08
Jun

Blue Monday

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With no economic data to key off today and a weak session in Europe futures are indicating a lower open with headlines taking up the call for a fall in the broad markets after three months of gains. Feels more like the summer doldrums to me as analysts and company executives are busy planning or taking summer vacations before 2Q releases gear up, as evidenced by the low number of estimate, target price, and ratings changes and press releases respectively.

The Week Ahead: Fairly quiet on the eco data front

  • Monday 6/1: No U.S. data release scheduled
  • Tuesday 6/2: Wholesale inventories (expected down 1%)
  • Wednesday 6/3:  EIA Oil Inventory Report, trade balance, Treasury budget
  • Thursday 6/4: EIA Natural Storage Report, retail sales, initial jobless claims, business inventories
  • Friday 6/5: Import / export prices, Michigan sentiment.

In Today's Post:

  • Holdings Watch
  • Commodity  Watch
  • Stuff We Care About Today
  • Odds & Ends

Holdings Watch:

  • $10KP: $31,300 / 40% Cash
  • The holdings tab is updated.

Commodity  Watch:

Crude oil rose 3% last week to close at $68.32. The 12 month crude strip is now trading at $72.51. This morning crude is trading off $0.75 to $1.25 on weak futures and a second day of bounce in the dollar.

  • CAPP Cuts Oilsands Forecast, Again. The Canadian Association of Petroleum Producers cut its 2015 oilsands production target from 2.4 mm bopd to 2.2 mm bopd and warned that if only the projects currently under construction are completed volumes will be limited to 1.9 mm bopd. CAPP said 2008 production was 1.2 mm bopd (out of total Canadian oil production of 2.7 mm bopd). In 2007, CAPP has forecast 2015 production of 3.0 mm bopd before starting a series of downward revisions as falling oil prices took their toll on capital spending.
  • IEA Reports Supply Crimp Coming. IEA says 2 mm bopd of new production projects have been canceled in the last 6 months and another 4.2 have been delayed for another 18 months due to low prices. The figures on natural gas come to 1 Bcfgpd canceled with another 2.3 delayed.
  • From Russian With Not So Much Love. On Friday, Russian Prime Minister Igor Sechin said Russia needs a global oil price of at least $75 and warned that the high cost of borrowing is hindering investments needed to forestall a run back towards $150 oil within the next 2 to 3 years. He went on to add that further production growth from Russian could only be obtained from higher cost developments in Siberia and the Arctic.

Natural gas eased up 1.3% last week to close at $3.89. The 12 month strip is now trading at $5.34. Natural gas is trading off a dime with oil this morning but also with a confirmation of last week's milder than normal weather which does nothing to help gas demand.

  • Weather Watch: CDDs eased from 31 in the prior week to 29 last week, which is quite a bt milder than normal. This week's forecast is much more typical of the second week of June with CDD totals rising to 46.

Stuff We Care About Today


CRZO Bumps Up Bank Line

  • Availability increases $25 mm to $284 mm
  • Adds 2 banks
  • No plans to use the additioal availability but nice to have the added firepower, staying within cash flow for now
  • CRZO is one of the interesting little names that floats about on the edge of my rada:
    • small cap, growthy, well hedged, low cost producer focused on the Barnett but moving into the Marcellus and Fayetteville shales, not exceedingly cheap given its leverage but not in real danger from a balance sheet perspective at this time.  

Bakken Comment From West on Friday's Post.

Gas Play Economics: Wondering how your gas play stacks up, here are the estimates of gas prices needed for break even at present (from Murphy):

Five Best:

  1. Deep Bossier of East Texas: $3.50
  2. Haynesville Shale: $3.50
  3. Pinedale Anticline (on the crest): $3.60
  4. Marcellus Shale: $3.90
  5. Barnett Shale: (Tier 1 Core) $4.20

Five Worst:

  1. Jean Marie (tight gas): $6.30
  2. Barnett (Tier 2): $6.90
  3. Piceance (non core): $7
  4. Mannville (coalbed methane): $7.40
  5. Barnett (Tier 3): $8.50

Favorites Around Here Not Listed Above:

  1. Fayetteville Shale: $4.80 - I know some people who very much argue that it's closer to $4.25
  2. Eagle Ford: $5.30 - really too early to tell
  3. Woodford (Arkoma) - $5.50  - this was not broken out by core and non core so the dominant player here, (NFX), would probably tell you its closer to $5.
  4. Horn River Basin - $5.70

SPWRA Signs Manufacturing Deal with Jabil

  • To make panels in Mexico for the North American market beginning 2H09
  • Talks about reducing costs, no specifics though; unlikely to get them to FSLR's < $1 / Mw threshold
  • Stock has been moving up in recent weeks, 2Q release may show more rays of light than somber 1Q
  • I'll probably play FSLR again soon on its recent pullback as we approach what should be a stronger 2Q there but I may dabble in the SPWRA as well as I like their move to get more aggressive on the U.S. market.

