25
Jun

Thursday – Oil Review and Gas Preview Plus E.F.S. Update

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Jobless claims disappointed at 627,000 so look for a bumpy opening as the market continues to focus on the 600,000 level (right or wrong, meaningful or not) as the go / no go point for equities. 

In Today’s Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Natural Gas Preview
  4. EIA Oil Inventory Review
  5. Stuff We Care About Today - Eagle Ford Shale update, SM thoughts
  6. Odds & Ends

 

Holdings Watch:

  • $10KP: $19,100 / 56% Cash

Yesterday's Trades:

  • HK - $23 July Calls (HKGT) for $0.60 on the mid, with the stock at $21.25. Just adding a little more leverage in the event they have a PR in store in the next 3 weeks.

 

Commodity Watch:

Crude oil fell $0.57 to close at $68.67 yesterday. The fall did not come as a result of the EIA's inventory report (see details on that below) but was instead prompted by a late day rally in the dollar which itself was prompted by the FOMC statement that was somewhat poorly received by everyone but the bond market once the Fed failed to expand its Treasury purchase program. This morning crude was trading up as much as $0.80 but sold down to the $69 level following the jobs number.

  • Nigeria Watch: MEND claims to have attacked another pipeline in Rivers state putting 3 flow stations "effectively out of service". Shell has still not confirmed the damage, if any from, three attacks last weekend.

Natural gas fell $0.12 to close at $3.76 yesterday. The August contract, which takes over as the front month contract on Friday was trading at $3.91. I think it is still early, in the bottoming phase for gas and that gas will not be able to maintain its footing around the $4 mark without injections of less than 100 Bcf in the very near future (including today's report - see below). This morning gas is trading up a penny with the slight move in oil.

  • LNG Watch: LNG tanker tracker "Waterborne" says Asian LNG demand was off again in May, a fifth consecutive month for Asian LNG to dip below 2008 levels. They point to this as the reason for U.S. imports being up 36% year to date. Waterborne adds that Chinese demand was not down but up 59% in May as they took advantage of cheap pricing. ZComment: I have to point out that this increase in LNG imports is attributable to very low volumes imported to the U.S. in 2008 that this increment is only about 0.3 to 0.4 Bcfgpd and that volumes are well off the record pace of 2007. I'd also point out that liquefaction capacity is up again in 2009 (see yesterday's LNG comments) and yet it does not seem to be showing up anywhere. My suspicion is that Asia is taking more volumes than trackers are accounting for. 

Natural Gas Preview

  • My number: 95 to 106 Bcf. 
    • History:
      • Last Week: 114 Bcf
      • Last Year: 85 Bcf
      • 5 Year Average: 86 Bcf
    • Weather:
      • Pretty warm, CDDs were essentially normal in aggregate but the distribution is out of whack with the northeast not sharing in the heat wave. While we definitely are seeing cooling load increase, the won't shy away from bigger than normal without some more heat in the East consuming region (of which the northeast is a big part)
      • EEI reports electricity generation was up 4.6% vs the prior week but was also down a whopping 14.6% from year ago levels. 
    • Imports:7.5 Bcfgpd, in line with the previous week, not really enough to notice.
  • Street Consensus: 101 Bcf.

EIA Oil Inventory Review


ZComment: Bigger than expected drawdown on crude stocks due to higher demand from refineries. First time in awhile I can say that's a pretty good draw for a good reason (not imports which actually ticked up a notch). Trouble is, you refine more in a low demand environment and finished goods inventories tend to rise faster which is what happened yesterday. On the distillate side, this isn't as much of a problem as we are already bloated on stocks and this time of year we expect to see distillates rally. But gasoline demand is erratic and can't seem to find its seasonal footing. We are now "in line" with year ago and five year average levels on gasoline. While I expect to see increased demand in next week's report for the 4th of July holiday the trend in gasoline demand is somewhat trendless at present, and refiners will need to curtail production quickly if it does not pick up soon.

