollar.
    Prices were resilient despite oil stockpiles in the U.S., the world’s largest
    energy consumer, at a 19-year high.
    “It’s holding up pretty well despite perceived bearish (U.S. inventory) stats
    yesterday,” said Tony Machacek, a broker at Bache Commodities in London.
    At 1130 GMT, the front-month June Brent contract on London’s ICE futures
    exchange was up $0.50 at $50.31 a barrel.
    The front-month June contract on the New York Mercantile Exchange was trading
    $0.91 higher at $49.76 a barrel.
    The ICE’s gasoil contract for May delivery was up $5.50 at $429.75 a metric
    ton, while Nymex gasoline for May delivery was up 52 points at 139.58 cents a
    gallon.
    Buying interest from funds and day traders propped up prices Thursday, as some
    participants shrugged off Wednesday’s data from the U.S. Department of Energy.
    The figures showed a 3.9 million barrel rise in oil inventories, coupled with a
    fall in demand to a 10-year low.
    The muted reaction to the DOE figures reflected the recent strengthening
    influence of equities and macroeconomic factors on oil.
    “Crude investors are presently more focused on the greenback together with the
    equity markets and rather inclined to disregard fundamentals,” said Marius
    Paun, a broker at ODL Securities in London. In recent months, oil has become a
    safe haven for investors seeking refuge from a weaker dollar.
    But the oil market’s deteriorating fundamentals will be difficult to ignore
    for much longer, some analysts said.
    “There is very little that can support the market at the moment,” said Andrey
    Kryuchenkov, vice president of commodities research at VTB Capital in London,
    who pegged key support for Nymex crude at $48 a barrel.
    “Depending on what happens to equity markets and the dollar, we could be in
    for some profit-taking on a sustained breach of this level in the next couple
    of days,” he said.
    Prices won’t be able to withstand the weight of high inventories for crude oil
    and refined products, said Peter Beutel of trading advisory firm Cameron
    Hanover.
    “The fundamentals are poor, we are running out of seasonal influence and
    (refinery) turnarounds are largely behind us…it seems like a matter of time
    before prices fall,” he said.

    -By Lananh Nguyen, Dow Jones Newswires

    Dow Jones Newswires
    04-23-09 0744ET

  2. 2
    zman Says:

    Just noticed Dylon Rat again quit. I’ve been cutting back on my CNBC intake.

  3. 3
    reefguy Says:

    NFX,HK,SWN CHK, others? Completion differals. I think we should try to start adding these up. Will give us a sense of overhang into a price runup.
    SWN is a “rolling 100”, any other firm numbers?

  4. 4
    zman Says:

    Reef – I’ve been thinking about…kind of like the surplus capacity that it at a decades high high now. Tough to do but maybe we can get the big pieces in line.

    I know you can add KWK to that list, I’d bet EOG and XTO as well in the Barnett but have not heard it yet. The thought of it implies two things to me:

    1) that we see a sharper decline earlier as those wells that are normally drilled to grow production are deferred on completion while just over enough wells to replace production declines are completed

    and later

    2) that you have a more gradual decline in production as those well completions are eaked out.

    The E&Ps will then benefit from the 60%+ drops in some areas being seen in completion costs. The service side of the story goes that they will have their costs down at that point so that such prices don’t beat them over the head too badly. Hmmm.

  5. 5
    zman Says:

    Anyone see a news item, broker note on HK this morning, seems SMH initiated at Hold.

    Offshore drillers are probably the flavor of the day, DO and NE surprising on better margins is a positive, probably has a sunshine effect on ATW, maybe on RIG as well. DO dividend is making a 9% yield and the consistency of this “special” dividend is something the equity-income type managers will appreciate (spoke with one last week who agreed that DO is a special case in the space).

  6. 6
    elduque Says:

    BDI +28 1897

  7. 7
    PackMan Says:

    CHK … do you anticipate any pop on the FBR coverage ? how much ?

  8. 8
    Sambone Says:

    04/23 06:41 *DJ Petrohawk Energy Started At Buy By CLSA

  9. 9
    zman Says:

    Listening to NFX call.

    Pack – I have not read the note so don’t know how they spun the story, would guess NAV.

  10. 10
    zman Says:

    Thanks – sam

  11. 11
    bill Says:

    differentials are better in williston basin and also in calif

    Pxp was 12 to 15 last qtr now about 7

    nfx has better differentials and tudor mentioned they are picking up working interest in some wells when smaller players dont have cash

  12. 12
    zman Says:

    Bill – yes, NFX inched up their working interest in both the Woodford and the Williston, good time for them to be doing it. Call going well.

  13. 13
    bill Says:

    pxp moving out of the gutter as they priced the 10 m shares. Im hoping/looking for a pop back to 20 now that the overhang is gone

  14. 14
    zman Says:

    adding to 12: they added 3% working interest in the woodford for essentially 0 cost by forcing the hand of partners who don’t have ready cash on new wells. Nice.

  15. 15
    bill Says:

    hk looking good too, now over 22

  16. 16
    zman Says:

    DO rocking on their earnings, NE as well, dragging RIG and ATW higher.

    NFX well costs in Bakken, last year $5.5, see target of $4.1 to $4.2 mm per well.

  17. 17
    zman Says:

    HK resistance remains at $22.65.

  18. 18
    zman Says:

    NFX – question re drilled but delay completed wells in the Woodford:

    Just starting this, seeing stimulation still come off, see pumping flattening, see sand and other falling more.

    NG off 7 cents pre storage number.

  19. 19
    zman Says:

    AAPL effect seems to be wearing off, market red again, leaves energy handing up here.

    Good friend, TA type telling me now is the time to add puts on HAL. Where was he two weeks ago you ask? Adding puts and losing money with me, but now, he is more sure.

  20. 20
    bill Says:

    lol 19

  21. 21
    zman Says:

    Where’s BOP – love to hear yield and head trader commentary today.

  22. 22
    bill Says:

    i bot a little line looking for a pop when they release their divy news

    3 years worth of hedges should help maintain the rate

  23. 23
    zman Says:

    Bill – I am with you there.

    NFX call going very well, thinking to add calls on weakness around the gas number and this market weakness.

    TXCO getting whacked for 30%, 8k out on their bank line, have not read yet, as I’m on NFX call.

