05
Jun
Jobless T.G.I.F.
Jobs Watch: Much better than expected; still ugly but less so. May non-farm payrolls:
- Negative 345,000 vs expectations of 525,000 lost.
- April was revised slightly low
- 9.4% unemployment rate vs expected 9.2%
Housekeeping Watch: Sometimes tabs on the upper left side of the site get a bit dated. It may be that I forget to post the most recent take on something or it may be that I'm taking a hiatus from that subject (as in the case with the refiners and the bulkers of late). If you ever see something that's out of date that you would like to see updated, shoot me a note or comment and I'll get it updated in short order. Thanks, and with that I give you my Friday movie quote:
"Screws fall out all the time, the worlds' an imperfect place."
In Today's Post:
- Holdings Watch
- Commodity Watch
- Natural Gas Storage Review
- Stuff We Care About Today - E&P multiple quick update, GMXR
- WIOWIO - KWK
- Odds & Ends
Holdings Watch:
- $10KP:
- $31,100
- 40% cash (I will be lightening up on June calls soon)
- The Wiki Tab is updated.
- $31,100
- No trades yesterday.
Commodity Watch
Crude oil went ga-ga for Goldman price forecast upgrade yesterday, rising $2.69 to close at $68.81, the highest levels seen since November of 2008. The 12 month strip end the session at $72.67. This morning oil is trading above $70 this morning following the payrolls number.
- IEA Watch: IEA head says: "We haven't seen much of a recovery in demand, so expectation of economic recovery is very high but fundamentals haven't improved so much ... If the economy is not recovering but the price is going up, it makes for a very bad, negative implication." ZComment: The IEA needs an industrial sized bottle of prozac. From week to week they fluctuate between raising the alarm that prices are too low to inspire global oil and gas investment which will lead to a calamatous rise in prices when the global economy recovers and demand picks back up to decrying high prices as something that will hinder global growth and adding that OPEC should produce more to keep prices low.
Natural gas rose $0.04 to close at $3.81, despite a pretty bearish looking and unexpectedly large injection into storage (see next section). This morning gas is trading up 10 to 15 cents as oil surges.
Natural Gas Storage Review - Filling Up Fast
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ZComment: Gas in storage is at record levels for this week of the year. Simply put, we're getting fuller faster than I would have expected due to a combination of continued strong production and weak industrial gas demand. The cumulative build season to date is now 100 Bcf above the five year average as seen below. It will take much warmer than normal weather and perhaps a disruptive storm in the Gulf of Mexico to close this gap any time soon.-
Stuff We Care About Today
E&P Multiple Update: The following charts show the change in consensus cash flow per share (CFPS) estimates for the E&P companies we frequent on the site plus the change in oil and gas 12 month and front month crude strips and in the stock prices themselves over the past month. Notes follow the charts.
Notes to charts above:
- As described in a previous post, analyst estimates are now too low for oil and still too high (but less so) for natural gas if the forward strip is to be believed. I expect oilier names to outperform, in general, as we go into the 2Q earnings driven by positive CFPS revisions which are not yet reflected in estimates.
- The stocks are cheap by historic stands. Long R/P stocks should warrant higher cash flow multiples. Focusing on 2010, as that is the year which most analysts will point to pretty soon, the stocks are for the most part cheaper than on 2009 numbers. The ones that are more expensive are predominantly the ones with smaller hedges, especially on natural gas in 2010.
- Note the estimates on the big caps have not yet filtered through higher than previously expected oil prices just yet...analysts have been raising their oil price decks for 2009 and 2010 but most have been more quiet about it than Goldman was yesterday.
- As far as performance goes, the stocks have not really moved much over the last month as the impact of a mid teens rise in both the front month and 12 month strip for crude has been offset by fits and starts and ultimately a lower 1 month price on natural gas. Kudos to Bill for having the best returning pick with PXP over the last month.
GMXR - Bank Line Redetermination, Hedge Update
- Redetermined at $175 mm vs prior $190 mm. Management repeatedly stated they thought they would be redetermined flat, at $190 mm.
- Hedge Update:
- 2009: 70% of expected gas production hedged at $7.77 (unchanged)
- 2010: 70% hedged at $6.50 (unchanged)
- 2011 and 2012 have added new hedges, small (less than 25% of current production)
- Nutshell: Not great, not disastrous. The redetermination was a bit overdue, I'm sure due to squabbling between management and the bank line group (I'm sure persistent low gas prices spooked the bankers). No mention of a change in activity levels but since they recent did an equity secondary I doubt there should not be a need to trim back levels based on the reduced borrowing base. In short a minor negative that is probably forgotten in a week or two although it is costing them, in the near term, $15 mm of potential flexibility.
Why I Own, What I Own: I plan to do one or two of these each day as a refresher.
KWK - I currently hold the June $10 and $12.50 calls.
- Cheapish, gassy but very well hedged name with deep drilling inventory and long reserve life: At 4.7x P/2009CF and implied value per Mcfe of $3.34 the name is trading on the cheapish side vs history. Taking into account the debt, at 8.2x TEV / '09 EBITDA it is in line with historic measures.
- Lower cost producer: $1.09 per Mcfe on lease operating expense; low cash cost (LOE+G&A+prod. tax) of $1.64 last quarter.
- Production growth of ~ 25% probably "in the bag" due to previously drilled wells, deep inventory
- 3/4's of production is natural gas gas but the produce high BTU content NGLs (about 20% of production) which is good in this low gas price, liquids premium market.