CRUDE OIL:





 

 

GASOLINE:

 




 


 

DISTILLATES:



Jet Fuel - I don't generally track this smaller component but I'm looking for signs of a turn and will begin tracking this one as well beginning this week. One group thinks air traffic may have reached a floor.

 


 

Stuff We Care About Today

Eagle Ford Shale Update:

  • (SM) Announces Webb County Well. See map of Texas counties here.
    • Briscoe G 1-H:
      • 7 day test of 5.6 MMcfepd, 79% gas; working interest on this one and the next, 100%. They commented the test was constrained by facility limitations but did not elaborate.
      • 7,500 deep (much shallower than the PXD well way over in Dewitt county) with a 3,200 foot horizontal, 10 stage frac
      • Cost of $5.2 mm with extra science on the well; (SM) sees future wells in the $3.5 to $4.5 mm range. They comment that their EFS acreage is shallower than others in the play which is true and say this leads to reduced drilling times and therefore costs which really isn't that much of a savings as the vertical part of the well is the easiest, least complex part of the task.
    • Acreage Increasing. SM announced that they had bumped up their E.F.S. acreage from 210,000 to 225,000 acres
    • Second Successful Well. A second well has been drilled and cased in Dimmitt County but not yet tested
    • Two Rig Program Through Year End
      • They are running a 2 rig program (1 rig in Webb and 1 rig in Dimmitt in JV with APC/TXCO)
      • They plan to drill 2 more horizontals (beyond the second well mentioned above)  on their 100% working interest acreage (195,000 acres) and 2 more on their JV acreage with APC prior to year end.
    • SM had reserves of 866 Bcfe as of YE2008 so this program won't be a big addition this year, assuming the wells ar 4 Bcfe apiece, but with higher prices, they offer a low finding cost solution for reserve additions when gas prices recover in 2010 and beyond.
    • Just a little background on these guys;
      • Haynesville, Eagleford, Woodford, Marcellus focus
      • fairly gassy (65% of 1Q production),
      • well hedged (50% of Mcfe's hedged north of $8 this year; but also over 50% in good hedges in 2010 and 2011.
      • balance sheet: 34% debt to equity (so not high, a little over half of that is revolver debt which they may have a desire to eliminate given gas prices) ; EBITDA to Interest of 17x (so debt is well in hand, their hedges are helping them a lot with cash flow generation at present)
      • they beat guidance for 1Q and upped full year guidance to a decline of 7 to 10% for 2009 YoY as try to spend within cashflow.

Map of Eagle Ford Shale wells to date: Excludes PXD well to the north east in Dunn County, three more wells drilled in La Salle by HK and this SM well:

From HK we are waiting on news regarding:

  • Dora Martin 1716 1H
  • STS Palmert 944 1H

Eagle Ford Players Acreage Vs Impact:

Eagle Ford Shale Players Valuation:

 

I have added an Eagle Ford Shale Notes page to the Reports tab.

The KOG Notes page has been updated. 

Odds & Ends

Analyst Watch:

  • Goldman changing ratings and price targets in both directions on a slew of oil service names. Notable names on Goldman's list include:
    • (HAL) and (PTEN) cut to Neutral
    • (NBR) cut to Sell
    • (DO) and (FTI) lifted to Neutral
  • Keybanc starts (BRY) at Buy, (CLR) at Hold.

News of Weird Watch:  In this age of google earth and gps everything, how does one lose an island? I ask because Mexico has lost an 80 square kilometer island off the Yucatan, known as Bermeja. Bermeja Isla was thought to be, well, where it was thought to be, because of a number of map references from the 16th and 18th centuries (no GPS but sextants and men who got paid to find things). Turns out that going there in a boat, flying over it, and questing for it on satellites actual turned up ... water. Why do I care? Because I find that kind of thing amazing. And by treaty, Mexico received a 200 nautical mile exclusive right to drill around the island, as part of a 2000 treaty with the U.S. to exclude "doughnut holes" in the Gulf of Mexico around islands giving the owner (in this case Mexico) sovereignty.  According to Wikipedia ~ "Explanations for its disappearance include an erroneous observation by the early cartographers, shifts in the geography of the ocean floor, rising sea levels and conspiracy theories claiming that the CIA blew up the island in order to expand the economic zone allotted to the U.S."  Other references show the island had gone missing in the 1840s, well before the global warming or the CIA existed. But this all really matters because the area is currently off limits to drilling but that moratium expires in 2010. Hmmm.  Maybe those conspiracy theorists should be looking at the Department of the Interior and not CIA. 