  24. 24
    bill Says:

    on txco

    On April 21, 2009, Bank of Montreal, as administrative agent for the Lenders (defined below), provided TXCO Resources Inc. (the “Company”) with (i) Notice of Acceleration (the “Credit Agreement Acceleration Notice”) of the amounts due to the Lenders under the Company’s Amended and Restated Credit Agreement, dated April 2, 2007 and as further amended on July 25, 2007, which had an outstanding balance (not including any accrued and unpaid interest) of approximately $50.0 million as of March 31, 2009, and (ii) Notice of Acceleration (the “Term Loan Acceleration Notice”) of the amounts due to the Lenders under the Company’s Amended and Restated Term Loan Agreement, dated July 25, 2007, which had an outstanding balance (not including any accrued and unpaid interest) of approximately $100.0 million as of March 31, 2009 (collectively, the “Credit Facilities”), each with Bank of Montreal as lender and administrative agent, and the other lenders party thereto (collectively, the “Lenders”). The Credit Agreement Acceleration Notice and the Term Loan Acceleration Notice notified the Company of the acceleration of and demand for immediate payment of the entire amount of the funds the Company owes to the Lenders including all interest accrued and unpaid thereon and all other amounts payable under the Credit Facilities. The Credit Agreement Acceleration Notice also notified the Company that the commitment of each Lender to make loans or participate in issuances of letters of credit is terminated.

    The Credit Facilities total approximately $150.0 million, which amount does not include any default interest which may have accrued on the obligations outstanding under the Credit Facilities at a rate of 2.00% above the applicable interest rates otherwise in effect, or any other fees or expenses owing as a result of the existence of the defaults. We do not have sufficient funds to repay the amounts owed under the Credit Facilities. To date, the Company has not been successful in its negotiations with the Lenders regarding the extension of the payment of the debt or in securing alternative sources of financing.

    While the Lenders have not yet taken any action beyond issuance of the Credit Agreement Acceleration Notice and the Term Loan Acceleration Notice, the Lenders have the right to exercise their remedies under the Credit Facilities, which rights include seeking to foreclose on substantially all of the Company’s assets, which are pledged as collateral to secure the Company’s obligations under the Credit Facilities. If the Lenders seek to exercise such remedies, the Company could seek relief through a filing under the United States Bankruptcy Code. In such event, the Company could cease to be a public filer, cease to have a market for its securities and/or the Company’s securities may have little if any value.

  25. 25
    zman Says:

    NFX on the writedown:

    Under the new SEC rules there would not have been a writedown. If you raise the price from march end to $4 from the $3.63 price you get 33% of the written down reserves back, $4.50 would get you have of them back and $5 would get you nearly all back.

  26. 26
    zman Says:

    #24 = hardball.

  27. 27
    bill Says:

    on 24 my take..

    banks keeping the pressure on.

    .i need bop to tell me what this means

  28. 28
    zman Says:

    Bill – quarter to date, the banks have not been “keeping the pressure on”. In the 1998 cycle, banks ended up sending many E&Ps under, taking the assets themselves, and 3 to 4 years later we had renamed assets being IPO’d.

  29. 29
    bill Says:

    so what s does hardball mean

    forcing a sale of assets

    if yes, who would be the buyers

  30. 30
    zman Says:

    NFX:

    Woodford shale: cost per well $5.5 to $6.0mm. Recall they are 90% held by production. Just pad drilling, no rush at these prices.

    Hardball: acceleration of repayment when you know someone can’t pay. As opposed to loosening the credit covenants. Sounds like their bank is getting impatient on gas prices.

  31. 31
    zman Says:

    NG off 9 cents, 10 minutes to storage, should be a size pop in gas prices if we come in 45 Bcf or less on the injection.

  32. 32
    BirdsofpreyRcool Says:

    hey! was on a marathon mini-mini-microcap E&P call this morning. Good stuff. Anway, Head Trader just weighed in… give me a sec to organize his thoughts…

  33. 33
    reefguy Says:

    29-APC,SM,ECA as they are JV partners in the Eaglerord with them

  34. 34
    zman Says:

    Targets of opportunity for me on such a pop:

    CHK, HK, SWN, CRK

  35. 35
    BirdsofpreyRcool Says:

    TechTrader is BACK… says LOD = right about now. Will rally from here to 2:45 EDT.

  36. 36
    zman Says:

    Reef – yep, they’re a goner. Wonder if Hacket called the banker and said “I got an idea”

  37. 37
    zman Says:

    NFX Notes:

    Woodford 240 MMcfepd gross, 58% as of now, so about 140 MMcfepd net production. This is flattish right now, can crank later in the year as needed to maintain and then late year to grow the region.

  38. 38
    BirdsofpreyRcool Says:

    HeadTrader won’t fill in the blank from 2:45 thru EOD… says “end of days are crapshoots for the time being…” and “too many people playing for eps calls and crap”

  39. 39
    zman Says:

    Thanks BOP!

    How are credit markets hanging here?

  40. 40
    zman Says:

    Help me out here, who is CLSA and does anyone have a copy or a brief of their note on HK?

    Also, like to see the SMH note there if anyone has it. Thanks.

  41. 41
    zman Says:

    NFX call over, nutshell, good story stays the same. No reason to think it runs like a scalded cat from here and it has had a good run. Analysts will toy with their models and in a benign market for oil, gas and stocks, I could see it drifting towards the low $30s but it has had a nice move. Despite being cheap (they are always cheap_ it will be subject to some profit taking in that range. May add a little soon on weakness.

  42. 42
    zman Says:

    46 Bcf, pretty in line, gas down a dime and initially falling on the number.

  43. 43
    BirdsofpreyRcool Says:

    Credit Market a bit stronger this morning… after some amazing volatility yesterday and the day before. Point being, tho, that real investors are buying single names… so, the improvement in overall spreads (and company borrowing rates) is not necessarily reflected in the indices. That said, the indices are still worth watching, as they are the playground for the Credit Bears.

    Credit Bears on the sidelines for now. They are worried about a break above 850 SPX, but will start to pile on with a break below 815. However — for now — Bears are more worried about the SPX moving to 950. At that point, they intend to take their next giant paw swipe at the market.

  44. 44
    bill Says:

    ng at 3.39 on a + 46

  45. 45
    BirdsofpreyRcool Says:

    To pin some numbers on the comments —

    IG 183 -4bps from yesterday’s close

    HY 74.5 +0.25

  46. 46
    zman Says:

    DO opened up $4+, now up $0.75, could not listen to call, think it bounces with some stability in gas prices and the market.

    Thanks again BOP. Did you see TXCO getting their arms twisted off?

  47. 47
    zman Says:

    CNBC comment that traders are eying the $3 level on natural gas from a technical standpoint. My thought is I’d rather be a hedged producer than someone dependent on activity picking up at that sort of a gas price.

  48. 48
    zman Says:

    My other comment would be that when everyone expects a price to go to a certain level it often does not.

  49. 49
    BirdsofpreyRcool Says:

    TXCO — i talk to a firm who covers them on a non-formal basis… they told me to stay away. So i have. Said there was going to be “issues with their lender.” Therefore, not informed there.

    But i see there are “issues with their lender” announced today. oops.

    Want me to look further?

