19
Jun

Quad Witch Friday

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Expect wild swings early on this quadruple witching Friday. Then utter boredom. The group has taken a breather for the last five days despite oil hanging in near its recent tops and signs of life from natural gas. I expect the E&P group to be brought back into alignment with the commodities in the near future, especially with regard to the oilier names.   


In Today's Post

  1. Holdings Watch
  2. Commodity Watch
  3. Natural Gas Storage Review
  4. Stuff We Care About Today - KWK, ATPG, more KWK, KOG
  5. Odds & Ends

Holdings Watch

  • $10KP: $24,000 / 65% Cash

Yesterday's Trades: None



Commodity Watch

Crude oil inched up $0.34 to close at $71.37 yesterday. You could not tell from the energy sectors which lost ground for the fifth straight day. This morning oil is trading back up just north of $72.

  • MEND Watch: This time AGIP feels the wrath of MEND as the group claims responsibility for blowing up a crude pipeline supporting the Brass export terminal in Bayelsa. This is the second attack outside of MEND's normal hunting grounds in the last week, as they move to expand their war on oil infrasturcture in Nigeria. The sabotage here gets worse every summer like clockwork.

 

Natural gas fell $0.16 to close at $4.09 yesterday after the EIA reported a bigger than expected injection to gas storage (see next section). It was a minor miracle (known as a continued but slow paced round of short covering) that kept gas from breaching the $4 mark. It seems to be getting harder for gas to fall. However, I don't think the commodity is ready to mount a sustain rally yet, not until we see definitive evidence of a supply rollover, sustained summer heat, and a recovery in the industrial economy (especially steel and chemical outfits and so far, I'd say there has been little recovery there to speak of). This morning gas is trading slightly higher with crude, again, interesting that it is becoming more resilient to near term bad news.


Natural Gas Storage Review


ZComment: Another unseasonably large build in gas storage as the north east experiences mild weather and industrial demand remains depressed. Storage is going to get full, probably north of 3.7 Tcf unless we start to see some demand pick back up AND evidence of declining production later this summer. We've know storage would get full since the end of winter so this is really nothing new and if you look back over time, gas in storage often has less influence on gas prices than the direction supply is headed. While the near month currently reads "glut", the 12 month strip, now at $5.46, reads coming supply pinch.

 



Stuff We Care About Today

Deal Watch:

  • KWK $600 mm debt deal

    • 2016 seniors, 11.75% coupon, ytm 12.5%
    • They plan to use the proceeds of this deal plus the recent Barnett asset sale to Eni to repay their second lien term loan facility.
    • I continue to see this one as more of a "go to" name, a financially leveraged, decently hedged (60% in 2009; 50% in 2010), gassy but with higher than average BTUs in the stream, "go to" name.
  • ATPG - $68 mm equity secondary

    • proceeds to help fund wrap up of a development in the deepwater Gulf of Mexico.
    • The story gets much more interesting at higher oil prices and I get the sense they will be continual selling down interests as they bring new projects online
    • Quite a bit of debt: 68% net debt to equity factoring in this secondary.
    • I'm working on a write up here
  • VLO Won't Acquire Interest in Netherlands Facility From Dow
    • While still on the hunt for an acquisition, VLO said TOT exercised its right of first refusal, locking VLO out of the deal. 

KWK Concerned Over BBEP Shelf Filing

  • KWK's message to BBEP, "step away from the equity window"
  • KWK, owner of 40% of BBEP's outstanding units, says Breitburn's unit price is too low for them to consider a deal now.  At yesterday's close KWK's ownership stakes was $166 mm here.
  • I have been asked a few times about BBEP and I said I'd stay away for a number of reasons including the complexity of their corporate structure and the lack of assurances (like hedges at the time) to maintain their dividend which they subsequently cut.
  • This little row may provide another entry point for me on (KWK).

KOG Net Asset Value Thoughts

This is where I’m at right now:

Table Notes:

  • 37,500 acres risked 35% so 24,375 acres prospective.
  • 640 acre well spacing. It will probably get smaller down the road but no rush and I’m giving them a lot of credit above by derisking the acreage.
  • That gives you 38 well sites.
  • 400,000 BOE EUR per well. That may be low but CLR is still calling the average well 325,000 (their IPs have been smaller but they’ve also drilled a lot more wells) so until I see bigger wells and some consistency in the ability to complete them I think that’s fair.
  • Go with $15 per barrel in the ground now, prices are better than they were by quite a bit and I think next year will be higher than here and so on so $15 per BOE is not out of the question for an oil deal in 2010.
  • 82% NRI and $112 mm shares and assuming no debt and no rig liability gets me to $1.74 per share with the $7mm cash, ($1.67 without).
  • TFS and downspacing are all upside, gravy if they exist. But I’d rather let the results walk the NAV up and not be yelling $4+ from the rooftops when the stock is a buck.


I'll be adding a mini cash flow model here next week.



Odds & Ends

Analyst Watch:

  • (SPWRA) upped to Buy at UBS, price target upped from $26 to $36.

"Cash for Clunkers" Bill Passes.