 

Odds & Ends

Analyst Watch:

  • (SWN) target upped from $45 to $55 at KeyBanc
  • (WLL) target upped from $50 to $55 at Keybanc
  • (STO) cut to sell at UBS

T Boone Pickens Watch: I'm attending a speech by T Boone Tuesday night and will have relevant comments about his response to my question if they will let me have the mike during the Q & A.

Housekeeping Watch: 2 weeks until June expiration. See the expiration calendar here.

108 Responses to “Blue Monday”

  1. 1
    BirdsofpreyRcool Says:

    Good morning.

    Nothing useful from TechTrader today… other than to just sit on your hands. Says it’s a 50/50 day. So, not worth trading.

    HeadTrader says it’s boooooooooooooooring.

    IG 127 1/2 +7 1/2 bps

    HY 83 7/8 -3/4 pt

  2. 2
    BirdsofpreyRcool Says:

    West — thx for your KOG comments. Still hoping some downward volatility puts a little more in my hands. Also have the core position… but, would add more at the right price.

  3. 3
    zman Says:

    Crude futures back to even on the day, from off a buck 10 minutes ago, not seeing the comment drove that, maybe Goldman through money at the trade.

  4. 4
    Sambone Says:

    By Nick Heath
    Of DOW JONES NEWSWIRES

    LONDON (Dow Jones)–Crude oil futures fell more than $1 to back below $67 a
    barrel Monday as a stronger dollar and weaker equities prompted investors to
    take profits from last week’s rally.
    Crude climbed to a new seven-month high above the key $70 a barrel mark
    Friday, but a sharp pullback after breaching that level also sounded a cautious
    note Monday, with investors wary of whether crude can continue to climb given
    weak fundamentals.
    “In the past, we have often seen sharp corrections, once the oil price was not
    able to break through a psychologically important mark,” said Eugen Weinberg,
    analyst at Commerzbank in Frankfurt. “From a fundamental point of view, the
    outlook remains subdued. Oil demand remains weak, while supply is being
    expanded at present, leading to rising oil inventories.”
    At 1103 GMT, the front-month July Brent contract on London’s ICE futures
    exchange was down 91 cents at $67.43 a barrel.
    The front-month July light, sweet, crude contract on the New York Mercantile
    Exchange was trading 99 cents lower at $67.45 a barrel.
    The ICE’s gasoil contract for June delivery was down $7.50 at $541.75 a metric
    ton, while Nymex gasoline for July delivery was down 231 points at 193.15 cents
    a gallon.
    “Friday’s performance technically was very poor – having gone through $70 a
    barrel it faced rejection. A combination of that, and signs that dollar has
    turned again, may just keep the pressure on this back to $65 a barrel,” said
    Jim Rintoul, analyst at London-based trade advisory TheOilTrader.com.
    Crude prices have experienced a strong inverse correlation to recent moves in
    the greenback, with a stronger dollar tending to reduce investor demand for
    commodities as a currency hedge. The dollar climbed to a seven-day high against
    the euro Monday and its fortunes are expected to be key in determining crude’s
    path this week, market participants said.
    Meanwhile, equity markets, which have largely served as a barometer for
    economic health, were also lower Monday.
    While the macroeconomic calendar is less crowded this week than last, the oil
    market is set for several fundamental data readings in the next five days,
    providing an update on the outlook for global demand.
    The U.S. Energy Information Administrations releases its short-term energy
    outlook Tuesday, the International Energy Agency publishes its monthly Oil
    Market Report Thursday, while the Organization of Petroleum Exporting Countries
    is due to release its Monthly Oil Market Report Friday.
    Traders eyed developments in Nigeria Monday after its main armed group over
    the weekend issued a fresh threat to attack the country’s oil industry. The
    Movement for the Emancipation of the Niger Delta, or MEND, Saturday warned
    local and foreign oil workers to leave the Niger Delta within the next 72 hours
    due to an “imminent attack.”
    “The ultimatum [to local and foreign oil workers] expires about midnight
    [Monday]…Our focus will be the oil industry as this is an oil war,” MEND,
    said in an emailed statement.
    While militant attacks have helped cripple Nigeria’s crude oil output, a
    market reaction is more likely to be reserved for indications of any new
    attacks impacting output, some suggested.
    “The market should…already have a premium for ‘threats’ from the Nigeria
    militants and is likely to now only react to confirmed news of disruptions,”
    said Olivier Jakob, managing director of Swiss consultancy Petromatrix.
    -By Nick Heath; Dow Jones Newswires
    Dow Jones Newswires
    06-08-09 0725ET

  5. 5
    zman Says:

    Hear ya re booorrinnggg BOP, June often gives a whole new meaning to the word.

  6. 6
    BirdsofpreyRcool Says:

    the T. Boone (“don’t call me T”) talk should be interesting, tho. Wonder if he has much to say about Washington policy. Frankly, it’s all about Washington policy right now.