  50. 50
    Sambone Says:

    By Steve Gelsi

    Energy stocks were higher in early action on Thursday as investors eyed
    earnings updates from ConocoPhillips, Occidental Petroleum and National Oilwell
    Varco.
    Higher crude prices provided a lift, as futures rose 71 cents to $49.56. The
    Amex Oil Index (XOI) was up 1.9% to 853. Leading components Exxon Mobil (XOM)
    and Chevron (CVX) rose 0.3% and 1.3% respectively.
    The Amex Natural Gas Index (XNG) advanced 1.2%.to 374.
    The Philadelphia Oil Service Index (OSXX) gained 1.4% to 149.
    ConocoPhillips (COP) rose 4.4% to $39.73 after posting lower profit while
    boosting production.
    Occidental Petroleum (OXY) was off 1.2% to $54.88 after reporting an 80% drop
    in first-quarter earnings.
    National Oilwell Varco (NOV) fell 11% to $29.30 after a drop in backlog raised
    some eyebrows on Wall Street.
    Diamond Offshore (DO) rose 1.9% to $72.50. The company said first-quarter net
    income rose to $349 million, or $2.51 a share, from $290.5 million, or $2.09 a
    share, in the year-ago period. Revenue rose to $886 million from $786 million.
    Diamond beat the target of $2.24 a share, according to a survey of analysts by
    Factset Research.
    Ensco International (ESV) shares jumped 2.5% to $32.68. The Dallas
    oil-services provider, said first-quarter net income fell 19% on 9.6% lower
    revenue. Net income was $222.1 million against $273.7 million in the
    year-earlier period.
    Profit attributable to Ensco was $220.7 million, or $1.56 a share, compared
    with $272 million, or $1.88. Revenue fell to $514.1 million from $568.5
    million. Analysts expected a profit of $1.52 a share on sales of $516.8
    million.

    -Steve Gelsi
    Dow Jones Newswires
    04-23-09 1043ET

  51. 51
    zman Says:

    NOV getting creamed, will look at replay there as well. Back in the day when I worked on the sellside, we joked about setting up a system for companies in the same industry to keep calls from overlapping each other. They seem to cluster on days with the calls close to the open.

  52. 52
    bill Says:

    * CHESAPEAKE AGREES TO FARM OUT ALABAMA SHALE ACREAGE TO ENERGEN

    Effective April 1, 2009, Chesapeake Energy Corporation has agreed to farm out its half-interest in approximately 660,000 acres in Alabama shales to Energen Resources. Under terms of the agreement, Energen Resources has 18 months to drill one Conasauga shale well and one Chattanooga shale well; after each well is drilled, Chesapeake will farm out its 50 percent leasehold interest in each shale to Energen Resources.

    Chesapeake will retain a net overriding royalty interest of approximately 1 – 2.5 percent convertible to a proportionately reduced working interest of 25 percent (net 12.5 percent) at 125 percent payout on a well-by-well basis. This will result in an after-payout working interest to Energen Resources of approximately 87.5 percent. Energen Resources plans to drill two wells within the terms of the agreement. The independent producer also plans to pursue a new partner as it seeks to unlock the potential of the Conasauga and Chattanooga shales in Alabama.

  53. 53
    kyleandy Says:

    TXCO recovering some wondering why??

  54. 54
    zman Says:

    BOP – re TXCO, not for me from a debt perspective, probably ought to work up an NAV to see if they go high or low to current price, clock is ticking for them.

  55. 55
    zman Says:

    ECA targets raised slightly at BMO and RJ after yesterday’s numbers, announcements on the Haynesville.

  56. 56
    MMarkkk Says:

    CHK Alabama Shale Farm out means this play is a bottom feeder! CHK doesn’t give up that much acreage for such a low leverage deal. Hope Energen can make a go of it but most insiders in the shale biz are not excited about it right now. In fact, they weren’t excited when NG was at $9.

  57. 57
    Garyinhou Says:

    fwiw.. taking a chance on some NOV Jun 32’s

  58. 58
    Sambone Says:

    Chris Pikul
    April 23 (Reuters) – TXCO Resources Inc TXCO:
    * Morgan Keegan’s Chris Pikul says TXCO Resources Inc TXCO faces rising
    risk of bankruptcy
    * Morgan Keegan’s Pikul says TXCO TXCO investors need to be aware of
    increasing risk on equity side despite Eagleford value
    * Morgan Keegan’s Pikul says if banks foreclose on their assets, TXCO TXCO
    would file chapter 11 to protect shareholders
    * Morgan Keegan’s Pikul says there may still be some value for TXCO TXCO
    investors even within the confines of chapter 11

    Thu Apr 23 14:47:56 2009

  59. 59
    jat Says:

    Been listening on/off to NOV, still staying away at the current price. Love the company, great mgmt team but people are obviously returning to a focus on new orders vs. earnings beats and PBR promises, which is what helped the stock last Q after a CAM reduced guidance earnings miss. NOV now saying they’ll reach the target 3-4bln with luck, and I think it’ll need to be some luck given that new orders were 240mln and book/build crashed. Mgmt said that there was one drillship order that they almost booked in the quarter, which would (IMO) probably helped out this number by a few hundred million, but obviously (IMO) people need to reevaluate now how the new order growth will look and how you should treat Rig Tech cash flow in terms of sustainability.

  60. 60
    bill Says:

    i think they will file chap 11

    txco will fall to 20 cents

    im not smart enough to predict what happens then

  61. 61
    Jay Reynolds Says:

    HS Caddo Parish Lease Bonus – calling further seeing $2,500/ac in the NW part of the parish, very large block, no Vertical Pugh Clause (in the offer to farm-in)..

  62. 62
    bill Says:

    cop cc call says differentials closed in q1

  63. 63
    zman Says:

    Thanks Jat, am going to listen to the NOV replay later … hmmm, so misses in service are ok but beats are turning bad. double hmmm. HAL looking weaker. Wonder when CLB turns lower.

    Hard to get excited about much today following the gas number, glad I held off on gas adds.

    Thanks Jay.

  64. 64
    zman Says:

    Re 62 – saw that in the numbers in NAM, CLR should benefit from the Bakken closure of wellhead to NYMEX which was substantial.

  65. 65
    zman Says:

    Mark – thanks for the flyby, agreed, not a big banger of a play.

  66. 66
    zman Says:

    Wyoming – when you get a chance, any thoughts on pressure pumping price direction from here. I thought I heard NFX say that it has bottomed and that other stuff, like proppant still has a ways to fall.

    Yesterday I listened to a couple of IPAA presenters say they can get any kind of sand whenever they want it now.

  67. 67
    wcoaster Says:

    Hi, lurker here. Can anyone point me to a catalyst for XCO’s outperformance today? Their credit was reaffirmed a few days ago, so it must be something else. Are they presenting this AM?
    Thanks!