Another One Bites The Dust Watch: Stanford Arrested

 

93 Responses to “Quad Witch Friday”

  1. 1
    BirdsofpreyRcool Says:

    hey z! Thanks for putting your latest thoughts on KOG in excel-form. We can play with assumptions and tweek the model. But at this point, that is about as granular as you can get on this company… without looking like you are making it up.

    Any chance of following up with a CLR model… hmmmmm????? (it’s never enough with us people, eh?!)

    Thanks again

  2. 2
    BirdsofpreyRcool Says:

    TechTrader checking in… says best trade today is to short the morning rally, usually early, then again around 11 EDT for a sell off through lunch and into the afternoon…. odds are 60/40

    HeadTrader adds that it doesn’t mean we close negative, but the “best trade” (the one with the highest probability of making TechTrader massive moola) is to short the rally.

    Quad-Witching. Not a day I can make money, trading. Sitting on hands is usually the best way to protect the nest egg.

  3. 3
    zman Says:

    BOP – I plan to have the mini cash flow models for the names I traffic in most pre 2Q release. As far as NAV goes for CLR I’d add that one (really ballpark fashion) because on the bigger names I’m not a fan of NAV. Fine for little companies as it gives you some thoughts about where the little sucker should trade but the small, mid and large cap E&Ps always trade at substantial discounts to NAV (like 30 to 60% off) except on one day, the day they are acquired.

  4. 4
    zman Says:

    BOP – hear ya on #2. I’ll be adding to July HK at some opportune seeming time of the day.

    Saw the Tudor Folks basically said the same thing I did in the open, group feels heavy, expect a bounce some time soon, yada yada yada.

    If you look at crude and you look at the lack of move in the stocks since the end of 2Q, you’d think they all sold dung, not hydrocarbons.

  5. 5
    Sambone Says:

    By Nick Heath
    Of DOW JONES NEWSWIRES

    LONDON (Dow Jones)–Stronger equity markets and Nigerian militant activity
    helped nudge crude to back above $72 a barrel Friday, but uncertainly over the
    sustainability of the recent rally continued to keep prices rangebound.
    Emerging doubts over the pace of economic recovery have helped put the brakes
    on crude’s rise, and while U.S. macro data Thursday provided some comfort – the
    latest Philadelphia Federal Reserve survey, jobless claims and the Conference
    Board’s leading indicators were all better than forecast – concerns economic
    growth might be slower to materialize than hoped provided resistance to moves
    higher.
    “Risk appetite has stalled a little bit,” said Torbjorn Kjus, oil analyst at
    DnB NOR Markets in Oslo. “You can go quite a long distance on improving [macro]
    indicators but the next gains will be harder to come by.”
    At 1133 GMT, the front-month August Brent contract on London’s ICE futures
    exchange was up 68 cents at $71.74 a barrel.
    The front-month July light, sweet, crude contract on the New York Mercantile
    Exchange was trading 74 cents higher at $72.11 a barrel.
    The ICE’s gasoil contract for July delivery was up $1.50 at $586.50 a metric
    ton, while Nymex gasoline for July delivery was down 10 points at 202.85 cents
    a gallon.
    Many market participants have suggested crude’s rally – culminating in seven
    month highs above $73 a barrel last week – has lacked support from current near
    term fundamentals, advancing more on hopes for an improved demand picture
    further into the future. Crude prices could now consolidate in the recent
    trading range between $70-$73 a barrel.
    “Given [the] solid gains over the past few months, an extended period of
    consolidation would in our view be constructive while giving near-term
    fundamentals a chance to improve,” said David Hart, oil and gas analyst at
    HansonWesthouse in London.
    Geopolitical news helped underpin prices with news of more militant attacks on
    Nigerian oil producing infrastructure emerging Friday, while unrest stemming
    from Iran’s presidential election results continued.
    The main militant group in Nigeria’s Niger Delta said Friday it blew up a
    pipeline belonging to a subsidiary of Eni SpA (E), the latest in a string of
    attacks against oil companies in the region. Chevron Corp. (CVX) and Royal
    Dutch Shell PLC (RDSB.LN) have also been attacked by the militants. One attack
    alone in May cost Chevron 100,000 barrels a day in lost production. Current
    weak demand and high global inventories have dampened some of the effect of
    Nigerian supply disruptions, however.
    “We need to price-in a risk premium,” said Olivier Jakob, managing director of
    Swiss consultancy Petromatrix. “Missing flows from Nigeria are starting to add
    [up].”
    After six days of protests by opposition supporters in Iran, the country’s
    supreme leader Ayatollah Ali Khamenei on Friday ruled out the possibility that
    fraud was behind the reelection of President Mahmoud Ahmadinejad. Iranian
    tensions have historically caused unease in the oil markets, not least due to
    its position as the second largest producer in the Organization of Petroleum
    Exporting Countries, but there has been scant price response to events this
    week.
    “That the market showed little reaction to the ongoing disputed elections in
    Iran is more to do with a general feeling that the protests won’t be effective
    unless they spread from the middle classes and students to the working
    classes,” said Lawrence Eagles and other analysts at JP Morgan in New York.
    “Further, there is no current threat to crude supplies and even if there was,
    there is plenty of spare capacity in reserve should OPEC choose to use it.”