  7. 7
    zman Says:

    Energy stocks getting hit for 150% of the move in the broad markets. Pretty silly when you consider that the 12 month crude strip is up 38% ytd while the XNG is up 19% and the XOI is flat. Once again we have very little volume but not insignificant drops in the stocks. I may do a little bottom fishing but will give the market a little time to get more folks involved.

  8. 8
    zman Says:

    I’m sure at least half of the talk will be “TBP goes to Washington”. I plan to ask him what the roadmap is for getting from where we are with the administration and natural gas (no where) to adopting it as a trasportation fuel. Facts and figures don’t seem to have made much progress so I’m wondering what plan B is.

  9. 9
    BirdsofpreyRcool Says:

    It is worth noting that the HY index is off it’s morning lows and hanging in there. An indicator of investor’s appetite for risk assets.

    HY 84

  10. 10
    BirdsofpreyRcool Says:

    Mrkt is using the excuse of the Govt’s report card on banks, due out some time today (maybe), to sell off. Govt is supposed to come out and say who is going to be allowed to return financial bailout funds.

  11. 11
    jiveyjr Says:

    z..those breakeven shale prices are interesting…the Murphy you cite is that Murphy Oil or some energy analyst?

  12. 12
    zman Says:

    It’s Murphy citing an analyst. Most of the numbers seem to be industry commentary based.

  13. 13
    zman Says:

    Hey BOP, did they say what time or is that just “sometime today”?

  14. 14
    BirdsofpreyRcool Says:

    “expected as early as Monday”

  15. 15
    zman Says:

    Well, there’s nothing like specificity to make the market happy.

  16. 16
    zman Says:

    ZTRADE:

    Added 25 PXD June $30 calls for $0.40 with the stock at $26.90 in a weak market this morning. Average cost here is $0.62. The company had no news at this morning and I continue to await news on their Eagle Ford shale well but may not get it by the June expiration.

  17. 17
    Nicky Says:

    Morning all. Oil should be tanking here. $ up, indices down. Something or someone is holding oil futures up.

  18. 18
    Nicky Says:

    SPX has support at 923

  19. 19
    BirdsofpreyRcool Says:

    Stocks Fall Ahead of Gov’t Report Card on Banks
    2009-06-08 13:58:50.294 GMT

    NEW YORK (AP) β€” Investors turned away from stocks ahead of the latest government report card on banks.
    Stocks fell Monday, sending the Dow Jones industrial average down by about 100 points. Overseas markets also pulled back.
    The government is expected to announce as early as Monday which banks will be allowed to return bailout funds. JPMorgan Chase & Co., Goldman Sachs Group Inc. and American Express Co.
    are expected to get approval to repay their loans, according to The Washington Post.
    Other banks that were told by the government last month to raise funds to help protect against a potential worsening in the economy must submit plans Monday about how they are raising that capital.
    Investors are also booking some gains from the market’s three-month rally as concerns linger about the economy. The Standard & Poor’s 500 index has surged 39 percent from a 12-year low on March 9. Interest rates on government bonds are higher and oil prices are near six-month highs.
    In the first hour of trading, the Dow fell 95.68, or 1.1 percent, to 8,667.45. The broader Standard & Poor’s 500 index fell 10.20, or 1.1 percent, to 929.89, and the Nasdaq composite index fell 23.66, or 1.3 percent, to 1,825.76.
    Major European markets all fell by more than 1 percent. In afternoon trading, Britain’s FTSE 100 fell 1 percent, Germany’s DAX index slid 1.3 percent, and France’s CAC-40 dropped 1.7 percent. In Asia, Japan’s Nikkei stock average finished with a gain of 1 percent.

  20. 20
    BirdsofpreyRcool Says:

    Seeing some banks rally, ahead of the Govt Report Card.

  21. 21
    Dman Says:

    Z – plan B: I suspect Aubrey’s plan B is “wait ’till they’re desperate & sell high”. Or maybe that’s just his plan A…

    SPWRA: market no likey the deal, or just profit taking?

  22. 22
    Sambone Says:

    By Madalina Iacob
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–Crude oil futures held steady around $68 a barrel
    Monday, caught between the temptation to take profits as they recede from
    Friday’s year high and a volatile dollar.
    Light, sweet crude oil for July delivery was recently trading 28 cents, or
    0.4%, lower at $68.16 a barrel on the New York Mercantile Exchange. July crude
    fell as low as $66.78 in overnight trading and set an intraday high of $68.59 a
    barrel early in the U.S. trading day.
    Brent crude on the ICE Futures exchange trader was 69 cents lower at $67.65 a
    barrel.
    Oil futures in New York vaulted over the psychologically significant
    $70-a-barrel mark during intraday trading but failed to hold that level.
    Friday’s rally came on the back of better-than-expected U.S. payroll data.
    Investors are concerned that weak demand and bloated oil inventories don’t
    support the rapid ascent in prices, which have doubled since January.
    As the dollar climbed to a seven-day high against the euro Monday, investors
    lost appetite for commodities as a hedge against inflation. A rebounding
    greenback also makes oil, which is traded in dollars, look more pricey to
    buyers using other currencies.
    “The stronger dollar has broken from a downtrend since April and that’s
    putting pressure on commodities with grain and gold also down,” said Tom Bentz,
    an analyst and broker at BNP Paribas Commodity Futures Inc.
    Also putting pressure on prices was the start of the “roll” in the United
    States Oil Fund, the largest exchange-traded crude oil fund. USO, which only
    bets that prices will rise, seeks to mimic broad oil price trends and, in the
    past, its large size has influenced the market.
    “We’ll see people taking profits and selling July futures for August or
    September ones,” said Tony Rosado, a crude options broker at GA Global.
    Supporting prices were assertions made by Royal Dutch Shell PLC Chief
    Executive Jeroen van der Veer that oil prices will spike without new investment
    in the sector.
    “The oil and gas industry cannot supply all this additional demand…this
    means the next price spike is in the making,” van der Veer said Monday at an
    oil conference and gas conference in Asia. “Oil and gas won’t be able to meet
    the additional demand required after the “economy will turn and overcapacity
    will disappear.”
    Investors are keeping an eye on important data to be released this week. The
    U.S. Energy Information Administrations publishes its short-term energy outlook
    Tuesday, the International Energy Agency releases its monthly oil market report
    Thursday, and the Organization of Petroleum Exporting Countries is due to
    publish its monthly report Friday.
    Heating oil was up 33 points at $1.7734 a gallon, and RBOB gasoline was 15
    points lower at $1.9531 a gallon.
    Rosado said stronger products could support crude futures but that the market
    “is still very weak… and not heading anywhere.”

    -By Madalina Iacob, Dow Jones Newswires

    Dow Jones Newswires
    06-08-09 1009ET

  23. 23
    zman Says:

    Nicky – Crude is not tanking because IEA and CAPP are out with fresh comments about canceled and delayed development projects.

  24. 24
    zman Says:

    SPWRA – I guess no like the deal, seems a bit rough on them, probably a good entry, I was waiting until we get closer to 2Q to get back long the solars to play on the back of all the mo-mo guys. I’m guessing the analysts have had time to call the company and get the details which were scant in the PR and did not like them.

  25. 25
    zman Says:

    Plan A – Tell it like it is:

    * That there is plenty of natural gas in the U.S., that the U.S. is in fact, the Saudi Arabia of coal and now natural gas as well.

    * That solar and batteries don’t move trucks.

    * That one Mcf of gas = 7 gallons of diesel

    * That even if you go to all electric cars the electricity has to come from somewhere and gas is cleaner than coal and is available at night or whenever you want it, not just when the wind blows or the sun shines.

    This knowledge has been conveyed but has not apparently been received in DC.

    Plan B – take that message to the public and shame the administration into pushing for NG as a transportation fuel.

    Of course, first you have to defeat the frac water thing.

  26. 26
    Nicky Says:

    Z – that nothwithstanding oil is now doing its own thing. I remain unconvinced about oil at these elevated levels when we are awash with it. Anyway what I am saying is that oil behaving in this way is the heads up that indices likely bounce or oil turns lower.

  27. 27
    Hoss Says:

    Z

    RE #16

    PXD – 2009 Annual Meeting of Stockholders June 17.

    Not usually the venue for operational updates?

  28. 28
    Nicky Says:

    Also I hate to say it but there is no economic recovery coming – only perceived economic recovery short term. So we aren’t going to need any more oil.

  29. 29
    zman Says:

    Hoss – You see right through me.

  30. 30
    Sambone Says:

    By Steve Gelsi

    Royal Dutch Shell CEO Jeroen van der Veer on Monday reiterated the industry’s
    recent warning about a possible spike in oil prices down the road, but it had
    little effect on falling oil prices and weaker energy stocks on Monday.

    The Amex Oil Index (XOI) fell 1.6% to 965. The Amex Natural Gas Index (XNG)
    fell 1.4% to 439. The Philadelphia Oil Service Index (OSX) dropped 2.6% to 175.

    Movers in the sector included Hess Corp. (HES), down 3.5% to $57.10, and
    Chesapeake Corp. (CHK), down 3.2% to $22.52. Shares of Weatherford (WFT) fell
    3.5% to $19.90.

    Oil futures fell 85 cents to $67.59 on a stronger dollar and weaker equity
    markets. Nobuo Tanaka, the executive director of the International Energy
    Agency, said fundamentals don’t support the recent run-up in oil prices.

    Van der Veer warned a lack of investment could leave the energy sector
    underprepared for a surge in demand tied a 50% increase in world population by
    2050.

    “We think it is a good philosophy to be a high investor (now) and benefit from
    the lower construction prices,” he said in a report by the Associated Press.

    His comments came after energy pundits reacted to cutbacks in capital spending
    as a result of lower oil prices and the financial crisis in recent months.