- Strong hedges:
- 2009: 77% of gas hedged at $8.75
- 2010: 48% at $8.17
- 2009: 77% of gas hedged at $8.75
- Long reserve life: over 15 years on 2009 production levels and 2008 reserves (less recent Barnett deal)
- Balance Sheet OK:
- debt to total cap is elevated but not out of control providing a bonus as credit risks continue to ease
- Improved slightly after a recent asset sale
- No debt maturites before 2012
- My plan here is to sell the near month calls soon and revisit the story on the next pullback in the group and to start including this name along with a few other new names for me in my list of "go to" trades.
Odds & Ends
Analyst Watch:
- (BRY) raised to Buy at Goldman
- (ROSE) initiated as Buy at Canaccord
Nicky – in light of the job numbers, do you still feel that SP500 will be a brick wall? Pre open indications are above that level but that can change. If we open above it, do you think that level remains resistance?
June 5th, 2009 at 7:50 amDollar bumping up a bit post jobs is now sapping strength from crude and NG. Its not that big a rally in the dollar so unless that really picks up I would expect crude to return to tracking the SP after a morning bout of profit taking.
Art Cashin on CNBC made a good point about these end of day rallies. Said he thought fund managers are worried about a quarter in which they sat on the sidelines and now have little to show for it whereas the indexes will show big gains. He says a lot of them are holding there nose as they don’t believe in the rally but are forced to buy, bidding and failing to buy all day and then just taking the ask near the close. Makes some good sense.
June 5th, 2009 at 7:59 amCNBC saying the unemployment rate, if you count all those who have fallen out of the official count because they have quit looking is now 16.4%. Ouch.
June 5th, 2009 at 8:02 amBy David Bird
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)–Crude oil futures prices climbed above $70 a barrel for
the first time in seven months Friday after May U.S. nonfarm payrolls fell by
less than was expected.
July crude oil, which had dipped into negative territory in the minutes prior
to the report, jumped to a high of $70.32, the highest level since Nov. 5. At
8:37 a.m. EDT, crude was up $1.08 at $69.85 a barrel.
Crude has gained sharply in the past week on predictions from the Organization
of Petroleum Exporting Countries and bankers that oil prices will climb above
$75 a barrel by year end. Goldman Sachs sees prices at $85 by the end of 2009
and at $95 by the end of 2010.
The Labor Department said Friday that nonfarm payrolls fell by 345,000 in May,
compared with a survey consensus of 525,000. April nonfarm payrolls was
504,000, adjusted down from 539,000. Still, the May unemployment rate rose to a
25-year-high of 9.4%, compared with a consensus of 9.2%.
-By David Bird, Dow Jones Newswires
Dow Jones Newswires
June 5th, 2009 at 8:05 am06-05-09 0849ET
Credit Market — picture this… buy-side bond geeks, all other the country, sending instant msgs and bloombergs to each other …. “HOLY COW! IG traded at 116!!”
Bond Desks, on the other hand, are skeptical. “u can argue that a lot is priced into the massive rally that we’ve had… I think next is 130 vs 110”
That is the credit morning update. In a nutshell. Massive massive rally over the last 2 weeks. But a lot of head-shaking and skepticism. This is what “climbing a wall of worry” feels like. Stocks… who knows. They will go up, they will go down. But, ultimately, they will either lead or follow the bond mrkt. Right now, bonds are rallying, albeit, on low volume.
So, i continue to pick a few stocks to watch and try to buy them on down-days at a price i am comfortable buying-and-holding. For more than a week, anyway. It’s a start.
IG 119 1/2 wider, off the morning tights
HY 84 3/8 inching back to the 85-comfort level
June 5th, 2009 at 8:05 amDollar index back over 80.
June 5th, 2009 at 8:08 am“bond geeks all OVER the country”
fingers just have an agenda of their own, sometimes
June 5th, 2009 at 8:08 amCrude slightly red as dollar advances.
June 5th, 2009 at 8:11 amTechTrader says it’s a “low odds day” so he has his arms crossed and refuses to say any more.
HeadTrader thinks we rally, then sell off, then wishy-washy into close.
“wishy-washy” means we could go either way. Wonder if we will see the mrkts pick a direction in the last hour or 1/2 hour? Wonder if that direction is down? Do PMs want to head into the weekend long?? Does anyone really want to short the mrkt here?? Don’t know. Waiting for the crystal ball to clear. Near-term calls are tough… shoulda bought the Tiffany Crystal Ball (instead of the one from Wal-Mart). My bias is to stay invested, for now. Mrkt will be higher by year end… just unclear what the path will be from now to then. And there’s that GGG…. first healthcare, then cap-and-trade. Big, mrkt-moving stuff.
Friday morning ramblings….
June 5th, 2009 at 8:14 amWasn’t Nicky using a projected number around 956 that she had expected to see? Futures popped immediately to that figure on the fantasy jobs report. (Do economists have a fantasy draft and make trades and stuff in a kind of NY version of real life? Hey, take a trip and stay at a Super 8 just once please).
Once again Nicky, very nice call!
June 5th, 2009 at 8:20 amSummary from the Best Cross-Asset Class Stragegist In the World’s morning commentary —
————————————-
We’ve pointed out that the credit crisis was never about the economy; it was about the debt. With the Chrysler and GM events, the credit market has been signaling that the credit crisis is on the wane and is likely to be reversed.