  68. 68
    zman Says:

    Wcoaster – welcome. A lot of these middle tier names are being pushed about on lowish volume. They filed a proxy this morning for their annual but that’s not likely it. I don’t see a broker comment but it could be a firm I don’t have access to. That name is an interesting one but I don’t see the linkage to someone else talking about the Marcellus or some such which is what you would expect to move them high single digits. That one has been rumored to be going private or taken out for a time so it could just be more of those rumors, will dig a bit and get back if I find anything.

  69. 69
    kyleandy Says:

    Bop – any new thoughts from tech trader. want to sell some SLB calls, but he’s been so right in the past am holding back

  70. 70
    wcoaster Says:

    Z – thanks for your XCO thoughts. Most unexplainable moves seem to be to the downside, but I don’t see big volume, so maybe some fund is picking it up.

  71. 71
    BirdsofpreyRcool Says:

    kyleandy — funny, I was just thinking about his comments. He only makes a technical call once a way, pre-mrkt. His caveat is always that eco-data and other headlines throughout the day can mess with his predictive model. He thought the LOD would be around 10:15-10:30 EDT. But, we got weak Existing Home Sales at 10am, so that might have thrown everything off base.

    Will check with Head Trader to see if he has any “feel” for this mrkt (HT is still feeling chagrinned at his call on Tuesday to “sell the open”… but he is usually NOT that dead-wrong [as he put it])

  72. 72
    zman Says:

    WC – I’d point out GMXR which ran the day after their IPAA release and a day after their pr which had no real hard news in it. Seeing this “bottoming action” a lot of late. Some of it is noise, some of it is as you suggest, fund accumulation. Of course, one fund’s buy idea is an opportunity for another to sell, see GMXR today.

  73. 73
    zman Says:

    And to add to 72, watching GMXR and CRK drift lower and thinking want to add in next two weeks.

  74. 74
    BirdsofpreyRcool Says:

    kyleandy — Head Trader is watching the SPX futures. He is in “breath-holding-mode” and cautions “patience.” Says he would be a buyer if futures break above 835 and a seller if they break below the LOD — 831.50 — he would be a seller.

  75. 75
    BirdsofpreyRcool Says:

    HT says we are thru the 835 now… but is waiting for confirmation… whatever that means…

  76. 76
    zman Says:

    NG watching the market at this point. Feeling there is, weak demand is normal for this time of year (little heating demand except in the west, little AC load anywhere), weaker demand now due to industrial and electrical being light to last year due to the economy, but it could have been a lot worse. Gas may go lower but it will likely not stay down there very long. We are obviously going to get very full via domestic production this year. That does not leave a lot of room for LNG to flood the U.S. market.

  77. 77
    zman Says:

    BOP – comments there much appreciated.

  78. 78
    zman Says:

    UBS raises NFX target to 41 from 38.

  79. 79
    BirdsofpreyRcool Says:

    kyleandy — to fully understand Head Trader… you need to know what he is reading this morning. This article caught his attention. It is a real headline from Bloomberg and shows up on the “most read” list.

    *STAR CRUISES APPOINTS AU FOOK YEW AS INDEPENDENT DIRECTOR
    2009-04-23 09:27:47.344 GMT

  80. 80
    BirdsofpreyRcool Says:

    HT on the box saying “looks good to me again”… but also “fingers crossed…”

  81. 81
    zman Says:

    HK volume again pm the minute chart, someone is impatient

  82. 82
    zman Says:

    ZTRADE:

    Added to the May $24 HK Calls (HKEO) for $0.60 with the stock at $21.80.

  83. 83
    kyleandy Says:

    bop thks that headline describes my long production companies, short service companies position.

  84. 84
    BirdsofpreyRcool Says:

    kyleandy — LOL!

    (sorry… but that was funny…)

  85. 85
    Sambone Says:

    Buddy of mine sent me this.

    ConocoPhilips reported 1Q09 revenues = $30.7 billion, down 44% YOY but better than $24.5 billion expected. 1Q09 EPS = $0.56, down 79% YOY but better than $0.42 expected.

    Lower oil and natural gas prices negatively impacted prices, while lower refining throughput hurt refining results. Apparently, however, the Street’s views were far too pessimistic.

    US crude oil production was down 1.4% YOY, to 346,000 bpd. US avg prices realized was $40.60 per barrel in 1Q09, down 57% YOY (was $94.02 per barrel in 1Q08).

    US natural gas production was down 2.7% YOY, to 2.1 billion cubic feet per day. US avg price realized was $3.82 per mcf in 1Q09, down 50% YOY (was $7.63 in 1Q08).

    International crude oil production was up 23% YOY, to 555,000 bpd, vs 452,000 bpd posted in 1Q08. The increase came from new projects in Indonesia, Vietnam, Canada and Russia, that last two from its equity affiliates in Canadian Oil Sands and Lukoil, respectively. Int’l avg price realized was $42.17 per barrel, down 54% YOY (was $91.96 per barrel in 1Q08).

    International natural gas production was up 4.6% YOY, to 2.9 billion cubic feet per day. Almost all of the production gains came from Indonesian operations, where nat gas production grew 135 million cf/d YOY. Int’l nat gas price realized was $5.76 per mcf, down 31% YOY (was $8.32 per mcf in 1Q08).

    Total 1Q09 E&P earnings = $700 million, down 76% YOY, and down from $1.4 billion of adjusted earnings in 4Q08. The continued fall of oil and gas prices, obviously, more than offset higher production.

    Refinery throughput was 2.3 million bpd in 1Q09, down 14% YOY. Company-wide refinery utlization was 81% in 1Q09. US refining margins = $7.55/bbl in 1Q09, vs $6.96/bbl in 1Q08. Int’l refining margins = $6.23/bbl in 1Q09, vs $8.31/bbl in 4Q08.

    Total 1Q09 R&M earnings = $205 million, down 61% YOY and down from $289 million in 4Q08.

    See slides 13 and 14 from attached for discussion of E&P and R&M income per BOE trands going back to 2003.

    For full-year 2009, COP expects to post slightly higher production on combined crude and nat gas than 2008. Management expects higher refinery utilization in 2Q, to upper 80% range. US refineries will operate in lower 90% range, while international utilization will be in lower 80% due to planned maintenance.

    For full-year 2009 capex, management sees no change in its $12.5 billion plans. However, to fund the $3.1 billion spent on capex in 1Q09, COP had to raise $1.9 billion in LT debt, since 1Q09 operating cash flows only came to $1.9 billion and dividend expense was $696 million.