    Sempra Energy (SRE) was flat at $46.65 after its Sempra LNG unit inked a deal
    handle liquefied natural gas from Ras Laffan Liquefied Natural Gas Company at
    its LNG terminal near Lake Charles, La.

    General Electric’s (GE) GE Oil & Gas unit said it won a $250 million contract
    to supply subsea wellhead systems to Petroleo Brasileiro SA. (PBR).

    -Steve Gelsi
    Dow Jones Newswires
    06-08-09 1012ET

  31. 31
    BirdsofpreyRcool Says:

    Stock Mrkt vs Credit Mrkt — perceptions and reality. Skepticism means we continue to embrace volatility. Perhaps all summer long. But, the releveraging cycle has begun (companies increasingly have access to the debt mrkt again).

    http://www.capmarkets.com/ViewFile.asp?ID1=299930&ID2=316571277&ssid=2&directory=11608&bm=0&filename=The_Gap_Grows_Wider_6-8-09.pdf

  32. 32
    Nicky Says:

    In looking at the cycles we likely will see a minor pullback starting some time mid June and lasting into early July. Then we likely get another run up into early August and then a very sharp down move which will convince many of the bears we are on our way to new lows. I think that is unlikely and we then turn higher into the end of the year even early next year before the market rolls over hard again.

  33. 33
    zman Says:

    Re 30. I think he jumped the gun on the line:

    ” but it had little effect on falling oil prices and weaker energy stocks on Monday.”

    The dollar is up quite a bit since he wrote that as well.

  34. 34
    elduque Says:

    If you want a perspective on why not to be overextended read John Hussman’s latest at hussmanfunds.com

  35. 35
    zman Says:

    Thanks Nicky, what do you see as resistance near term for the SP?

  36. 36
    Nicky Says:

    I will add that many are calling for cycle lows into 15th – 17th June and then a final top into 15th – 17th July and then we go down hard!

  37. 37
    Nicky Says:

    Z – resistance is at 934,939,942 SPX

  38. 38
    cargocult Says:

    If we are the Saudi Arabia of gas why are we importing it?

  39. 39
    zman Says:

    Because lots of poor countries have stranded natural gas and until recently, the last 5 years, no one in the U.S. believed that domestic supply was reliable. We relied on the sporadic play, the one’s and two’s strategy. The shales were not as well understood. They are still a relatively small slug of domestic production with total non-conventional production of only 15% of U.S. production but that will change as the resource is there. They may be lousy reservoirs but they are big ones, with lots of gas in place.

  40. 40
    BirdsofpreyRcool Says:

    9 banks could be allowed to repay TARP funds – CNBC

  41. 41
    zman Says:

    Eli – Addax on tape this morning saying it could be a taken out.

  42. 42
    zman Says:

    Re 40 “could be” … priceless/useless. Ugh. Your tax dollars floating trial balloons in the market.

  43. 43
    reefguy Says:

    z- you sure tha well we discussed is in the Eagleford? When I well you its location, the response is WTF!!

  44. 44
    zman Says:

    Reef – that’s what that little company said, don’t know them from Adam and its likely they are just hypesters. So you found it?

  45. 45
    BirdsofpreyRcool Says:

    here’s for for your Green Screen, z… PetroAlgae (PALG). Up 25% today. Company says it can make oil from algae. Mrkt cap of over one billion.

    No analyst coverage… can’t tell who owns it… only trades a few hundred shares a day… based in FLA (always a red flag for me)… 8.00 bid / 15.00 offered… traded at 3 cents a year ago (think company backed into a shell)… other than that, what’s not to like?

    One Billion Dollar company… hmmmmm…..

  46. 46
    reefguy Says:

    Found it…TMR is now a buy

  47. 47
    reefguy Says:

    PALG- needs seawater and dry air for surface raceways.

  48. 48
    zman Says:

    TMR has 30,000 acres in the play. They are the operator? Do you have a working interest and partners?

  49. 49
    BirdsofpreyRcool Says:

    reef — you know PALG?

  50. 50
    zman Says:

    BOP – lot of people are trying that but I have not read about these guys much, tech always seems to be 10 years out. Different with this one?

  51. 51
    reefguy Says:

    z- APC operated, but TMR has 30,000 acres nearby for chalk.
    bop-PALG has test facility on Tx state lands near Pecos Texas. Need salty water that is in arid setting, so alinity and ph stay stabl. Rain dilutes that nasty brine!

  52. 52
    reefguy Says:

    z- correct APA, my bad. Need to confirm EF…

  53. 53
    zman Says:

    Reef – what county, assume la salle or mcmullen?

  54. 54
    BirdsofpreyRcool Says:

    PALG — i know nothing about it… just saw it show up on the “big movers” list on bloomberg today. I can’t imagine buying… as I’ve got a snake oil stock i would buy first. πŸ˜‰

  55. 55
    zman Says:

    APC jv with TXCO there, did not know APA was playing.