While the economy is thus not central to the end of the credit crisis, today’s payroll number has given the euphoric buying of credit (that began with Chrysler) a boost after the bond market took a breather for a few days in front of the payroll number. The payroll number further cements the bond market’s view that the crisis is waning. We understand that equity investors do not fully believe this, so we continue to emphasize the themes we’ve had in recent months: protection, asset class plays (i.e. discount junk funds married with stock puts) and sector plays (i.e. beaten-down financials vs. retailers). At some point, stock investors will come around to the view of the credit market, but it may be a volatile summer before that happens.
June 5th, 2009 at 8:22 amYep, got an email saying it was 956. I was referring to her level from a comment Monday and did not realize it had been revised upward by her.
June 5th, 2009 at 8:22 amhttp://online.wsj.com/article/SB124416485187987585.html#mod=todays_us_page_one
June 5th, 2009 at 8:22 amAdditional Commentary. Nobody’s saying it’s all sunshine and gumdrops.
—————————————–
Payrolls were down 345k, compared to the consensus of -520k. After revisions the payroll total was actually a stunning 257k better than expected, which is one of the largest positive surprises that we can remember.
However, the total amount of hours worked fell at a sharper rate. So this is a positive surprise only in that the economy is losing jobs at a slower rate, but the economy has not turned up.
June 5th, 2009 at 8:24 am#2 – one of the brokers that i keep in touch with from the old days told me the other day over lunch that a good thing to watch these days might be stocks at or over $100 a share. Fund managers that have been sitting on their hands flock to these first to put cash to work when they feel like they have to catch the market train that has left the station. Names like IBM, AAPL, POT, XOM – spots were managers can drop large amounts of cash and then show their cash position dropping quickly
June 5th, 2009 at 8:25 amEveryone seems to expect the morning rally to fail and for the market to close lower from commentary I’m reading. I’m with Cashin. They “want” the market higher, I’m staying long but will reduce positions for cash into strength.
Crude green again, frenzied trading.
June 5th, 2009 at 8:27 am1520s — thanks for sharing that. interesting. will watch!
June 5th, 2009 at 8:27 amRe 15 – That’s absolutely true.
June 5th, 2009 at 8:28 ampersonally i’d like to see a huge volume day today – even if we don’t go up a ton – just like to see some folks get off their hands.
June 5th, 2009 at 8:31 amExcellent read on Credit Markets vs Equity action
http://www.capmarkets.com/ViewFile.asp?ID1=118342&ID2=327323293&ssid=1&directory=6571&bm=0&filename=06.05.09_Is_the_Credit_Crisis_Over.pdf
June 5th, 2009 at 8:31 amThe analyst cash flow numbers are suspect at least in the case of pxp.
using your number’s the strip for crude is up 10 bucks in 1 month.
PXP produces over 50,000 b /day so 10 bucks is another half m a day, 15 m per month and 45 m per qtr so cash flow per share should be rising not falling from 6.39 to 5.89 as indicated above.
I sold my pxp to take profits but will get back in on profit taking
Some of the better hedge oil companies like dnr,line, pxp, might have a q2 loss due to the value of their oil hedges being worth less marked to market but we look at cash flow 🙂 not reported earnings
June 5th, 2009 at 8:36 amSome of the Credit Market Euphoria is wearing off… as expected. Will be a useful data point to see where we close today.
IG 120
HY 84 3/8
June 5th, 2009 at 8:39 amHear ya Bill. As we approach quarter end and analysts start marking their estimates to market and re-examining their forward prices we should see the less hedged, oilier names see better boosts to their CFPS estimates. Analysts are still gun shy so I would not expect big ups except for 2Q and maybe 3Q numbers.
June 5th, 2009 at 8:40 amE&Ps largely trading with the equity markets and not crude/NG which are both down again. They will not maintain their gains if the dollar continues to rally and sends crude down a couple of bucks but for now they are holding OK.
June 5th, 2009 at 8:43 amJune 5 (Reuters) – The number of drilling rigs operating
globally fell 3.5 percent in May compared with April, according
to closely watched data from Baker Hughes Inc BHI.
The global rig count fell to 1,983 in May, from 2,055 in
April as drillers, particularly in United States and Canada,
continued to idle rigs in the wake of falling energy demand.
However, the international rig count for May was 993, up 7
from the 986 counted in April. This is the first time the
international rig count has been up this year.
U.S. rig count for May was 918, down 77 from April, the
lowest decline rate since November last year.
Rig count in the U.S. has been hit particularly hard so far
because many wells are drilled with equipment on shorter
contracts and by smaller operators that respond more quickly to
market signals in order to manage their cash and risk.
But over the last few weeks analyst have been turning bullish
on the drillers and oilfield services providers.
Canada rig count for April was down by 2 to 72.
Recently Dahlman Rose upgraded its outlook for the offshore
drillers citing its expectation for increased spending by oil and
gas exploration and production companies.
Deutsche Bank also upgraded few drillers saying improving oil
market conditions and an increase in drilling intensity for oil
should boost demand.
Last month, Citigroup and Morgan Stanley raised their price
targets on U.S.-based oil services companies, including
Halliburton HAL, Schlumberger SLB, and Baker Hughes
BHI citing an anticipated recovery in oilfield fundamentals.
(Reporting by Hezron Selvi in Bangalore, Editing by Dinesh Nair)
Fri Jun 5 13:27:33 2009
June 5th, 2009 at 8:49 amWow. Disregard 24.
June 5th, 2009 at 8:50 amBy David Bird
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)–Crude oil futures prices dropped below $69 a barrel
early Friday after climbing to a seven-month high above $70 a barrel in
response to news that U.S. nonfarm payrolls fell by less in May than was
expected.
“This initial rally in crude looks to have failed,” aided by strength in the
dollar, said Adam Klopfenstein, senior market strategist at Lind-Waldock.