    -By Nick Heath, Dow Jones Newswires
    Dow Jones Newswires
    06-19-09 0754ET

  6. 6
    zman Says:

    FBR cutting drybulk sector to Underweight. This flies in the face of the Dalhman sector upgrade from about 3 weeks ago. Stocks are off since that upgrade. Makes me think its time to start looking a little harder here. DSX is back below $15.

    FBR says downgrade due to high supply growth forecast. Anyone have the Dahlman thoughts on ship supply growth, I had read some new build ships had been canned.

  7. 7
    bill Says:

    Question on the kog model:

    Do you have to discount the 194 m to present value or does the $15 have that baked in?

    also, if they are going to drill 38 wells, wont they need that 2nd rig?

  8. 8
    BirdsofpreyRcool Says:

    That KWK (very) high-yield debt deal looks like it’s pretty well accepted. 11.75% Sr notes due 1/16, priced at 97.717 to yield 12.5% is currently offered at 100.375 (2.5 pt move… PMs gotta LOVE that!).

    The fact that KWK has adequate hedges in place and cash coming in from ENI helps the risk profile here. It also makes the existing 8.25% KWK Sr notes due 8/15 look attractive at 86 or so for an 11.5% yield to worse.

    Both issues are registered, so us normal people should be able to buy.

  9. 9
    West Says:

    Thx z & bop.Z, WLL had some decline curves on their site but have it down for updating. BEXP has several slides on their current presentation I hope this link works.There is a lot of good information on BEXP’s presentation. http://www.bexp3d.com/IR_pres.pdf

  10. 10
    BirdsofpreyRcool Says:

    z — i saw a color-piece on shipping last night… basically a transcript between the analyst and his long-time industry contact. Gives me a bit of a pause on the Dahlman Rose recommendation. Hate to say it, but Omar may be early this time around. Really need to see the new build schedule… but demand may be weaker than originally thought too, when the DR upgrade was published.

    New information… so may have to back away from thinking DR got it right again. Watching….

  11. 11
    bill Says:

    there were too many ships ordered,the 64 k question is how many will be delivered and can the buyers arrange financing.

    I think its a legitimate concern. Offsetting the new supply is scrapping. Low rates encourages scrapping. Higher rates the clunkers keep working. Rates recovered in q2 and scrapping declined. The ffas show lower numbers as the new supply comes in

    Maybe, congress should give ship owners
    45 m to trade in old bulkers.

    Suppose someone put down 20 m to buy a 100 m cape and the current value of a cape is 60 m, this encourages them to walk away and forfeit the 20 m.

    The real pain will be felt by the shipyards as there are no new orders coming in

  12. 12
    zman Says:

    Bill – you guessed it, I’m not running a PV10 (present value 10% on the reserves) but instead running a “what if they were acquired scenario) in that NAV. It’ll cost a lot to drill all those wells and take several years. But in an aquisition, I’m thinking they could get $2 to $2.50 per Mcfe ($12 to $18 per barrel) in the ground on the m. Bakken alone.

  13. 13
    kyleandy Says:

    bop – u have cusip for kwk bonds?

    z – glad to see passage of cash for clunkers. i have prime candidate.

  14. 14
    zman Says:

    EGLE has a lot of ships on the way but I think they are ok on financing them.

    If crude holds up here for a little while longer, you have to think that those who were slamming money into the sector a month ago but have run like rats will rejoin.

  15. 15
    zman Says:

    Kyle – I have my eye on an $800 pickup in the paper, wife wants the Jetta TDI. She apparently does not care about boosting diesel demand.

  16. 16
    BirdsofpreyRcool Says:

    KWK 8.25% due 8/15 offered around 86
    CUSIP 74837RAE4

  17. 17
    zman Says:

    BOP – are those the right bonds?

    West – thanks. Have both presentations open. Never been a huge fan of BEXP, they’re eyes have been too big for their wallet. They do put together a big fat presentation though. And the stock has been flattened since it rallied last year after a notorious pump shop wrote it up.

  18. 18
    bill Says:

    Scott Burk: Ted, maybe you can discuss the supply picture on the larger vessel front, specifically if
    you address the size of the current order book; and also how scrapping may affect that and how
    owners are making the scrapping decisions based on what has happened with freight rates recently.
    Ted Petrone: The order book is a very interesting question; there are a number of issues that go with
    the order book. There is a lot of slippage coming on – how much of that is actually going to appear
    coming forward? There are 68 million tonnes we were supposed to deliver this year; the shadow
    forecasts are now under 50 and going lower. There are three parts of slippage: was the book over
    marked? Probably yes, we can get into that, but it’s too long. Cancellations, delays; it looks like the
    order book was over-marked considerably, Getting onto the scrapping side actually, historically during the market downturns the significant
    scrapping took 6-12 months. There was this lag time before scrapping really got going, but this time
    around it was almost immediate; it got kick-started as soon as the market came off in the fall. Look,
    you’ve seen 5 million deadweight tonnes scrapped in Q4 and almost the same in Q1 of this year;
    you’ve seen almost 7 million deadweight scrapped this year so far. The previous annual record was
    12.3 in 1986; I think 1998 was very close. Some projections show scrapping doubled these previous
    record levels. I think even if shipping rates stay high or improve to 2009 scrapping activity is going to
    remain high, but yes, the current trend is slightly below that double of the previous record trend, but
    scrapping, like everything else in shipping, is just not predictable.
    A downward correction in freight could start another scrapping wave; and I think Dale talked about it
    before, at that tipping point with the delivered price of iron ore, if the market starts coming down I think
    you’ll see another wave of scrapping going on.