Cash For Clunkers Update. More rules, less opportunity for the junkyard to make a buck.

167 Responses to “Thursday – Oil Review and Gas Preview Plus E.F.S. Update”

  1. 1
    zman Says:

    Add to the analyst watch:

    FSLR cut to hold at Cannacord

  2. 2
    nifkin Says:

    Goldman Sachs also upgrades TLM; downgrades COG, FST, ME; DVN removed from Conviction Buy (but no rating change Also downgrade COP to neutral

  3. 3
    zman Says:

    GS also raised RIG to Buy

  4. 4
    tater Says:

    Wow! Maybe Gilligan took it?

  5. 5
    Sambone Says:

    Off subject:

    Way ta go, USA! US beat #1 ranked Spain yesterday in a very big upset in Soccer/football. This is like when the US beat USSR in Hockey in the 80’s! They will play either Brazil or South Africa on Saturday. Today, Brazil faces South Africa on ESPN at 2:25 pm EST

  6. 6
    Sambone Says:

    June 25 (Reuters) – U.S. regulated and diversified utilities:
    * Goldman Sachs upgrades U.S. regulated and diversified utilities to attractive

    view
    * Goldman Sachs raises NRG Energy Inc NRG to buy from neutral
    * Goldman Sachs adds Entergy Corp ETR to conviction buy list; rating buy
    * Goldman Sachs cuts NV Energy Inc NVE to neutral from buy
    * Goldman Sachs raises Westar Energy Inc WR to buy from neutral; adds to
    conviction buy list
    * Goldman Sachs raises Ormat Technologies Inc ORA price target to $45 from
    $40; rating neutral
    * Goldman Sachs raises American Electric Power AEP price target to $32 from
    $30
    * Goldman Sachs raises NRG Energy Inc NRG price target to $28 from $23
    * Goldman Sachs raises Duke Energy DUK price target to $15 from $14
    * Goldman Sachs raises Sempra Energy SRE price target to $51 from $46
    * Goldman Sachs raises Exelon Corp EXC price target to $60 from $55
    * Goldman Sachs raises Consolidated Edison Inc ED price target to $34 from
    $32
    * Goldman Sachs raises Entergy Corp ETR price target to $91 from $84
    * Goldman Sachs raises PG&E Corp PCG price target to $37 from $35
    * Goldman Sachs raises Edison International EIX price target to $31 from
    $26
    * Goldman Sachs raises Progress Energy Inc PGN price target to $37 from $35
    * Goldman Sachs raises Allegheny Energy Inc AYE price target to $31 from
    $29
    * Goldman Sachs raises Cleco Corp CNL price target to $25 from $23
    * Goldman Sachs raises Ameren Corp AEE price target to $21 from $18
    * Goldman Sachs raises El Paso Electric Co EE price target to $19 from $18
    * Goldman Sachs raises Wisconsin Energy Corp WEC price target to $46 from
    $43
    * Goldman Sachs raises Westar Energy Inc WR price target to $23 from $21
    * Goldman Sachs raises Great Plains Energy Inc GXP price target to $21 from
    $19
    * Goldman Sachs raises SCANA Corp SCG price target to $37 from $35
    * Goldman Sachs raises Northeast Utilities NU price target to $25 from $24
    * Goldman Sachs raises Portland General Electric Co POR price target to $22
    from $21
    * Goldman Sachs raises NStar NST price target to $27 from $26
    * Goldman Sachs raises NV Energy Inc NVE price target to $13 from $12

    Thu Jun 25 12:52:11 2009

  7. 7
    zman Says:

    Sam – I have that in the Friday draft; awesome game stayed up too late watching the replay. And a win despite some poor referee calls. That red card was off base.