Earlier, dollar weakness helped boost crude futures.
Jim Ritterbusch, president of Ritterbusch and Associates said crude could show
continued strength in coming days, with further gains to $76 in the next few
weeks.
Crude has gained sharply in the past week on predictions from OPEC and bankers
that oil prices will climb above $75 a barrel by year end. Goldman Sachs sees
prices at $85 by the end of 2009 and at $95 by the end of 2010. The bank sees
declining non-OPEC output tightening supply as global oil demand improves amid
an expected economic recovery.
Still, in the U.S., the world’s biggest oil consumer, demand hit its lowest
level in 10 years in the latest week, and inventories remain at extremely high
levels.
The Labor Department said Friday that nonfarm payrolls fell by 345,000 in May,
compared with a consensus of 525,000. April nonfarm payrolls were 504,000,
adjusted down from 539,000. Still, the May unemployment rate rose to a fresh
25-year-high of 9.4%, compared with a consensus of 9.2%.
At 9:17 a.m. EDT, July crude was down 34 cents at $68.47 a barrel, after a
high of $70.32, the most since Nov. 5.
July RBOB gasoline futures were 97 points lower at $1.9524 a gallon, while
July heating oil was down 64 points, at $1.7776 a gallon.
-By David Bird, Dow Jones Newswires (Madalina Iacob contributed to this report.)
Dow Jones Newswires
June 5th, 2009 at 8:50 am06-05-09 0927ET
Credit losing steam with stocks….
IG 123 1/2
HY 83
June 5th, 2009 at 9:13 amBOP – regardless of what equity investors believe, I would just point out that whether they buy or sell SPX today, they get a report which is 41% higher than on March 6.
So looking at equities & bonds, who is leading who?
June 5th, 2009 at 9:14 amoops… HY too low
HY 83 11/16 big difference.
June 5th, 2009 at 9:15 amBOP – #29 refers to #11.
June 5th, 2009 at 9:15 amE&P volumes running a bit high for this time of day, just a sense, not scientific, just scrolling through some names. Looks like a willingness to bottom fish and not sell them off in some sort of a panic.
Oil down a buck, trading calming down there as well. Feels like some profit taking on the dollar rally which after yesterday’s Goldman pump is not to be unexpected.
June 5th, 2009 at 9:16 amTechTrader just uncrossed his arms… says 66/34 odds for a positive close.
just fyi
June 5th, 2009 at 9:18 amHY trading up a bit
HY 83 15/16
June 5th, 2009 at 9:19 amIG 121
HY 84
June 5th, 2009 at 9:22 amJust woke up and ahahaha, what a BS takedown in gold.
June 5th, 2009 at 9:22 amNeedless to say, I’m with TT
June 5th, 2009 at 9:22 am“The Breakfast Club – 1985”
BTW, “Bill” died!
June 5th, 2009 at 9:22 amand rise in the dollar.
June 5th, 2009 at 9:23 amYep, re Bill. No bueno.
June 5th, 2009 at 9:25 amGot another report the Morgan Stanley Elliot Waver is thinking like Nicky.
VTZ – I hear ya and I agree with ya.
Looking at that 16.4% number on actual unemployment rate (if you count the uncounted) makes me want to buy stock in home security companies.
June 5th, 2009 at 9:28 amDman — Credit hit it’s low on Dec 6th. Equity on March 6th. Equities have been dragging credit up, since March 6th… until Credit took over, about 2 weeks ago. So, bit of a back and forth. But, credit got us into this mess… credit will have to pull us out. And that is happening. Albeit, with Volatility still clouding the picture.
HY 84 1/4 +1/2 point now
June 5th, 2009 at 9:28 amCNBC can rant all they want about how and why this recession/depression isn’t even close to the 30s but if the broad unemployment gets up to 20-25% (which is very well could) it’s no different. They aren’t even comparing the same metric when they talk about unemployment.
June 5th, 2009 at 9:36 amCrude down 20 cents, market up 50. I guess this is my little rally, lol.
June 5th, 2009 at 9:42 amBOP – I guess you could say that despite the 41% ramp, it is still hard to actually find anyone who admits to “investing” in equities. Trading, yes, investing…hmmm. So in that sense I see the idea of equity investors not yet “believing”. But when they do get religion, would that be your moment to buy or sell? (somewhat of a rhetorical question).
VTZ – I’d *really* like to see a fair comparison of unemployment now vs. the 1930s.
June 5th, 2009 at 9:49 amBy Steve Gelsi
Energy stocks fell Friday as investors weighed the implications of a
better-than-expected U.S. jobs report against flat oil prices and prospects for
fresh oil and gas regulations in Washington.
Blue-chip shares sustained modest losses in the early going, with Exxon Mobil
Corp. (XOM) down 0.5% to $72.63 and Chevron Corp. (CVX) off 0.3% to $69.53.
Among sector benchmarks, the Philadelphia Oil Service Index subtracted 1.5% to
178, the Amex Oil Index gave up 1% to 978 and the Amex Natural Gas Index fell
0.8% to 443.
Energy stocks initially moved up as the Labor Department reported a loss of
345,000 in payrolls for May, less severe a contraction than had been expected
and the lowest number since September.
In energy trading, crude-oil futures were off 9 cents to $68.72 a barrel after
momentarily spiking to the $70 mark on the payrolls data.
Among stocks in the spotlight, Noble Corp. (NE) fell 12 cents to $36.16, as
analysts at Pritchard Capital Markets reiterated their buy rating and a $38 a
share price target.