  19. 19
    BirdsofpreyRcool Says:

    Those are the old KWK bonds… the 8.25% due 8/15. $475mm issue, BofA and CS lead underwriters. I see them offered around 86 for a YTW of around 11.5%. They mature 1 yr before the new bonds.

  20. 20
    zman Says:

    ZTRADE:

    Added (10) HK July $24 calls for $1.10 with stock at $23.

  21. 21
    bill Says:

    Scott Burk: Dale, could you expand on one of the things Ted talked about, and that’s order
    cancellations and delays? We do have a significant influx of ships scheduled for 2009 and 2010, how
    much slippage do you expect or cancellations and how is that going to affect supply and demand for
    the dry bulk industry?
    Dale Ploughman: As Ted said, it’s a very murky crystal ball this one. It’s very difficult to ascertain
    what has been cancelled, what has been delayed, and all you can do is to try and put a certain
    percentage in your own mind where you think it’s going to go. I think in 2009 we’ve seen quite a small
    number of ships actually delivered and I think a lot of them have been postponed towards the end of
    the year, but most of them I think will probably go into 2010. If we look at the total new order in
    deadweight terms we’ve got roughly 50% again of the current deadweight in the world actually on order
    for the dry bulk, but then if we say that roughly 40% of that will not effectively come to fruition, because
    when we start looking at the Greenfield sites, which effectively will not get built, and that tends to
    towards the smaller ships.
    In the Capes of course it is a different story, because most Capes are being built by recognized bigger
    yards and most of those will probably come, although we are looking at somewhere in the region of
    about 80 Capes not actually happening because of the cancellations which we know of. But even so,
    even if we apply 40% to the current order book as it stands, we’re still looking at an influx over the
    current situation of about 26-30% in deadweight terms, so there’s still a lot of tonnage coming in. You
    say to yourself how is this going to affect the market? And obviously you’ve got to think of what the
    compound growth on commodities is going to be.

  22. 22
    bill Says:

    All the pundits tell us that in 2009 there’s going to be a reduction in basically the tonne-miles moved
    and that’s the issue you have to look at; yet 2010, the forecast is there will be an increase in tonnemiles.
    Over the next few years is there going to be sufficient increase, say, from a compound basis to
    actually absorb all the additional off tonnage.
    It depends on what percentage you look at and if you say that you think an average of 4% then you’re
    not going to be in a position to absorb all the tonnage, so it is just going to have a downward trend. But
    the unknown fact also is scrapping and when does an owner decide to do it; obviously now what’s
    happening is you’re seeing, because of the fall in the rates increase, a lot of people are rethinking about
    their scrapping plan. At the same time, a lot of people are rethinking about should I be cancelling my
    order, should I wait a little bit longer, so there’s an awful uncertainty out there

  23. 23
    West Says:

    exactly, love the presentation but better not start dating her.

  24. 24
    tater Says:

    cash for clunkers and the brains behind such a use of our government powers = RANT!!!

    I feel better now. Thank you for listening.

  25. 25
    bill Says:

    We’ve seen very few such transactions yet, but I expect to see a lot more
    and what I mean is the shipyards and the owners may have more incentive both sides to reach some
    kind of an agreement to postpone, for example 2010 deliveries, for a much later delivery. The shipyard
    has zero new orders for 2012, 2013. They would like to see a more normalized picture instead of
    working to capacity in the beginning and have zero newbuilding orders for later. They would like to
    normalize; they have an incentive now to normalize their order book and that might produce an
    opportunity for owners as well to even out the order book into a longer period. We have seen that
    happening already; already one of the other public companies has done such a deal and I welcome it
    and I think we will see a lot more.

  26. 26
    BirdsofpreyRcool Says:

    The new KWK bonds, $600mm 11.75% due 1/16, offered around 101.125 now.

    CUSIP 74837RAF1

  27. 27
    zman Says:

    ZTRADE:

    EOG – Added (5) EOG July $75 calls (EOGGO) for $2.10 with the stock at $71.

  28. 28
    BirdsofpreyRcool Says:

    TechTrader update — largest gap up in history on this particular day, gives odds over 70/30 for a short trade working well. highs are on the gap and again at 10:15 and 10:30, best lows are 10:45 and before lunch. SPOOS will close positive, NOT negative, hits the HOD on the NYSE close.

  29. 29
    bill Says:

    if you go to capital link.com they had a forum on drybulk on 6/12 that you can listen too or get a copy of the transcript for free.

  30. 30
    zman Says:

    BOP – regarding the close, just what I was thinking.