  8. 8
    Sambone Says:

    By Nick Heath
    Of DOW JONES NEWSWIRES

    LONDON (Dow Jones)–Crude oil futures traded slightly higher at above $69 a
    barrel Thursday, with dollar weakness and Nigerian militant violence lending
    support, but doubts over economic recovery and demand limited gains.
    A slight recovery in gasoline prices helped shore up crude prices, although
    doubts still surrounded the outlook for U.S. driving season consumption after
    U.S. inventory data Wednesday revealed another large build in stockpiles.
    The U.S. Federal Open Market Committee’s largely neutral statement late
    Wednesday failed to give markets much new direction Thursday, although it may
    have helped consolidate expectations that any economic recovery is going to be
    long in coming.
    Data Thursday showed euro-zone industrial new orders posted their sharpest
    drop on the year on record in April, in a sign that the single currency area’s
    recovery from recession could be painfully slow.
    “One of the reasons behind the recent increase in crude is this theory that
    recovery is going to be soon and it will be brisk,” said Neil Atkinson, senior
    consultant at KBC Market Services in London. “I think, after having seen the
    price rise quite quickly in the short term, people are starting to realize
    things are not that good and the evidence of that is this stale price action.”
    At 1059 GMT, the front-month August Brent contract on London’s ICE futures
    exchange was up 54 cents at $68.87 a barrel.
    The front-month August light, sweet crude contract on the New York Mercantile
    Exchange was trading 36 cents higher at $69.03 a barrel.
    The ICE’s gasoil contract for July delivery was up $1.00 at $565.50 a metric
    ton, while Nymex gasoline for July delivery was up 250 points at 186.75 cents a
    gallon.
    Contributing to narrow range-bound trade Thursday, market participants were
    also waiting on first quarter U.S. GDP figures and weekly U.S. jobless claims
    due 1230 GMT.
    Market participants suggested that gasoline futures will likely be
    instrumental in determining oil prices in the near term. The U.S. Energy
    Information Administration said Wednesday that U.S. gasoline stockpiles rose
    nearly 3.9 million barrels last week, much more than expected and largely
    offsetting the impact of a 3.9 million barrel decrease in crude stocks.
    The U.S. peak driving season has failed to prevent gasoline inventories
    building in the last two weeks. The July 4 holiday has preserved some hope for
    a pickup in driving although the American Automobile Association Wednesday
    warned that fewer drivers are planning to take to the road during this year’s
    holiday, usually the busiest time of the year for car travel.
    “The steep increase in gasoline stocks over the past weeks indicates that
    underlying demand is weak and that more crude oil is being processed than there
    is actually demand for,” said Eugen Weinberg, analyst at Commerzbank in
    Frankfurt. “Hence, the latest decline in U.S. crude oil inventories does not
    necessarily signal an improvement in the fundamental situation of the oil
    market.”
    Royal Dutch Shell PLC (RDSB.LN) Thursday confirmed a pipeline facility in
    Nigeria’s Niger Delta had been shut down after another claimed militant attack.
    While the news was seen as providing some support to the market, current weak
    demand and a large global inventory overhang has largely mitigated the impact
    of recent militant attacks, some said.
    “The market has 6 million barrels a day of spare capacity, so if Nigeria loses
    a little production, there is plenty available to cover it,” a London-based
    crude oil trader said. “If we get back to 2 million barrels a day spare
    capacity, a flare-up will have a greater impact.”

    -By Nick Heath; Dow Jones Newswires Dow Jones Newswires
    06-25-09 0728ET

  9. 9
    zman Says:

    Oil and now NG holding up better than the equity markets post jobs. Stimulus not getting jobs up has to be a reason to not do same kind of stimulus program again.

  10. 10
    BirdsofpreyRcool Says:

    Good morning.

    TechTrader is in with a low-probability outlook — 55/45 long today, but will probably be choppy.

    Ben speaks at 10. Will add to the choppy part, i would guess.