The company said on Thursday that energy activity is increasing in the North
Sea, and it’s forecasting a need for jack-up rigs from Pemex, Mexico’s
state-run oil giant.
Noble also said it’s moving into advanced talks with Exxon Mobil, Chevron and
France’s Total SA (TOT) over long-term contracts in Angola.
Meanwhile, The Wall Street Journal reported the oil-and-gas industry is
gearing up for a battle in Washington over fracturing wells with water and
pumping out oil and gas.
Two Democratic lawmakers plan to introduce measures to regulate “fracking” at
the federal level for the first time amid concerns about tainted drinking
water.
-By Steve Gelsi
June 5th, 2009 at 9:50 amDow Jones Newswires
06-05-09 1025ET
off subject
Jim Cramer – June 2009
“I’ll just come right out and say it: Ben Bernanke will go down as the greatest Federal Reserve chairman in history.”
June 5th, 2009 at 9:52 amDman – http://www.shadowstats.com/alternate_data
The SGS alternate unemployment data is an estimated comparison using the same broad measure of unemployment before they started screwing with the definitions and metrics.
June 5th, 2009 at 9:53 amre: Jobs. I can’t help but think there is a very permanent loss of many many jobs. Jobs that are not going to come back. Maybe the return to the 1 job per household is a little over-stated… but, i think there is a trend that way. If so, a lot of stuff that was “outsourced” in keeping the homelife going is gone. Dog-walkers, personal trainers, manicurists… probably permanently thin the ranks there. So, the “recovery” is not going to take us back to where we were (not that anyone believes it would).
This is a value-stock picker’s market now. Something people on this board are pretty good at.
BTW, the sell-off was due to a rumor that the jobs number contained a giant error. Labor Sec’y Solis came out 15 mins ago and said that rumor is false. She stands by the Jobs Report as reported. Mrkt rebounded on that.
June 5th, 2009 at 9:55 amComparing the current unemployment rate to the 1930’s would be an interesting exercise. However, so much has changed. In the 30s, women did not work, kids worked for free on the farm (or in their dad’s shop), and govt did not provide much of a safety net. May be too much of an apple-and-oranges exercise now. Just thinking out loud…
June 5th, 2009 at 9:58 amBOP – She came out and said there was no error but somehow next month they are going to revise it up to 500,000 quietly. No error though, never…
June 5th, 2009 at 10:04 amMovie quote Friday
“Say hello to my little bounce”
June 5th, 2009 at 10:05 amVTZ — lol. Never confuse me with someone who believes a govt official… just reporting, not supporting. 😉
June 5th, 2009 at 10:06 amIG 118 -5 1/2… tears
June 5th, 2009 at 10:12 amBOP and V – I hear ya re govt data. I used to deal with EIA and EPA quite a bit. Nothing would shock me about data quality at either department. I learned way back not to hinge too much on one number at a particular point but to follow trends. Repeating to myself the phrase “it is what it is” helps.
June 5th, 2009 at 10:16 amz — totally stumped on your movie quote… are you sure you meant “bounce”? or, was that just a stock mrkt reference… and i’m too dumb to get the joke (suspect the latter…)
June 5th, 2009 at 10:21 amOne thing that cracks me up is people expecting the housing market construction jobs to come back… THERE’S WAY TOO MANY HOUSES ALREADY.
June 5th, 2009 at 10:27 amVTZ — yep. Even funnier than Dog-Walkers.
June 5th, 2009 at 10:30 amBOP – replace bounce with friend.
Odd bounce in NG today, still feels bottomish, but 3Q worries persist.
June 5th, 2009 at 10:35 amwhen will good news be out on pxd
seems like the gas stocks are all down
June 5th, 2009 at 10:39 amHoldings Watch thoughts – very brief.
After today we have 2 weeks left until expiration is this is one of the 4 “long” months between expirations of the year.
KWK – I will opportunistically sell soon, it is acting well and I’d frankly like to milk it a little more.
HK – can sell the Junes next week higher I think.
PXD – not acting great or terrible, waiting on news. If we don’t get it the first half of next week I’ll punt on the Junes and hold and maybe add to the July’s on weakness.
EOG – thinking that firms soon as estimates start going up into quarter end.
WRES is the only other thing on options plate now and that is kind of long term hold.
All stocks held I have no trouble holding longer: current list is the same with WRES, PQ, NFX, GMXR, NBR, CHK, CLR, GMXR, FTO, SWN. Was not all that excited by the GMXR news this am but not a big deal for now in light of the upside reserve potential.
June 5th, 2009 at 10:44 amBill – was typing 61 and finished before I saw 60.
Re PXD. I have no idea. I know if I call them and ask they will not say with is standard for the industry.
My sense is very soon based on:
*They have tied the well to sales, so they have the data in hand.
* they said at recent conferences they would get that data to market soon.
Caveats here:
June 5th, 2009 at 10:47 amThey could be leasing more acreage around the well and don’t want to overtly tip their hand. That can hold the data release for a long time, including to the 2Q release in July.
Analyst: Some Producers in Denial
June 5th, 2009 at 10:50 amfrom NGI’s Daily Gas Price Index June 05, 2009
Judging by recent exploration and production (E&P) company behavior, some in the energy patch are in denial that low gas prices will be around for a while, Becca Followill, managing director at Tudor, Pickering Holt & Co. Securities Inc., told an industry audience in Houston Thursday
chk seems to be burning thru cash and has only 20 hedged in 2010
swn hedges run out
the whole industry is in a world of hurt if prices stay here
June 5th, 2009 at 10:51 amI’d add that most are not but drilling behavior is driven by more than just current low prices and return but also by things like “wow, I need to get my acreage into HBP or I’m screwed”. For the most part, people are operating within cash flow. Those that are not either have low economic threshhold plays like the Haynesvile or E. Texas Deep Bossier or have room on the balance sheet and a desire to get more acreage held by production before their leases expire (like SWN).