    EOG selling well overdone here. This is one of the ones that will see upward revisions next two weeks to analysts estimates as they mark up the crude deck they are using. If there is one good thing EOG is good at in the IR department it is reigning in out of hand estimates to prevent misses. So they bag the analysts for a beat and in times of a rising oil prices, they really bag the analysts. Same crew of model reading, analyst bagging folks have been there for over a decade now.

  31. 31
    zman Says:

    Thanks Bill. Seems early on the group for a turn given world economy, shakily recovering. Seems waiting on transactions is key, rates ran and the stocks didn’t do that much. Sitting on hands.

    Pinning action setting in in a lot of names. Heck, it seems pinning started a week ago. Sham-boring.

  32. 32
    zman Says:

    Tater – its only a $1 billion program. What’s another billion?

    Could you look at EOG, CLR when you get a chance on a chart? Thanks.

  33. 33
    BirdsofpreyRcool Says:

    Given the food fight we are seeing over grabbing for the new 11.75% KWK bonds, we have to agree with this Brian R piece. READ.

    Pick your stocks, pick your price, execute your plan. We will see volatility this summer, but we are at the start of a releveraging cycle that will ultimately put a foundation under the stock market.

    http://www.capmarkets.com/ViewFile.asp?ID1=301396&ID2=318535925&ssid=2&directory=11608&bm=0&filename=The_Flood_6-19-09.pdf

  34. 34
    zman Says:

    Dman – does Think or Swim keep good track of option trading volume if you want to go back and look at time and sales? Can you overlap that with the stock chart?

  35. 35
    zman Says:

    For instance, I’d like to see how blocky the volume is in the $75 July’s I bought earlier. Just before I bought in 20 contracts had traded. Now, 1,459 traded within 20 minutes. All other contracts still barely moving with the stock barely moving as well.

  36. 36
    tater Says:

    I’ve pretty much got everything updated as of yesterday (including CLR and EOG). EOG and CLR both need to hold their 50EMA’s (about where they are now) in order to maintain any kind of momentum.
    I think they are both at good buy points because they are at a place where it is very simple to put a stop loss sell order on them just below here and declare a loser with hardly any loss. If you get upside bounce, well great.
    I know you can always do that with any name at any point, but I think that these are particularly situated concerning the likelihood of a bounce TA-wise.

    side thought = lets see whether anybody in DC knows anything about game theory and the idiot in N Korea. Elduque how’s it feel to be a game piece? Hope it’s sunny. (Every been to Hawaii Tater? Of course it’s sunny!) Stay safe.

    Been cleaning the cave this week. Heading back again today. Good luck.

  37. 37
    zman Says:

    ZTRADE:

    Added KOG at $1.03 in the family account. Not adding more at this time to the $10KP.

  38. 38
    zman Says:

    Tater – thanks, will look, should have looked before asking. The name of the day is Kang Nam:

    http://www.cbsnews.com/stories/2009/06/18/eveningnews/main5096468.shtml

  39. 39
    Sambone Says:

    By Veronica Dagher
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–Natural-gas futures rose slightly Friday amid forecasts
    for warmer weather across the key demand centers, despite swelling gas storage
    levels.
    Natural gas for July delivery on the New York Mercantile Exchange was trading
    1.6 cents higher, or 0.4%, at $4.109 a million British thermal units. The
    contract climbed as high as $4.159/MMBtu in earlier trading.
    Forecasts for above-normal temperatures, which could boost demand for
    gas-fired power for air conditioning, were helping nudge prices higher Friday.
    “The temperature factor should prove instrumental in slowing these injections
    given an ongoing warming trend across much of the nation’s midcontinent that
    appears sustainable into early July,” Jim Ritterbusch, president of the energy
    advisory firm Ritterbusch and Associates, wrote in a note to clients on Friday.
    The National Weather Service was predicting warmer-than-normal temperatures
    across the Midwest and in Texas from June 24 to June 28, with below-normal
    temperatures along the East Coast.
    Hurricane season was also providing some support for prices even though some
    forecasters expect the season to be less active than average. “In hurricane
    season, anything could happen at any time,” said Julio Sera, trader at Hencorp
    Becstone Futures.
    Storms threats to key energy infrastructure in the energy-rich Gulf of Mexico
    could help offset the glut of natural gas in U.S. storage. Swelling storage
    levels amid a boom in domestic gas production pressured prices lower.
    Natural gas storage stands 2.557 trillion cubic feet, 22.6% above the
    five-year average and 32.1% above last year’s level, according to the U.S.
    Energy Information Administration.
    “Unless demand increases the market fundamentals don’t support a sustained
    rally,” said Gene McGillian, analyst with Tradition Energy.

    -By Veronica Dagher, Dow Jones Newswires
    Dow Jones Newswires
    06-19-09 1021ET

  40. 40
    PackMan Says:

    HK Looks like they are killing the June 22.50 calls w/ 16,000 open interest.

  41. 41
    BirdsofpreyRcool Says:

    TechTrader comments for next week — looking for the sell-off to continue to 6/26 (next Friday). Then a small bounce into quarter end (Tues) and then a mid-July sell-off again.

    Just passing along TechTrader thoughts.

  42. 42
    BirdsofpreyRcool Says:

    wow. New KWK bonds offered at 101.625… priced at 96.7 last night. A FIVE POINT MOVE in a high yield bond. Feels like the old days, buying telecom bonds at par (100) and watching them shoot to the moon (109). Those were heady days, in high yield land.