  11. 11
    zman Says:

    re “stale price action” in #8. Spoken like a true 2008 minded oil trader. The fact that oil is in the $60s given the global economy is pretty amazing. Digestion of the recent high is a good thing, telephone pole shaped charts are a bad thing. Oil traders, at least the ones that get quoted, are so hot or cold from day to day it is amazing … must be on lots of meds. They really need to focus on the longer view or they are going to get big brothered into a much smaller role in the world.

  12. 12
    BirdsofpreyRcool Says:

    z — was surprised to see Warren Buffett mention yesterday that “another stimulus may be needed.”

    Go, Warnie! The first one worked so well… let’s just have another. Who cares about the Grandkids! …??

    Sheesh.

  13. 13
    PackMan Says:

    BOP: You will be interested in this…

    http://www.reuters.com/article/bondsNews/idUSN2425368520090624

    Treasury apparently is juicing the indirect bid component of Treasury auctions. A recent change in their calculation methodology is resulting in much higher bid to cover figures that may not be credible.

  14. 14
    zman Says:

    Tater – my money is on the professor funded by Mr. Howell.

    BOP – Maybe Warren thinks their will be some stimulus in round #2.

  15. 15
    zman Says:

    BOP – as I recall, you are not a fan of St Mary (SM), right? Any management color there?

  16. 16
    zman Says:

    Reason I ask 15 is I started to like what I was reading last night in doing their update, they may be the second most active player in the EFS this year after HK. Its not a play you want to develop at these gas prices but when things crank up they will have fairly strong leverage to it on a potential reserves basis.

  17. 17
    BirdsofpreyRcool Says:

    PackMan — #13 you are pushing buttons this morning. I am about to go on a rant…

    Met with mngmt of a small-ish, but global manufacturer this morning. About 1/2 of their business is in North America. They are a micro-cosm of what is going on in manufacturing on a global basis. Bottom line = Sucks to manuf and sell in NAM and Europe… SE Asia/China hit bottom and recovering. Here in US… people/projects waiting… for stimulus… for regulations… for cap and trade… just waiting… on Govt. SUCKS (he didn’t say that… I do!). This company is selling their US headquarters (to move into cheaper space), closing plants in the NE to move to the Southern US and Mexico and China. Don’t see anything happening here in NAM… maybe some inventory restocking at some point. But, manufacturing in “wait-and-see what comes out of Washington” mode. Plus, precisely ZERO “stimulus” money has trickled out to them… and they are directly tied to the infrastrucure business.

    No new information here… just that the 800-lb GGG is still keeping everyone off the dancefloor.

  18. 18
    BirdsofpreyRcool Says:

    z — #14… the definition of insanity… doing the same thing over and over, expecting a different outcome.

  19. 19
    zman Says:

    Amhad, everyone’s favorite nutbag is back in the press, slamming Obama with the worst insult he could think of, likening him to Bush. Who says things change?

    http://news.yahoo.com/s/nm/20090625/wl_nm/us_iran_election

  20. 20
    Nicky Says:

    Morning all. Dollar up and commodities up???

  21. 21
    BirdsofpreyRcool Says:

    z — #16 no direct contact with SM mngmt. No color from me there. An institutional investor guy here in town loves ’em. But, he made $$ in the name for the 1st half of last year (then sold). So, the love is justified.

  22. 22
    Nicky Says:

    Indices rather finely poised here. SPX has to hold the 889 area or we could seriously tank.

  23. 23
    tater Says:

    Just wanted to make sure that everybody is aware of the downtrend line on the S&P from June 11 high through the June 19 highs. Line acted as resistance all day yesterday, so it is something to monitor should we get the end of month bounce that everybody is anticipating. I have it on the first chart here
    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2933882

  24. 24
    zman Says:

    Amazing rally in ng and oil post jobs. No dollar help on oil so I guess its back to commodities as the last best hope of action in this actionless market. NG just about has to turn in a number close to the low end of my range to keep this morning’s gain from evaporating. Weather was such a diverse spread and industrial is showing no signs of recovery so I went with a pretty broad range today.