    This left COP’s LT debt balance at quarter-end at $29.4 billion, or 34% of capital. Management’s preferred range for debt-to-capital is 20% to 25%. This ratio may in fact get worse before it gets better, as management noted that it will look to access the debt markets again in 2Q or 3Q to fund capex.

    COP ended the quarter at $802 million. See slide 5 for 1Q09 cash flow breakdown.

    The stock is currently trading at 13.5x the 2009 EPS consensus. Value Line’s historical average for COP is 9.5x. Using the 2010 EPS estimates at $5.55, the forward PE moves down to 7.0x. Presumably, these 2010 EPS estimates are assuming higher crude and nat gas prices next year, at around $75/bbl and $5.00 mmBTU respectively. Using 9.5x on the 2010 EPS estimate gives us a target price = $52.73.

    Peak EPS for COP was for 2008 (big surprise) at $10.66. Using the 9.5x Value Line avg on this peak EPS, the stock’s upside potential is to $101, should crude and nat gas prices return to last year’s average.

    The stock continues to hug its 50-day moving average, at $39.29. The 200-day moving average is $56.57, which is close to the 2010 target price noted above.

  86. 86
    choices Says:

    I did see this mentioned today:

    LINN Energy, LLC (Nasdaq:LINE) announced today a cash distribution for the first fiscal quarter of 2009 of $0.63 per unit, or $2.52 per unit on an annualized basis, for all of its outstanding units. The distribution will be payable on May 14, 2009 to unitholders of record at the close of business on May 6, 2009.

    Units of record date of 6 May prob means ex-div date of 4 May or thereabouts.

  87. 87
    zman Says:

    Thanks Choices. No surprise there. That distribution is a safe one. Long lived assets mean slow rate of decline, they historically keep a high distributable cash flow to distribution ratio compared to their peers, that will contract if prices stay down here and they just keep the 100% hedges on and don’t make an effort in 2010 to hold production flat but let it eake lower. But that being said, they should be able to maintain this level of distribution plus a close to maintenance level capex program plus service the debt load through 2010, then they probably would have to think about taking the distribution down slightly in 2011. If prices start to rise however, they can monetize a portion of the hedges and bump capex up. Either way, safe, stable program there.

  88. 88
    zman Says:

    Gary – that’s probably going to be a nice bottom fish trade for you on NOV, I just have been away from the name for awhile, it takes me longer to get back where I want to be to buy in and with the call overlapping, I let it slip. Will read transcript and make my call there tomorrow.

    Brilliant weather here in the South, mid to high 80s which will cause people to start to use their air conditioning very soon.

  89. 89
    zman Says:

    NE call in 10 minutes.

  90. 90
    zman Says:

    I get no endorsement fee for this I promise but if you listen to a lot of conference calls the Sennheiser wireless head phones are worth the price. Day two, crystal clear, 120 range advertised, works through walls and the next best thing to installing a urinal next to your desk.

  91. 91
    zman Says:

    NFX running without me, had hoped for a pullback there after the call, was too chintzy with my bid, will stay patient there.

  92. 92
    elduque Says:

    BOP- I have been lugging some Canroys for yield. Thinking that I should probably own some high yield energy bonds. Would you be kind enuf to send me some suggestions. I know the board went thru this topic a couple of months ago.

    I am long both SD and CHK common and really wouldn’t want to duplicate those names.

    Thank you

  93. 93
    bill Says:

    line up 59 cents on the news

    nice to see a trade play out according to plan

  94. 94
    zman Says:

    Bill – agreed. In a commodity price it will lag until they unhedge (if they do) but they should have convinced people that their yield, unlikely other MLP’s is safe in this low price, low investment environment.

  95. 95
    jat Says:

    NE 1:00 CT, 2:00 EST.

  96. 96
    zman Says:

    jat – thanks, apparently I can’t tell time, NE call in 1 hour

  97. 97
    Garyinhou Says:

    hopefully so re: NOV great weather in Houston today too… great tix to Astros / Dodgers tonight to boot

  98. 98
    etswd Says:

    any comments on cvx or xom 1st qtrs, they seem to have gotten lost in this last rally. hanging @ 64-65

  99. 99
    BirdsofpreyRcool Says:

    elduque — here’s a name that crossed my desk this morning, WLL. Not one I follow, personally, but it’s on the oily-side and trades cheap to e&p’s with similar ratings. Also, it’s a B1 / BB- rated bond, so it’s only a “mid-risk” junk bond.

    z — do you follow these guys? I hear mixed review of management… but no one’s perfect.

    Anyway, there are $250mm of 7.0% notes. They are non-call and issued (originally) by LEH, JPMo, and Merrill. So, you can go to BAC or JPM to get a quote, I would think. I see them offered at a few smaller shops around 84 for a yield of 11.45% That compares very well to similarly-rated FST (10.1%) and EAC (10.7%) bonds. CUSIP 966387AE2.

    I have a report I can send you, if you’re interested.

    I’ll look around for others.

    One i REALLY like are the SGU bonds… an MLP that is a survivor in the heating oil distribution space (disclosure: I own the stock). If you can find their 10.25% Senior Notes due 2/13 offered around 87 for a YTW of 14.8% BUY THEM. They are totally mis-priced and mis-rated bonds at CCC (S&P) / B+ (Fitch). I see them kicked around sometimes… not often, but worth the search. CUSIP 85512QAE4

  100. 100
    zman Says:

    ETS – Not feeling like much of a value add there as to the quarters at present. Tough time for refining margins this summer given inventories, chemicals seeing weak demand, if I had to pick one of the big three it would be COP for a rebound in NAM natural gas as their exposure is large.

  101. 101
    zman Says:

    BOP – yes, I’ve played them a few times, never tracked closely, I like management’s style but don’t know them. They work better in a higher oil price environment (I know, really, no kidding Z?!), have had good success in around Parshall part of Bakken with super long laterals (1 well 2 sections drained is theory) also many dual and some tri lateral wells with to good effect. Not super up on them at momemnt, should also be big beneficiary of the differential contraction up there. They have other ops outside the Williston but that’s the sexy part of the story. Thought their IPAA was overlong, much like BEXP’s but their story is 10x more solid.

  102. 102
    zman Says:

    Thanks BOP for pointing out CLSA is part of Calyon, did you see the analyst’s name there?

  103. 103
    zman Says:

    Eld – check your email, present from BOP.

  104. 104
    zman Says:

    Has the POTUS announced his credit card solution yet?

  105. 105
    BirdsofpreyRcool Says:

    z — didn’t look. 😉

  106. 106
    BirdsofpreyRcool Says:

    z — #105 is a response to #102

  107. 107
    BirdsofpreyRcool Says:

    z – #101. Thanks for the colour on WLL. One thing I will add is that a good bond to buy is not necessarily issued by a company with a good stock to buy. Stock going up is always good for bonds… but, cash flow and flexibility and downside protection is better. WLL can cut back on spending and still produce enough cash flow to keep their bondholders happy. Stock wouldn’t like it much, but bonds would be money-good.