June 5th, 2009 at 10:52 amBill – agree they will have to scale back drilling programs but the maintenance budgets for many of these guys are fairly low, especially a SWN, so they can pull back drilling more and still be ok on cash flows. On CHK their interest coverage is fine and they won’t have anything coming due for years on the debt side. I expect an upward dragging effect from oil on NG next year. Also, you have winter which SWN believe will give them a better shot at a hedge. You have to wonder, if all that LNG is coming here in lieu of Europe and Asia, why LNG, the company, is applying to receive and then reship the LNG elsewhere.
June 5th, 2009 at 11:00 amAny take on CWEI? It has a PE ratio of 2.59 and makes up almost 2% of BlackRock’s energy and resource fund.
June 5th, 2009 at 11:05 amNG up 12 cents, odd, feels like a cover. CFTC won’t tell us much this week but next week’s number could be interesting.
June 5th, 2009 at 11:05 amCargo – apologies, I don’t follow Clayton. I could look at it if you like but anything intelligent won’t come from me until next week (if then, lol)
June 5th, 2009 at 11:06 am“You wanna fuck with me? Okay. You wanna play rough? Okay. Say hello to my little friend!”
June 5th, 2009 at 11:11 amScarface – 1983
My turn;
“The ratio of people to cake is too big.”
June 5th, 2009 at 11:15 amchk has a new outlook– they spent some time talking about production declines with rig lay down
http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MzQwNTk3fENoaWxkSUQ9MzI2MjQ3fFR5cGU9MQ==&t=1
June 5th, 2009 at 11:15 amKIEV (AFP)–Ukraine will pay its Russian gas bill for May on Friday, President
Viktor Yushchenko said, after Moscow said a missed deadline could trigger a new
gas crisis.
“The payment for the gas will go out in about an hour,” Yushchenko said at a
meeting with his national security council, quoted by Interfax news agency.
Yushchenko said he had authorized the release of 3.8 billion hryvnia for the
payment to Russian state-run energy giant Gazprom OAO (GAZP.RS), news agencies
reported.
“I had no other option but to approve the decision today to release the
funds,” said Yushchenko, a pro-Western leader who has sparred repeatedly with
Moscow over the gas issue.
Wednesday, Russian Prime Minister Vladimir Putin warned Russian gas supplies
to Europe across Ukraine could come to a “full stop” if Kiev was unable to pay
its bills on time. Such a situation would lead to a repetition of the January
gas crisis, when a bitter payment dispute between Moscow and Kiev led to a
cutoff of Russian gas supplies to more than a dozen European countries.
Ukrainian state gas firm Naftogaz said Friday the country’s total gas bill for
May was $647 million. Before Yushchenko released the funds Friday, Naftogaz had
only $120 million on hand to pay its bill, an official from Yuschenko’s office
said.
Naftogaz spokesman Valentin Zemlyansky told AFP the payment would go through
on Friday evening. But Gazprom spokesman Sergei Kupriyanov said payment hadn’t
been received as of 1900 Moscow time (1500 GMT).
“As of this hour no payment has been received,” he was quoted as saying by
RIA-Novosti news agency.
The effective deadline for Ukraine to pay its May gas bill is next Tuesday,
Kupryianov said. The deadline has been reported as June 7 but the real deadline
is later because Sunday and Monday are state holidays in Ukraine, he explained.
Ukraine has been one of the hardest-hit countries amid the global economic
crisis and Russia has raised questions about the country’s ability to pay its
gas bills. But Kiev insists it has the funds to pay them.
About 80% of Russian gas supplies to the European Union pass through Ukraine,
a fact which has forced the E.U. to pay close attention to the perennial gas
disputes between the two ex-Soviet neighbors.
Dow Jones Newswires
June 5th, 2009 at 11:16 am06-05-09 1147ET
Sam- sounds like Office Space… one of my favs!
June 5th, 2009 at 11:18 am3 wells in haynesville 22 m +
June 5th, 2009 at 11:18 amSam – good call. I have no idea on the quote but want to see any movie that acknowledges such a basic truth.
Bill – thanks, will go look. Saw DVN and XTO saying they thought return to balanced gas market is a 2010, not 2009 event. CHK still going with 3Q / 4Q, saying the peak was definitely 1Q.
June 5th, 2009 at 11:19 amBOP is the winner!
June 5th, 2009 at 11:23 amWow. It’s been a long week. Office Space is in the personal library, can’t believe I missed that.
NG surprisingly strong here, approaching $4.
June 5th, 2009 at 11:27 amPXD green again, now for good news early next week. If not, I guess I’ll join you in shifting out of June and into July.
June 5th, 2009 at 11:34 amDella – The other thing I left out is the possibility they had a problem with the well. I don’t get that feeling listening to management but you never know until you see it. Their well is far to the east of the HK and APC/TXCOQ and COP activity. They have good well control through the area and seismic. Their log looked good (high porosity (for a shale at 10% average) and gamma showed distinct 205 foot section of shale. Could have good natural fracturing they mentioned, its a little higher pressure and a little hotter (over 300 degrees) so they’ve pre warned people not to expect a boatload of liquids but more dry gas with a little bit of associated condensate. Anyway, you could have mech issues, its still early in the play.