    [so you can see, a 5 pt move in one day is HUGE]

  43. 43
    zman Says:

    Pack – agreed, looks like same plan for EOGs on the $70s and $75s.

  44. 44
    Sambone Says:

    BOP, What happens if the Tres sale next week has any trouble?

  45. 45
    BirdsofpreyRcool Says:

    Sam — then the mrkt goes down. Until the world realizes that people/funds/countries will still buy US Treasury bonds. Then the mrkt goes up. Record auction next week… but, new “records” being set every week now.

    Cash for Clunkers… just another way to say, “you want some Treasuries with those fries?”

  46. 46
    bill Says:

    interesting article:

    http://www.hellenicshippingnews.com/index.php?option=com_content&task=view&id=52566&Itemid=37

    It is a very interesting world we have created – the stock market used to be a place to raise capital and value equities based on supply and demand for the stock. Valuation used to be the underlying determinant. That seems to be changing with all the new instruments we have created, especially of the ETF kind. I’ve been opining the past 18+ months that I believe that has changed the game… the ETFs and program trading have made this a very different world – now a casino where money flow is more important than actual things being bought and sold.
    It’s now all about wondering which direction the student body will run, and what sectors they want to be in;

  47. 47
    BirdsofpreyRcool Says:

    But, the corporate bond market is pulling it’s act together. And yields are still low, although the “real” rate (yield minus inflation) on UST is near the record on expectation of inflation to come.

  48. 48
    bill Says:

    Dicker said that should oil prices continue to rise, the drumbeat for action will continue to get louder. He said he could even envision regulators forcing all futures traders to liquidate their contracts when they expire, rather than rolling them over into the next month — which is how regulators responded when the Hunt brothers tried to corner the silver market 30 years ago. “If the screaming gets loud enough,” he said, “you could see some pretty draconian measures.”

  49. 49
    BirdsofpreyRcool Says:

    latest from TechTrader has me rolling in the aisle …

    HOT NEWS FROM NEW YORK: lot of guys up here in NY off their desks today to go to US OPEN at BLACK COURSE in Bethpage Long Island..one of 5 toughest courses in America…yesterday rained out ,first nice day here since WW I Armstice so everyone gonzo …not even B teams on desks.. all interns and alcoholics.. with orders DONT FUQ ANYTHING UP..and YOU HAVE ZERO TRADING LINE might as well head out for coconutville..

    [translation — TechTrader is done for the day, flatlined. Too tough to call mrkt on back-up traders and low volume]

  50. 50
    zman Says:

    BOP – sounds about right. Not concerned about any of the action I see today, just noise, some of it opportunity knocking, most of it just noise.

  51. 51
    elduque Says:

    Thanks for your excellent discussion on the dry bulkers. As I stated earlier, the CFO of PRGN was very clear that they thought the new supply coming on board would keep prices depressed. They had lots of cash and expected that to use it later rather than now to buy cheap bulkers, in fact they were even considering selling one of there ships right now.

  52. 52
    Dman Says:

    Z – I’m looking at a 1-minute chart of the EOGGO. A volume chart below shows 1 contract at 9.50 then 4 at 9.51, both at $2.10. A few small trades follow & then at 9.58, 1401 contracts at $2.

    (note the prices are not on the vol chart, I’m just reading them by mousing over them & the price range appears in the top of chart line)

    There is a completely separate time & sales feature, but it isn’t overlaid on a chart.

    I’ve got to be careful with this, there are so many features I haven’t explored & whilst I was fiddling around just now I somehow posted an order to sell 10 contracts of something for $0.00 (managed to stop it before it was confirmed!).

    In general, since you already have a decent platform, I’m guessing ToS will be somewhat better in some ways, maybe not in others. But for me it was a huge improvement from a very clunky system.

    You don’t need to fund an account to play with the platform (you have to fill out the online forms to set it up of course). So I’d suggest just have a play with it 🙂

    NG fading somewhat here …

  53. 53
    zman Says:

    Thanks Dman. I do need to do that, but so far its been easier to bug you than do it myself ;->

  54. 54
    Dman Says:

    So is #52 any different to what your platform does?

  55. 55
    zman Says:

    Mine does not chart option price. I do that with another program outside the trading site and so, I don’t do it very often.

  56. 56
    VTZ Says:

    I use interactivebrokers. It’s extremely cheap commissions and has full features and access to products.

  57. 57
    VTZ Says:

    Another good thing about interactive brokers is if I have my base currency set as CAD and I buy a USD stock or option. It will automatically hedge my currency back to CADs so I don’t have currency exposure.

  58. 58
    BirdsofpreyRcool Says:

    VTZ — about 1 1/2 yrs ago, interactive brokers bought my favorite trading platform — “FutureTrade”… do they let you use that one? It is the best i’ve worked with.

  59. 59
    VTZ Says:

    Don’t know about that.

  60. 60
    BirdsofpreyRcool Says:

    VTZ — it is definitely worth asking about. the “Market View” template is the best visual i’ve seen. Love the “daily range” and “relative volume” bars. I’m about to lose that service (i was an old customer of FT, before they were bought), so thinking about migrating some personal money into IB… if they let you use the FT platform.