  108. 108
    zman Says:

    The sun is shining, the birds are singing, and oil service is ever so slightly retreating.

  109. 109
    zman Says:

    Well, whatever the Calyon analyst’s name is, he seems to have some pull with the mid cap E&P names.

    HK at $22.33, resistance just above using Tater’s old 22.65 level.

  110. 110
    elduque Says:

    Got it.

    Many thanks.

  111. 111
    choices Says:

    I have no idea who this guy is but he likes $48 level for crude support-FWIW.

    http://www.321energy.com/editorials/chaize/chaize042509.html

  112. 112
    BirdsofpreyRcool Says:

    [from their website] A renowned presence in Asia-Pacific markets

    CLSA serves its clients from its headquarters in Hong Kong. More than 1,500 dedicated professionals are located in 13 Asian cities, plus Dubai, London, Port Louis (Mauritius) and New York. In Asia CLSA is located in Bangkok, Beijing, Jakarta, Kuala Lumpur, Manila, Mumbai, Seoul, Shanghai, Shenzhen, Singapore, Taipei and Tokyo.

    CLSA’s client-focused approach is supported by its comprehensive network across Asia and international financial centres. About 60% of clients are based in the US, UK and Europe with the balance in Asia.

    CLSA was founded in 1986 by Gary Coull and Jim Walker. These two former journalists understood the value of high quality and well researched information. Driven by innovative and unbiased research of Asia’s leading small-mid cap companies and markets, the CLSA model has demonstrated a demand by global investors for unique market insights.

  113. 113
    BirdsofpreyRcool Says:

    CLSA/Calyon… still can’t see who their energy analyst is, tho.

  114. 114
    kyleandy Says:

    bop cud u pls send me what u sent el duq. am5153@msn.com
    thks

  115. 115
    zman Says:

    POTUS to speak on credit cards shortly.

  116. 116
    BirdsofpreyRcool Says:

    kyleandy — consider it done.

  117. 117
    BirdsofpreyRcool Says:

    If anyone else wants a good “shopping list” for energy bonds, just email z. I sent him the report. The bond prices are a bit stale (from April 6th), but we can get fresh quotes for any bond you might be interested in.

  118. 118
    zman Says:

    NE call in 5 minutes.

  119. 119
    bill Says:

    >FOOK YEW

    seems like this guys is on a number of boards

  120. 120
    bill Says:

    i wish the potus would ask fenway park to reduce the cost of beer and hot dogs for this seasons games

  121. 121
    BirdsofpreyRcool Says:

    bill — keep ’em coming… u r foony!

  122. 122
    zman Says:

    VTZ – any thoughts on SU aside from the fact that they did well on the quarter?

    NE call starting now.

  123. 123
    zman Says:

    NE slipping a newbuild rig back 4 months from late 09 to April 10.

  124. 124
    zman Says:

    NE – not yet seeing labor rates come down

  125. 125
    BirdsofpreyRcool Says:

    Energy Bond List — if anyone has any questions about how to use that list, please ask. Other people may want to know the same thing. The report was meant for an institutional audience, so there are some massive assumptions about using/understanding the terminology.

  126. 126
    zman Says:

    NE – they’re running through the cost control efforts; as per the post they did a very good job on control and cutting costs.

    Fleet Status report release later today:

  127. 127
    zman Says:

    NE – lots of moving pieces, not going to bite today. Q&A starting.

  128. 128
    zman Says:

    Mimster- did I cover your question from last night re KWK?

    VTZ – did I cover ECA question? Any more question from the Haynesville angle there?

  129. 129
    zman Says:

    Been bidding a little more HK, stock is still below where they announced the operations update, hitting on all cylinders, yada, yada.

  130. 130
    zman Says:

    Wow, boring action into the close.

  131. 131
    ram Says:

    21.50 seems to be a mini battle ground for HK – short term support?

  132. 132
    choices Says:

    Z-you nailed it on EOG and LINE.

    Thanks.

  133. 133
    elduque Says:

    In case you haven’t noticed $dollar is actually coming off a little.

  134. 134
    zman Says:

    Ram – yeah, I think so but I’m no TA wizard.

    Choices – wish I had listened to self on the EOG, not in again yet. The LINE is a long term thing.

  135. 135
    zman Says:

    Thanks Eld – started softening last night, more today, oil certainly noticed it.

  136. 136
    tater Says:

    Thanks BOP to your tech trader. Had to run out this morning so I took my small profits. Looks to have been the right decision. Much appreciated.

  137. 137
    choices Says:

    Eld-I’m watching the USD against Can $-it is coming down to 1.20, currently 1.2238-tested 1.20 mid-april and bounced strongly up to 1.2550-if it breaks 1.20, it could be a good thing for crude.

  138. 138
    BirdsofpreyRcool Says:

    tater — love your charts and TA. So, glad to be of any help in return. TT and HT are not always right (who is?). But, they seem to be more right than wrong.

  139. 139
    BirdsofpreyRcool Says:

    End of Day WRAP-UP

    Levels

    – SPX rose 8pts to 852 (we went out at highs of the session)

    – Credit rallied in lockstep w/stocks into the close; HY12 moving up 5/8pt to 74.5/74.75; IG12 181/183 (~3bps tighter)

    – Commodities: energy products are weighing on the complex, esp natgas which is off nearly 4% post inventory data; crude settled near intraday highs at a shade under $50/bbl.. the rest of the CRB commods index acted well, most notably the precious metals (spot gold back above $900/oz) and the soft commodities / grains..

    – Baltic Dry Index jumps 1.5%, its ninth straight advance..

    Overview

    Stocks stage strong rally into the bell, led higher by financials; no single reason behind the catalyst it seems (a bunch of headlines hit late in trading today but none of them are all that great). A lot of talk/anticipation ahead of the bank stress tests (we will get the criteria tomorrow) and some are relieved that the Obama/White House press conf following today’s credit card meeting didn’t produce any nasty headlines (as far as new regulations, etc). SP500 “held” the 840 level today for the most part (briefly traded below earlier today)…..860 remains the level to watch on the upside. Credit rallied in lockstep w/stocks into the close; HY12 moving up 5/8pt to 74.5/74.75; IG12 181/183 (~3bps tighter)

    Afternoon Headlines

    · The Fed released its year-end ’08 financial statements; the biggest takeaway being talked about are some of the loss figures being disclosed in three LLCs it assumed last year. http://www.federalreserve.gov/newsevents/press/other/20090423a.htm

    · STI – S&P downgraded SunTrust 3 notches after the bank’s earnings this morning; “The downgrade of SunTrust’s ratings resulted from the significant credit costs embedded within its loans, in particular its large commercial and residential real estate portfolios. These costs have climbed materially over the past year and, in Moody’s assessment, will remain elevated in the near-term”; S&P also downgraded FHN late this afternoon

    · BAC options see high activity amid speculation the co could embark on a pref/common swap (similar to Citi) according to a Bloomberg aticle (which cited Credit Suisse); the article noted that options trading appears to be forecasting a rise in the cost to borrow BAC shrs.