By the way, if anyone has the name of the PXD well, I’ve been looking the PXD DeWitt County filings and am not sure which permit this one is (they have several horizontals permitted to 17 or 17,500 feet, just crossing my I’s and dotting my T’s.
June 5th, 2009 at 11:46 amQuote:
June 5th, 2009 at 11:49 am“You remind me of my daddy. Mama told me he liked skinny women with breasts that stood up and said “Hello””
Bill – I heard them mention those wells at RBC, not sure if these are the same but likely.
Also, note that HK has news coming at some point on their “biggest well yet” in the Eagle Ford which could push the EFS names up more. This HK well could be the Butaud well mentioned in a REOS press release which was said to be much larger IP than what we have seen so far. No, I don’t know pressures or choke but the well would have been a 30 + MMcfepd well if the rates are correct in the press release.
June 5th, 2009 at 11:49 amPop – strangely rings a bell but can’t put finger on it.
June 5th, 2009 at 11:50 amCrude up 40 cents, back above 69; stocks warming up into the afternoon.
Should get rig counts in the next hour or so.
June 5th, 2009 at 11:51 am“OK, manslaughterer…
who just broke parole and has only
immoral purposes in mind,
as far as you’re concerned.
June 5th, 2009 at 11:58 am– Thank the Lord!”
Popeye – still don’t know.
Rig Count Watch
Oil rigs down 8 to 179 vs 385 a year ago
Gas down 3 to 700 vs 1493 a year ago
Horizontals down 4 to 372 from 548 a year ago.
Notably, Louisiana saw the biggest drop (that honor has usually gone to Texas).
Louisiana rigs fell 11 to 132 vs 160 a year ago.
Texas dropped 3 to 327 from 931 a year ago. Declines are coming.
June 5th, 2009 at 12:11 pm“Wild At Heart”. My all time fav.
June 5th, 2009 at 12:16 pm“Uh oh. Baby, you’d better get me back to that hotel. You got me hotter than Georgia asphalt.” That is hot!
Wild at Heart – 1980?
June 5th, 2009 at 12:17 pmPopeye — sounded way too familiar… now i know why. Dark movie… from a dark director. But, had to look it up… so cheated.
June 5th, 2009 at 12:17 pm“We figured there was too much happiness here for just the two of us, so we figured the next logical step was to have us a critter.”
June 5th, 2009 at 12:19 pmRe 90: Arizona?
June 5th, 2009 at 12:20 pmMan Z, you and think alike.
June 5th, 2009 at 12:21 pm“Raising Arizona – 1987”
HOUSTON (Dow Jones)–The total number of rigs drilling for oil and natural
gas in the U.S. fell this week as producers continued to curb drilling activity
amid slumping energy prices.
The number of oil and gas rigs fell to 887, down 12 from the previous week,
according to rig data from oil-field services company Baker Hughes Inc. (BHI).
The number of gas rigs was 700, a drop of three rigs from last week, while the
number of oil rigs fell to 179, a decline of eight rigs. The number of
miscellaneous rigs was down one rig and stands at eight.
The number of gas rigs in use peaked at 1,606 in September.
Natural gas prices have plunged about 71% from summer highs amid robust
production from U.S. onshore natural gas fields and slumping demand. Large
industrial consumers have scaled back gas use to cut costs during the
recession. In response to falling gas prices, producers such as Chesapeake
Energy Corp. (CHK) and Devon Energy Corp. (DVN) have slashed their spending
plans and rig counts to reduce the flow of new gas supplies into the market.
Analysts anticipate that the sharp decline in natural gas drilling activity
will eventually bring supply back in line with demand and help bolster gas
prices.
Gas for June delivery on the New York Mercantile Exchange was recently down
11.6 cents, or 3.04%, at $3.926 a million British thermal units.
-By Jason Womack, Dow Jones Newswires
June 5th, 2009 at 12:23 pmDow Jones Newswires
06-05-09 1315ET
Roger that Sam. Had someone over the night at the house who said Princess Bride was a stupid movie, then added Office Space was too. It was hard to be civil.
June 5th, 2009 at 12:25 pmThrow em out of da house!
Who doesn’t like Miracle Max: “Sonny, true love is the greatest thing, in the world-except for a nice MLT – mutton, lettuce and tomato sandwich, where the mutton is nice and lean and the tomato is ripe
June 5th, 2009 at 12:36 pm[smacks his lips]
they’re so perky, I love that.
What is sad is that I had to buy my 24 year old assistant a copy of “Good Fellas”. She had never seen it! What a waste.
June 5th, 2009 at 12:38 pmHeadTrader said “we had our rally”…. now we are going to flop around, then close in the green.
just passing comments along.
June 5th, 2009 at 1:06 pmSounds about right, volumes nothing to write home about in most energy names.
June 5th, 2009 at 1:07 pmWeekened reading;
http://www.nakedhedgefund.com/wp-content/uploads/2009/05/200day2.pdf
June 5th, 2009 at 1:13 pmSecond largest drop in consumer debt:
http://www.marketwatch.com/story/us-consumer-debt-falls-by-157-billion
June 5th, 2009 at 2:02 pmEnd of day/week push? Now this kind of trading feels like summer.
June 5th, 2009 at 2:25 pmdoes anyone know how much of the front month nat gas UNG holds? I want to say 25%- they start to roll next Friday. USO starts Tue goes to Fri FYI
June 5th, 2009 at 2:34 pmBy David Bird
Of DOW JONES NEWSWIRES
Crude-oil prices ended modestly lower Friday on profit-taking from seven-month
highs amid lingering concerns about the state of the U.S. economy.