  56. 56
    zman Says:

    PALG – press release style is of a variety a routinely ignore/avoid.

  57. 57
    zman Says:

    …but thanks for bringing it up.

  58. 58
    reefguy Says:

    Let me make clear. It is Apache in GRIMES county…WTF!!

  59. 59
    zman Says:

    The Feds just approved LNG’s (the company) plan to re-export LNG shipped to the U.S. So, you have to wonder what the plan entails… a guy with two flashlights standing on the end of a long peer waving the ships back out to sea?

  60. 60
    zman Says:

    Wow Reef. That is a big WTF but it’s in the trend.

    Link to Texas counties for you folks to get your bearings.

    http://www.censusfinder.com/maptx.htm

    HK and APC have been drilling the Eagle Ford in the southwest in La Salle and McMullen counties. PXD is drilling to the north and east in Dewitt. Grimes is well north and east of Dewitt.

  61. 61
    zman Says:

    From APA’s 1Q09 conference call when asked about the Eagle Ford:

    We are presently evaluating that. I guess we did have some drilling problems on several wells there and we’re kind of working through that to make sure we understood what the issues are. I will say we will be trending toward looking at the gas windows a little more than the oil window there, and I guess that’s as much as I can tell you about it.

  62. 62
    zman Says:

    Early early read on crude inventories for last week:

    crude: down 400,000
    gasoline: up 1.3 mm
    distillates: up 1.2mm

  63. 63
    Nicky Says:

    Z – smug git Terranova on CNBC saying oil going much higher. Najarian saying its going a lot lower!

  64. 64
    zman Says:

    Nicky – for a pony tail wearing guy, Naj is pretty smart in a practical way. Did he just say fundamentals don’t support or did he say the economy is not turning?

  65. 65
    Nicky Says:

    He was actually aligning it to the move in the $ Z. I like him too and would follow him anyday over Mr Sickly Grin.

  66. 66
    zman Says:

    Nicky – I hear ya. How low was Naj thinking it would go? I think low $60s is your near term downside. I have a suspicion we see $70 before the month is out though.

  67. 67
    Nicky Says:

    You were right anyway when you said he would have switched back to the long side. What happened to his short trade I ask myself.

  68. 68
    Nicky Says:

    He didn’t say – he just said much lower.

  69. 69
    Nicky Says:

    We did hit $70 plus on Friday. I have lost count but we are up something like 12 of the last 14 sessions. It is way overbought technically. I also think we may see further weakness in the equity market – nothwithstanding any short term bounce – which may ultimately weight on oil. Right now you are right nothing to say we don’t pop over $70 again.

  70. 70
    zman Says:

    Nicky – Things I think are overbought … iphones/aapl.

  71. 71
    Nicky Says:

    Well apple dropping somewhat hard today. Will Jobs appear or won’t he? What a load of crock really.

  72. 72
    zman Says:

    Agreed. Talk about something in need of a windfall profits tax … nope, wait, forgot I wasn’t a communist for a second there.

    I see the same people complaining about gasoline prices already, just like last summer and yet they are dumping their $400 iphone purchased last fall in favor of this new one.

  73. 73
    Nicky Says:

    That leads me to an email I have just received of Michelle Obama serving soup to the homeless. Cost of soup at homeless shelter – $0. Cost of Michelle Obama serving you soup – $0.
    A homeless person who is receiving government funded meals while taking a picture of the first lady using his $500 Black Berry cell phone $$$$ Priceless

  74. 74
    Nicky Says:

    Gartman calling for $60 oil apparently. Maybe a spike first. Makes sense.

  75. 75
    Garyinhou Says:

    “load of crock” … my new favorite phrase.. Thanks Nicky

  76. 76
    zman Says:

    Natural gas imports watch: (for last week)

    LNG at 1.6 Bcfgpd – still no tsunami of foreign gas.

    Canada at 5.6 Bcfgpd, still very low,

    Total imports down 0.8 Bcfgpd from last year at this time.

  77. 77
    zman Says:

    Nicky – assuming we don’t violate your levels on the SP today, they are good for tomorrow and this week, correct? Just going to post as people send me emails asking for them later in the week.

  78. 78
    zman Says:

    Fyi, $US has given back most of its gains today, crude up tiny, financials thinking about going green.

  79. 79
    zman Says:

    Stepping out to a late lunch, back in 30

  80. 80
    zman Says:

    Oil closed off a dime, ho hum; stocks still watching the broads, broads watching auctions and DC.

  81. 81
    zman Says:

    Nicky – the real crock will be if they turn the market on “one last thing” and a Steve Jobs appearance.

  82. 82
    elijahwc Says:

    Re: 40

    Makes to much sense. Sinopec is te operator of the sister block in the GOG. Also, APC (operator of another sister block) bidding for Kosmos acording to thedeal.com. The whole GOG is getting jiggy. I think Addax will do a deal after spinning out Taq Taq assets.