    · Banks – A draft quarterly report from the Financial Stability Oversight Board, made up of officials at the Federal Reserve and Treasury Department, said today that the gov’t may end up acquiring a significant ownership stake in banks as part of its efforts to stabilize the financial system.

    · GM announced it will reduce its output in Q2-3 – the company said it would cut approx. 190K vehicles will be removed from GM’s NA production schedule in the second and early third quarter of this year.

    · Chrysler on the NYT – “U.S. Is Said to Prepare Filing for Chrysler Bankruptcy ” as soon as next week…..has agreement in principle w/UAW..Fiat would finalize deal under bankruptcy http://www.nytimes.com/2009/04/24/business/24chrysler.html?_r=1&hp=&pagewanted=print

    · 5yr TIPS auction – demand at the $8B auction today (@ 1pmET) was stronger than the last auction; the notes priced to yield 1.278% – Bloomberg

    · The IMF’s Strauss-Kahn said in a speech in Washington that more must be done to unclog credit and cleanse banks’ balance sheets because efforts thus far have tended been “slow and piecemeal.” Bloomberg

    · Credit Cards – the industry’s top execs met w/the president today @ the White House; Obama held a press conf following the meeting and overall his comments were pretty benign as far as the market was concerned (nothing that hasn’t been talked about in the press over the last few days and nothing that wasn’t in the Frank/House bill that passed Wed).

    Catalysts

    · Bank stress tests: the Fed/Treasury have said they will release Fri the criteria being used for the tests (recall the WSJ has leaked some of the test terms in the last few days: banks would have to calculate two-year losses of up to 8.5% on their first-lien mortgage portfolios, 11% on home-equity lines of credit, 8% on commercial and industrial loans, 12% on commercial real-estate loans and 20% on credit-card portfolios; Reuters has reported that regulators are targeting a 3% TCE for banks after the tests). Also tomorrow – bank execs will meet w/Fed officials (the meetings will take place in the Fed regional offices closest to the bank HQ) to discuss the stress tests; banks will then have until Tues Apr 28 to dispute the test findings (NYT); Federal officials are preparing to disclose the final results to the public on May 4, and they expect to rely on the banks to release findings specific to their institution.

    · Economics for Fri: durable goods @ 8:30amET and new home sales @ 10amET.

    · Geithner hosting a G7 finance ministers meeting in Washington Fri Apr 24; he will hold a press conf after the close @ 4:30pmET

    · Major tech earnings for Thurs night: AMZN, ATHR, DDUP, EXTR, INFA, JNPR, KLAC, LSCC, MSCC, MSFT, NFLX, PMCS, RVBD, STAR, SWKS, SYNA, WDC, WFR

    · Financials for Thurs night: AXP major name to watch

    · Basic Industry earnings for Thurs night: BUCY, GDI, MHK, BLDR, BNI, CNW, YRCW, EMN, NCX, MTX, CF

    · Major earnings reports to watch for Fri morning: Volvo, MMM, HON, ITT, KMT, SWK, SAIA, F

    · Stress tests – the Fed to release stress test results for individual banks on May 4…..the announcement on that day may also include plans to raise capital to the extent such a move is needed. Fed to release this Fri Apr 24 the specific stress tests/criteria, etc (i.e. how each bank is being tested); the WSJ reported that each individual bank will get its stress test results this Friday as well (although they won’t be made public). Bank execs will meet w/Fed officials this Friday (at their respective Fed regional office) to discuss the stress tests; banks will have until Tues Apr 28 to dispute the test findings (NYT)

    · Short Interest for the front-half of April will be released Friday (Apr. 24th) after the close.

    · TALF – the NY Fed schedules the next Fed operation; the facility will open on May 5. http://www.newyorkfed.org/markets/TALF_operations.html

    · IMF/World Bank meeting this weekend in Washington. Apr 25-26. http://www.imf.org/external/spring/2009/index.htm

    · Obama to hold a prime time news conf Wed Apr 29; Obama will hold a news conference next Wednesday to mark his first 100 days in office (Reuters).

    · Treasury Auctions – a lot of supply coming next week – It will auction $26 billion in seven-year notes on April 29, $35 billion in five-year notes on April 28, $40 billion on two-year notes on April 27th; also – $29 billion in three-month and $28 billion in six-month bills at its weekly auction on April 27. Bloomberg

    · C – Citigroup’s exchange offer – the co announced Fri Apr 17 that “the proposed exchange offer will not be launched until the conclusion of the industry stress tests. Citi also confirmed its intention to continue to pay full dividends on the preferred shares through and until the closing of the public exchange at which point these dividends will be suspended” (Citi press release). On Citi’s conf call Fri morning, the co’s CFO said “I can’t and we cannot currently envision circumstances under which we would change either the implied $3.25 conversion price or the announced tender prices for the preferred stock being sought”

  140. 140
    BirdsofpreyRcool Says:

    Both AMZN and MSFT are trading up in a/h after earnings report… AXP can’t make up it’s mind yet.

  141. 141
    BirdsofpreyRcool Says:

    BNI up on a/h earnings report. Good commodity volume bellweather.

  142. 142
    tater Says:

    Hey Ram, you planted that question in my head about what the 21.50 level in HK might be so I had to go and work on the 60 min chart. My nerd is showing.

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

    Didn’t come up with a sufficient answer, but there does appear to be a distinct channel. Oh well.

  143. 143
    zman Says:

    SD doing a secondary, CEO Ward selling some but not all of the shares he registered the other day.

  144. 144
    john11 Says:

    OKLAHOMA CITY, April 23 /PRNewswire-FirstCall/ — SandRidge Energy, Inc. (NYSE: SD – News) today announced a registered underwritten public offering of 12,200,000 shares of its common stock. In addition, Tom L. Ward, the Company’s Chairman, Chief Executive Officer and President, is offering 3,000,000 shares of common stock.

  145. 145
    john11 Says:

    oops, didn’t see yours Z

  146. 146
    RMD Says:

    Isn’t SD (and PXP before it) another of the co.s who were going to live within their internally generated cash flow? Funny, I thought that meant no stock deals and no new debt.
    I wonder if mgts are really getting worried about the outlook in ’10 as hedges roll off. Just musing…

  147. 147
    zman Says:

    RMD – Um, balancing the capital structure? Getting it done before earnings.