Light, sweet crude oil for July delivery settled at $68.44 a barrel, down 37
cents, or 0.5%. For the week, crude rose 3.2%, or $2.13 a barrel. July ICE
Brent crude settled down 37 cents at $68.34.
The Labor Department said Friday that nonfarm payrolls fell by 345,000 in May,
compared with a consensus estimate of 525,000. The drop in April nonfarm
payrolls was 504,000, adjusted down from 539,000. May’s decline was the
smallest monthly drop in eight months, but the May unemployment rate rose to a
fresh 25-year-high of 9.4%, compared with a consensus estimate of 9.2%.
July crude climbed to a fresh seven-month high of $70.32 a barrel before
profit-takers took over. The contract bounced to a low of $67.54, on twists in
equity prices and the dollar, and held support above Tuesday’s low of $67.50.
“I think the sentiment is still higher, there are lot of funds in the market,”
said Nauman Barakat, senior vice president at Macquarie Futures. “Any
corrections are being bought back quickly.”
Oil traders have been fed a steady diet of higher price forecasts in recent
days, with Saudi Arabia and others in the Organization of Petroleum Exporting
Countries calling $75-$80 a barrel a fair price for oil and one that the global
economy can handle. Saudi Arabia Oil Minister Ali Naimi said he hoped the price
could reach that level by the end of the year.
Influential bankers Goldman Sachs Group Inc. forecast crude will hit $85 by
the end of 2009 and $95 a barrel by the end of 2010. Goldman said declining
non-OPEC production won’t keep pace with needed growth in oil supplies when the
global economy and oil demand improve.
Hopes and expectations of a global turnaround have drawn fund investors into
energy futures and other commodities, with many analysts cautioning that
still-rising prices are getting well ahead of current supply-demand and
economic fundamentals.
Crude futures have more than doubled from their January 20 low of $32.70 a
barrel, even as oil demand in the U.S., the world’s biggest oil consumer, is at
a 10-year low amid bloated stockpiles. Gasoline has been the one area with
relatively tight inventories, but demand at the start of the peak summer
driving season has been weak compared with a year earlier, even with a 40% drop
in retail prices.
The May U.S. jobs report “was not as bad as expected, but it was still awful,”
said Peter Beutel, president of trading advisory firm Cameron Hanover. The data
show “at least a third of a million workers who will not be commuting to work
each day…or taking vacations.
“We still have problems building a nearly $40 advance in oil prices on a
foundation of ‘slightly less horrible’ economic conditions,” he said.
July delivery RBOB gasoline futures settled down 0.4%, or 75 points, at
$1.9546 a gallon, while July heating oil was down 0.8%, or 139 points, at
$1.7701 a gallon.
-By David Bird, Dow Jones Newswires
June 5th, 2009 at 2:38 pmDow Jones Newswires
06-05-09 1534ET
EOD E&P buying, again.
June 5th, 2009 at 2:47 pmbeerthirty
June 5th, 2009 at 3:01 pmgreat week gentleman and ladies! great insights by all the posters; Z have a good one.
June 5th, 2009 at 3:08 pmWelp. Stocks had a kind of poopy close… but credit rallied and held up today. We’ll see what sort of headlines the weekend brings. But, all else equal, we should be able to move higher on stocks next week. Assuming stocks follow the bond market.
IG 119
HY 84 1/2
Have a wonderful weekend, all.
June 5th, 2009 at 3:14 pmBakken Weekend Update: (1) WLL closes deal with private oil co. for interest in Sanish field. Private co. will pay 65% of WLL completed well cost for 50% interest. Link to news releasehttp://phx.corporate-ir.net/phoenix.zhtml?c=147759&p=irol-newsArticle_Print&ID=1296494&highlight=. This will be great help to develop this field as WLL has to much debt to be an effective developer of the field in a stand alone capacity. I have personally being avoiding the stock long term because of the debt and how they did a stock offering in February and then showed in their non official reports and presentation what their yearend 2008 would have been including this cash from 2/2009. This was a red flag to me. Probably time to look again, this is a really hard stock to trade options on because of the spread and lack of volume……..(2)South of the Sanish MRO continues to add 1280s in the Reunion Bay Field area and west of the Missouri River in McKenzie Co,ND. According to the Rocky Mountain Oil Journal (RMOJ): MRO continues develop 100,000 ac tract purchased from variuos interest for 42 million mostly on the western side of the Lake Sakakawea, the third largest manmade lake in the United States, after Lake Mead and Lake Powell. MRO also completed a Lodgepole well in the Baily Field which is above the Bakken formation. This would seem t be a localized situation due to fault running thru area. Link to Bakken Discussion group site with this article and other information that may be of interest,http://bakkenshale.blogspot.com/2009/06/marathon-opens-lower-lodgepole-third.html…………(3)Questar, STR, Has staked its fourth well on it’s 78,000 acre prospect which is mainly under Lake Sakakawea. These prospects are all on the east side of the Lake in an area that EOG is also drlg some wildcats.STR interest surrounds KOG’s acresge like a horeshoe. If you put all this together on a map and look in the center of all the activity you will find KOG. As a discloser I own KOG so I may report this with some leanings in that direction. Core positon established and not having much pull back to add to positions. At $1.15 its like buying an option that doesn’t expire. I don’t know how close to the end of June well announcements you can wait to get in the stock, but if the mkt corrects there will probably be an lower entry point. thx
June 6th, 2009 at 12:41 am