    Article follows:

    UPDATE 2-Addax says it held talks with potential suitor
    Mon Jun 8, 2009 1:07pm EDT
    * Company responds to report bid mulled

    * Says it held “preliminary discussions”

    * Shares rise 8.9 percent (Adds analyst comment and detail; updates shares. In U.S. dollars unless noted.)

    CALGARY, Alberta, June 8 (Reuters) – Addax Petroleum Corp (AXC.TO: Quote, Profile, Research, Stock Buzz) said on Monday it held talks with a would-be buyer of the oil company, sending its shares up 11 percent.

    Addax, which operates in the Middle East and West Africa but is based in Geneva and lists its shares on the Toronto Stock Exchange, said in release it has “held preliminary discussions with third parties expressing an interest in a potential transaction with the corporation.”

    The company issued the release in response to newspaper reports that Sinopec (600028.SS: Quote, Profile, Research, Stock Buzz) , China’s state-owned oil company, was considering an $8 billion bid for Addax.

    The report from the South China Morning Post said China National Petroleum Corp [CNPET.UL] and CNOOC Ltd (0883.HK: Quote, Profile, Research, Stock Buzz) were also interested in acquiring Addax.

    Addax is the latest oil producer to report a takeover approach as oil prices strengthen and economic fears moderate. Last week British-based Heritage Oil (HOIL.L: Quote, Profile, Research, Stock Buzz) said it was in early-stage talks while Dubai’s state-owned Emirates National Oil Co, said it would look to add to its majority stake in London-listed Dragon Oil (DGO.L: Quote, Profile, Research, Stock Buzz).

    Addax did not specify which company it was in talks with and said there was no guarantee the negotiations would result in a transaction. Still, China’s oil companies have been voracious acquirers of international oil producers as they look to add reserves and production to sate rising demand.

    “All three of the national Chinese oil companies are likely buyers of oil assets and all three are present in Nigeria where Addax has its core operations,” said Jamie Somerville, an analyst with Genuity Capital Markets.”

    Addax produced 134,730 barrels of oil a day in the first quarter, with more than three quarters of its output coming from properties in Nigeria.

    Any would-be bidder for the company would need the backing of Addax Chief Executive Jean Claude Gandur to go ahead, since he holds a controlling interest in the company, Somerville said.

    “The decision comes down to one person and it comes down to price,” Somerville said.

    Addax shares rose C$3.20, or 8.9 percent, to C$39.20 on Monday afternoon on the Toronto Stock Exchange. (1=$1.12 Canadian) (Reporting by Scott Haggett; Editing by Frank McGurty)

    Also: from thedeal.com

    Addax Petroleum admits acquisition talks
    Posted on June 8, 2009 at 12:31 PM
    Filed under: Acquisitions | Corporate Strategy | Deal International
    Tagged: Addax Petroleum , China National Petroleum Corp. , Cnooc , earnings , Sinopec
    [ Share ] [ E-mail ] [ Leave a Comment ]
    With a possible price tag of about $8 billion, Addax Petroleum Corp (LSE:AXC) could become Chinese-owned soon. Responding to reports, Addax announced it has held preliminary discussions with third parties expressing an interest in a potential deal. A report from South China Morning Post said China Petroleum & Chemical Corp., or Sinopec, could buy Addax and that China National Petroleum Corp. and Cnooc Ltd. are also interested.

    Diminished petroleum sales have hurt Addax, which focuses on Africa and the Middle East. In May, it reported first-quarter net income dropped 98% to $5 million from $240 million in the prior-year quarter.

    The potential deal is part of a larger Chinese initiative to acquire foreign oil and gas companies. The paper also said Cnooc and its parent China National Offshore are planning bids of about $4 billion for the principal assets of Texas’ Kosmos Energy LLC. Of note, our sister blog Dealscape said that Texan neighbor Anadarko Petroleum Corp. (NYSE:ACP) could be positioning to buy Kosmos.

    Addax shares were up almost 11% on the deal news. – Baz Hiralal

    Finally: On Jim Hackett and APC from dealscape:

    Could Anadarko Petroleum acquire Kosmos?
    Share E-Mail Discussion Print Story
    Published May 12, 2009 at 2:19 PM

    Β« Previous Story Home Next Story Β»
    Could Anadarko Petroleum Corp. (NYSE:ACP) be on the acquisition trail? The Woodlands, Texas, oil and gas explorer just rolled out a $1.6 billion secondary offering of 34.5 million shares led by UBS Investment Bank and Barclays Capital, saying the proceeds would be used for “general corporate purposes,” including future capital expenditures, which, according to SEC documents, could include buying more acreage in offshore West Africa and further developing its prospects in the Marcellus shale in Appalachia.

    Houston energy investment bank Tudor Pickering Holt & Co. Securities Inc. thinks those “capital expenditures” might be an acquisition of all or part of Dallas explorer Kosmos Energy LLC. Anadarko spokesman John Christiansen said he couldn’t comment on the offering or the rumors. A Kosmos spokesman couldn’t be reached.