  148. 148
    ram Says:

    Tater – Thank you.

  149. 149
    ram Says:

    Tater – What do you make of SKF at current levels?

    BirdsofpreyRcool – Do you have a relative comparison of what banks have debt wise when you compare residential real estate vs. commercial real estate+credit card balances, i.e 50/50 or 65/35 or ???

  150. 150
    tater Says:

    Ram,
    I’ve mostly been playing the SKF and SDS this week. Dabbled in the HAL and HOG, but got taken out of those quickly. I think that the financials are showing their colors technically so I am going to stay on that. Currently I am looking to re-enter on the short side but not until I see it really begin to turn. I’ve been getting lucky with some things, particularly the Fib turns and retracements, but this next time I think I am going to do a momentum trade. We are due for a pullback, whether you believe it to be corrective or whether you believe it to be a reassertion of the bear. Either way it could be a bigger move and I don’t think that I need to catch all of it to make some cash. Want to play that one big and quick. Just a thought. Would love to hear your thoughts on it.

  151. 151
    PackMan Says:

    Z – #90 – ROTFLMAO at that !

    Tater – way overdue for selloff IMO in market, particularly financials and RE.

    Today EOD last 10-15 minute pump job; juice the financials, juice the market.

    Earnings “beats” decent on low expectations. Economic and company specific news continues to be dismal (like GM and Chrysler pending BKs, Cali problems, foreclosures, credit cards, UPS, etc.). Market ignoring for now; market seems to be GS vs quants; everyone else has gone home.

  152. 152
    bill Says:

    sd pv10 at ye was 2.3 b. Yesterday they said they would take a 1.3 b charge due to commodity prices

    so that implies the 2.3b is now 1.0b

    In early april, investors presentation page 11 of 56 they show pv 10 at 4.3 b using strip prices

    so what is it 1.3 b or 4.3 b??

    Sd seems to be writing off as much as they can so in the future they will have low finding costs

  153. 153
    zman Says:

    Morning Bill

    SEC requires them to use the price, held flat at the point in time of the end of the period (March 31). The Strip pricing is there for “what if” purposes only, can’t use Strip for the ceiling test writedown.

    Its not their choice of whether to write down the reserves or not, it is an accounting rule.

    Also, when looking at this, the bank group does not really look at Debt to Total Cap, its not a banking covenant. It will rise as this charge hits the equity line reducing the denominator and that may cause some trepidation on the part of investors but it has little to no impact on their liquidity.

    Also, the reserves are not gone, they simply don’t meet the test at that point in time. If prices come back those Mcf will be economic once again.

  154. 154
    bill Says:

    I appreciate your comments. Cash flow should hold up and if prices get back to normal, sd could be a 2 or 3 bagger

    Im a traditionalist,

    I like to see equity on the balance sheet.

    With this charge SD has a negative net worth which means ,as you know, liablities are greater than assets.

    They have all the reserves they used to have, however, given todays ng prices those reserve arent worth as much as they used to be, in fact, so bad, equity is wiped out.

    The ceo is partially cashing out.

    Its getting yucky. What happens if prices dont go back up? Everybody is reporting higher productions numbers even with the drilling cut backs

    The hedges for them and others are winding down.

    Sd has almost doubled from its lows 1 month ago. The fundamentals do not support the recent rally in sd and others shares

    Its disconcerting, imho

  155. 155
    bill Says:

    barclay on yesterdays number

    Investment Conclusion
    Last week’s 46 Bcf storage injection implied weather-adjusted gas oversupply expanded by ~1 bcfpd to 5.3 bcfpd vs. 5-year averages.
    The bearish trend over the past 5 weeks (See Figure 1 for weekly trends) is disappointing given plunging gas rig counts (down 53% from
    the peak), slowing well completions, production shut ins and bullish – but incomplete – January EIA 914 production data. 3 large E&Ps
    have reported strong Q1 production results that have led us to raise ’09 US gas production forecasts. The strong observed company
    production data/trends and bearish injection data lead us to question the thesis that gas markets will recover sooner rather than later.
    The large inventory overhang and rising LNG imports make the need to cut US production intense to avoid a gas-price collapse. We
    estimate the stocks discount a near-doubling in Henry Hub natural gas prices and we expect very little in the way of bullish news in the
    near term. We recommend the purchase of SWN in advance of Q1 results as we believe a capex reduction may be planned but that very
    strong production targets may be reiterated. Among other favored names, we are concerned EOG and DVN may lower capex/
    production targets and – even though capital discipline is required – that the shares may suffer. We continue to recommend the
    purchase of APA and NBL as well.
    Summary
    􀂉 We believe Henry Hub gas prices could fall below $3 and Rockies/Mid continent prices into the $1.50 range if gas markets do not begin
    to materially tighten in the next month or two.
    􀂉 Sharply higher LNG imports remain a threat. The start up of 3-4 bcfpd of new LNG capacity by summer and very weak Asian demand
    has led some to speculate that US imports could rise from ~1 bcfpd in Q1 to more than 5 bcfpd by year end. We believe Atlantic Basin
    LNG suppliers may be willing to produce at prices that could force Rocky Mountain producers to shut in volumes

  156. 156
    zman Says:

    I’m not defending them but you made a comment on their reserves regarding a purposeful writedown that I wanted to clarify. The writedown was expected and you will see everyone who is gassy and a full cost accounting type company have writedowns this quarter. The way mark to market hedge accounting works, hedges are not allowed in the calculations for the ceiling test.

    Not sure what you mean by saying their hedges are rolling off, they are one of the more hedged in 2009 and 2010
    2009: 85% hedged at $9.06,
    2010: 74% hedged at $8.10

    Ward sold 3 mm shares and has 26 mm shares following the deal so I’d say he still has an interest in seeing it go higher.

    Again, not defending, just clarifying.

  157. 157
    zman Says:

    I agree with the thinking on SWN in 155 by the way. I think you are about to see a number of companies talk about just how far they can stretch their capital budgets right now. Not the all caps statement from NFX yesterday about cost reductions NOT BEING REFLECTED in their Capex.

    On the LNG, the prospect is out there for a ramp but international pricing still remains above U.S. pricing and by the time most of the incremental project volumes come to market there will be little room in the U.S. to store said gas.

  158. 158
    bill Says:

    156 points well taken

    barclay made one other comment thats interesting…..

    We continue to believe that E&P companies need to slow capital spending and lower production guidance. However the market will likely
    reward “over-spending” rather than capital discipline in the near term.

  159. 159
    zman Says:

    SLB call about to start.

    Saw SLB comments described by one broker as “more realistic” than the peer commentary quarter to date…have to agree with that. Stock called up $2+

  160. 160
    Meir Ezra genius Says:

    Meir Ezra genius

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