  61. 61
    Dman Says:

    VTZ – I’m looking for a Canadian online broker that is actually Canadian owned & independent of any US firms and so (hopefully) independent of the increasingly interventionist US govt. The idea is that if I’m going to own things like ERF, I might as well own them in a Canadian account. But I don’t really have any ideas on what brokers would be available.

    Also, are there options traded for stocks like ERF on the Canadian exchanges? (The spreads are terrible for the US traded options).

  62. 62
    zman Says:

    Crude back to even with the market. Dollar is actually off quite a bit today, down 0.4% and looking again at the 80 level. Stocks just drifting lower.

  63. 63
    VTZ Says:

    It sounds like they’ve adopted some of the aspects. They are continually adding features. The charting, order criteria, speed of order execution and pair trading is also exceptional. Just my 2 cents.

  64. 64
    VTZ Says:

    http://www.m-x.ca/nego_cotes_en.php?symbol=erf

    Spreads are bad.

  65. 65
    VTZ Says:

    Dman, IB has a canadian office in Montreal and they also have no investment instruments. They make all their $ strictly from commissions. I think they are safe from US intervention.

  66. 66
    jiveyjr Says:

    looks like some wet drunk or intern on a trading desk hit the sell button on EOG…taking it back near 50 day sma….I’m gonna buy me some

  67. 67
    PackMan Says:

    i think you almost have to buy CHK HK SD EOG right now……

  68. 68
    West Says:

    Quick update from RMOJ 6/19/09. Data from Peak ND 320 ac units for Heart Butte field west of KOG acreage. 320ac, avg por 6%, 25% h2o sat, 988scf/bbl gas/oil ratio, primary recovery 13.8%, eur/oil 342,520, eur/gas 330,190 mcf. I’m sorry but I will be out rest today, so I will try to do a post this weekend. Everybody have a great one.

  69. 69
    zman Says:

    Re 66 and 67 – Obviously I would not agree, jury still out for me on SD, but my timing as been, um, off last week or so as they have flushed the group without flushing commodities.

  70. 70
    BirdsofpreyRcool Says:

    West — you’re a great well-watcher. Thanks for the info!

  71. 71
    zman Says:

    West – that’s for two wells? Big bold recovery factor there.

  72. 72
    PackMan Says:

    well, i didn’t buy SD, but I did buy EOG and HK ! already own CHK.

  73. 73
    PackMan Says:

    b/c of options shenanigans …. 70 strike and 22.50 strike made those sell offs very tempting.

  74. 74
    BirdsofpreyRcool Says:

    that Peak primary recovery at 13.8% seems high, compared to CLR’s statement yesterday that 8-9% is what they use. Interesting….

  75. 75
    BirdsofpreyRcool Says:

    MIDDAY Trading Update

    · Decent open, but conviction remains light and ex rebal/expiration, volumes/activity aren’t that heavy. Tech having a strong session after trading sluggish over the last few days (tech strength despite RIMM sell-off) w/software & hardware leading things (MSFT and DELL esp. strong). Health care again having a strong session – up ~1% (was up 2% Tues and another 2% yesterday) as investors again heartened by headlines out of Washington. Consumer discretionary acts well, up 1.4%. Financials sold off this morning but rallied back as noon passes. Staples, energy, utilities, telecom carriers are weakest today. VIX is collapsing today, dwn 6%.

    · Treasuries – are higher on the day following yesterday’s weakness; 10yr yields increased 14bp yesterday, the most since June 4. 10yr yields are dwn 3bp today.

    · Corp credit acts a bit better today (although still lags equities a bit)

    · FX: dollar selling off, reversal of its strength yesterday; some are citing the Moody’s intra-day warning on California for the dollar weakness. Euro bounces following sell-off late in US equity trading yesterday (the $1.40 level being watched as important technically for the euro).

    Calendar

    · S&P will conduct quarterly share rebalance for the S&P 500, 400, and 600 indices after the close on Friday, June 19, 2009.

    · Quad witch options expiration on Friday

    · On the short selling front, the comment period for the SEC’s new proposals ends June 19, so we could see a formal announcement on new rules soon.

    · Preliminary look at next week: 1) FOMC decision due @ 2:15pmET Wed June 24; 2) tech earnings (a bunch of May-end tech reports, inc. ORCL, PALM, ACN, JBL, TIBX); 3) Treasury auctions resume (TSY going to do 2yr auction on June 23, 5yr on June 24, and 7yr on June 25). Eco #s due Mon morning: Richmond Fed Index, existing home sales, housing price index.