    Anadarko and Kosmos are exploration partners off the coast of Ghana, which may be on the cusp of an oil and gas boom. This past March, Anadarko announced it encountered 70 feet of net pay in the Tweneboa-1 discovery well, and an acquisition of Kosmos would give it a controlling interest in the Teak prospect in the West Cape Three Points Block and operatorship and double its 18% stake in the Onyina prospect in the Deepwater Tano License, which is 49.95% owned by Tullow Oil plc.

    Kosmos is a privately held gas explorer started by former executives at Triton Energy, which was initially backed by Hicks Muse Tate & Furst, went public and then was sold to Amerada Hess Corp. (NYSE:HES) in 2001 for $3.2 billion — thrice what the private equity firm put in. Kosmos is backed by Warburg Pincus and Blackstone Capital Partners — $300 million in 2003 and $500 million in 2008. Warburg is thought to own 55% and Blackstone 45%.

    Pickering noted that Anadarko avoided equity after its $23 billion purchase of Kerr-McGee Corp. and Western Gas Resources Inc. in 2006, but said the current opportunity “justifies adding capital.”

    This past October Anadarko CEO Jim Hackett said on the sidelines of the Mergers and Acquisitions Institute in Houston that the company would consider a smaller acquisition but was more focused on organic growth. Times — and Anadarko’s prospects off the coast of Africa — have changed a lot since then. – Claire Poole

  83. 83
    elijahwc Says:

    Sorry should be Re: 41 on Addax

  84. 84
    zman Says:

    Think APC is too leveraged, sure Jim would like to do it. He might even like that Kurdish oil.

  85. 85
    BirdsofpreyRcool Says:

    The recession is over. The recovery may not feel that great. But, we are not going to return to the prior market lows. Too much ice has thawed from the Credit Iceberg.

    IG 125

    HY 84 1/2

  86. 86
    zman Says:

    New plan for the time between now and 2Q reports. Check market first 15 and last 15 minutes of the day. Work on tan in between.

  87. 87
    ram Says:

    Do you guys tan in the midwest/south or burn?

  88. 88
    zman Says:

    We roast well because we have no smog.

    WRES trying to inch higher, most moves today just noise, nice reversals into the close but pretty meaningless.

    ROSE also moving up nicely, no, I’m still not there but that’s interesting as well.

  89. 89
    zman Says:

    AAPL rallying into the close, so obviously my energy positions should be moving higher, lol.

  90. 90
    BirdsofpreyRcool Says:

    Smog sure makes for some very pretty sunsets, tho.

  91. 91
    ram Says:

    Fortunately no smog, just fog on the coast.

  92. 92
    BirdsofpreyRcool Says:

    The unilateral power-grab of Chrysler by the President has been delayed by the Supreme Court.

    wow. This is positive.

  93. 93
    BirdsofpreyRcool Says:

    ram — you must be one of those Northern California guys, eh? As in, North of Ventura…

  94. 94
    ram Says:

    Actually, just south of Ventura.

  95. 95
    BirdsofpreyRcool Says:

    beautiful area. foggy in the summer, but great roadside produce stands!

    spent a summer in Ventura… working for Unocal… coldest summer I ever experienced πŸ™‚

  96. 96
    Paul in Kansas City Says:

    sunburn heavy here this weekend

  97. 97
    BirdsofpreyRcool Says:

    The Missouri or Kansas side?

  98. 98
    zman Says:

    BOP, this one’s for you:

    http://finance.yahoo.com/tech-ticker/article/260378/Obama-and-Geithner-Get-Ready-to-Cap-Wall-Street-Pay?tickers=XLF,JPM,GS,AXP,MS,FAS,^DJI?sec=topStories&pos=8&asset=&ccode=

  99. 99
    Paul in Kansas City Says:

    MO side; although what;s the difference stateline road isn’t too wide!

  100. 100
    BirdsofpreyRcool Says:

    I know… i meant it as kind of a joke… but I don’t think i made it very funny… oops πŸ˜‰

  101. 101
    BirdsofpreyRcool Says:

    z — re #98… you sure know how to get us Libertarians all riled up!

  102. 102
    zman Says:

    I don’t make the news, I just report it. Heh, heh.

  103. 103
    zman Says:

    Futures liking this:

    http://www.marketwatch.com/story/tis-midquarter-update-palls-results-due

  104. 104
    bill Says:

    chk did a small deal

    Privately backed producer Indigo Minerals LLC has returned to the acquisition market after making a $218 million cash deal with Chesapeake Energy Corp. to acquire some producing properties, undeveloped acreage and midstream assets spread across northern Louisiana, East Texas and Arkansas

  105. 105
    zman Says:

    Bill – saw that, no reserves with it so hard to tell how good a deal they got. Good for CHK to monetize some low upside acreage while retaining the deeper rights to the Haynesville.

  106. 106
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  107. 107
    mesin pin Says:

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  108. 108
    carpenter bees damage Says:

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