    · ECB tender operation coming up next week; The ECB said last month it will lend banks as much money as they need for as long as a year, with the first offering scheduled for next week

    SP500 Performance Breakdown (source: Bloomberg)

    · Stocks helping sp500 most: MSFT, AAPL, ORCL, JNJ, HPQ, MRK, GE, DELL, PFE, CVS

    · Stocks hurting sp500 most: WFC, T, WMT, EOG, PEP, APA, VZ, DVN, PG, GS

    · Top Gainers: GNW, CCL, WYN, M, CIEN, HSP, DELL, CI, OI, HIG

    · Top Decliners: FII, TSN, EOG, COF, MA, THC, APA, DVA, CHK, CTL, DVN

  76. 76
    bcinca Says:

    Re: Canadian Broker…David Elliot at Haywood Securities in Vancouver, BC…604-697-7128…recommended by Jay Taylor in his newsletter

  77. 77
    Dman Says:

    thanx VTZ & bcinca

  78. 78
    zman Says:

    Gasoline getting slapped pretty hard after having fallen through $2. I see stories trying to explain it but there is nothing new in them to account for the drop, just more shenanigans.

  79. 79
    Sambone Says:

    By Jason Womack
    Of DOW JONES NEWSWIRES

    HOUSTON (Dow Jones)–The number of rigs drilling for oil and natural gas
    climbed this week, marking the first increase in the U.S. rig count since
    April.
    The number of oil and gas rigs climbed to 899, up 23 from the previous week,
    according to data from oil-field services company Baker Hughes Inc (BHI). The
    number of gas rigs was 692 – an increase of seven rigs from last week and the
    first increase in the count since February. The oil-rig count rose to 196, an
    increase of 13 rigs. The number of miscellaneous rigs increased by three to 11
    rigs.
    The number of gas rigs in use peaked at 1,606 in September. The rig count has
    been under pressure in recent months from lower natural gas prices. Analysts
    stopped short of saying that this week’s increase signaled an uptick in U.S.
    drilling activity.
    “One week is not indicative of a trend,” said Cameron Horwitz, an analyst with
    SunTrust Robinson Humphrey in Houston, adding that he expected the natural gas
    rig count to decline next week as producers cut rigs to cope with lower prices.
    However, the oil rig count could continue to climb, bolstered by the strength
    in the crude oil market, Horwitz said.
    Natural gas prices have tumbled about 70% from summer highs amid robust
    production from U.S. onshore natural gas fields and weak demand. Large
    industrial consumers have curbed 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 July delivery on the New York Mercantile Exchange was recently down
    2.9 cents, or 0.71%, at $4.064 a million British thermal units.

    -By Jason Womack, Dow Jones Newswires
    Dow Jones Newswires
    06-19-09 1348ET

  80. 80
    zman Says:

    Rig count watch:

    Oil up 13 to 196 from 384 a year ago
    Gas up 7 to 692 from 1514 a year ago

    Horizontal up 10 to 391 from 544 a year ago.

  81. 81
    zman Says:

    Oil trying to hold 69 into the close of Nymex with gasoline off 5%, pretty tough action there. NG trying to hold $4 into the close. Stocks continue to drift lower.

  82. 82
    PackMan Says:

    Ha…. got their 100 Dow points back from yesterday morning’s pump job !

  83. 83
    occam Says:

    re 61 – Dman, it is illegal for U.S. citizens to buy options on non-US stocks. There seems to be no rationale for this (maybe CBOE or someone else who would benefit is behind the rule). I have looked into methods for doing this, including setting up a Canadian account, but no luck. If you just want to trade Canadian stocks, IB is excellent (probably ToS, others too). I keep both a US dollar and a Canadian dollar account, so don’t have currency conversion charges when buying and selling Canadian stocks.

  84. 84
    zman Says:

    Occam – thanks for the push by the way on ATPG…making for interesting reading.

  85. 85
    choices Says:

    http://seekingalpha.com/article/144052-bogle-investors-getting-killed-in-etfs?source=article_sb_popular

    Interesting comments by John Boggle, someone who has pretty much seen it all in the financial world-should not be surprised that the sponsor is making out better than the buyer of the ETF.

  86. 86
    choices Says:

    VLO seems to be trying to find support in here but nothing to indicate yet that it wants up.

  87. 87
    AAA Says:

    BOP,

    TT really nailed it today.

  88. 88
    choices Says:

    It will be interesting to see where HK closes today, hovering right around strike price of 22.50 now after being as low as 22.10

  89. 89
    zman Says:

    Choices – I see it (VLO), I even like the chart a bit. But cracks got crushed by today’s action in gasoline, they were having trouble getting out of bed anyway. I’m still going to have to stay on the sidelines.

  90. 90
    choices Says:

    FWIW: For those seeking some monthly income with some risk, based upon energy and gold stks with covered calls, GGN pays about 12% with stable distributions projected out for the next few months-I own some.

    http://seekingalpha.com/article/144070-gold-oil-and-fixed-income-they-re-all-in-this-cef-ggn

  91. 91
    ram Says:

    What a difficult week. Hopefully next few weeks are better.

  92. 92
    BirdsofpreyRcool Says:

    AAA — yeah… TT was scary-right today. He also thinks the sell off continues next week… but we see a bounce into quarter end (starting some time before june 30th). I won’t bet against him.

    Keep dry powder to buy stocks in good companies at great prices. Volatility can be your friend.

    Have a great weekend all. Cheers!

  93. 93
    Dman Says:

    Occam #83

    how bizarre ?! You can own equities but not the derivatives?

    Yet $300 trillon in derivatives from Goldman, AIG etc was just fine 🙂

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