  25. 25
    zman Says:

    Thanks T and Nicky on the broad market thoughts. At some point you have to wonder where the “end of quarter rally” is.

  26. 26
    zman Says:

    For you new folks, Tater and Nicky do a very good job on the TA side. The link above is Tater’s chart site and you can use the pulldown menu on the right hand side under chartbook to see his recent thoughts on some of the names we frequent around here.

  27. 27
    Nicky Says:

    Tater I am watching the same line. Interestingly the bottom of the channel comes in at 880 which is HUGE support. I think a touch of that is likely to hold on the first attempt at least.

  28. 28
    elijahwc Says:

    Add-on to your KeyBanc Note: KOG mentioned.

    Live In Play

    25-Jun-09
    08:14 KeyBanc notes cos with exposure to the Bakken oil play, as they expect activity there to pick up in 2H09, but to a lesser extent than seen previously

    KeyBanc notes they expect the Bakken oil play activity to pick up in 2H09 or early ’10. Following checks, they believe the resounding takeaway is that with oil prices back above $60/bbl, many are putting together preliminary plans to possibly add rigs in the play during 2H09 or early 2010. Though a slightly different tone to early 2008, the focus is on balance sheets, debt reduction and a cautious approach to adding drilling rigs or committing for the long term. They note several cos that they are currently recommending have significant relative exposure to the play, including: WLL, XTO, KOG; to a lesser extent CXO, they also note CLR, EAC and NFX; others include: AEZ, BEXP, SM, they also note COP, EOG, HES, MRO, MDU and STR are leser known for their exposure to the play.

  29. 29
    zman Says:

    Emailed in question from the compliance department constrained:

    Z: FYI. Question: Most of your names are geared to short term events because you are a trader. Makes sense. For those of us who are looking for highest % gain over 12 months time and more of a covered call approach, which of your current names would you guesstimate has highest % upside. HK, EOG, CHK, PXD. Always looking for an updated dance card. If you want to wait til the 3rd quarter is out, I can be patient. S

    1) see the long term tab at upper left of the site.
    2) HK if gas cooperates with me, maybe SD if gas really cooperates (meaning $6 to $7 in 4Q09.
    3) In the single digit midget crowd, for the non-risk averse (because anything can happen and often does contrary to fundies) I like PQ for gas, WRES and KOG for oil. But I understand shying away from SDMs and I generally do myself as a rule. If oil is here at year end, names like WRES and BRY will see significant price related reserves upgrades.

    I’ll add some more thoughts to this in a bit.

  30. 30
    zman Says:

    Thanks Eli – NFX is a bargain in here, tough to play from options standpoint but they are have catalysts and I think a new shale play to talk about 2Q.

  31. 31
    tater Says:

    Hey Nicky,
    All I’m hearing about is the end of month markup rally. (If anybody wants to explain why that tactic dupes investors, please do so. I’m kind of a bottom line guy. If I make money, great, if not, why do I care what you list on your holdings?)
    Anyway, then all I’m hearing is how the markup rally is going to be sold. I’d be broke if I listened to all that noise.
    Your reads have been dead on. Nice work!

  32. 32
    VTZ Says:

    Is this jobs number going to shutup the people who take two points and call it a downtrend?

  33. 33
    zman Says:

    V – I think now the market is back into “ok news” is not good enough, there is no “good news” and “bad news” is actually “good news” because stimulus II (or is it III?) is around the corner. Or it could be what Tater said and they rally today and tomorrow for quarter end purposes and then punt on Tues/Wednesday next week.

  34. 34
    Nicky Says:

    cycle lows are not due until middle of July so quite possible that Tater is right. Although you have to give the cycle a plus/minus of a week. There is also a Bradley turn date on 25/26 June.

    VTZ – any thoughts on Gold?

  35. 35
    zman Says:

    Tater – thanks again for adding the resistance level on HK, getting there.

  36. 36
    BirdsofpreyRcool Says:

    Since we are all Treasury Auction Watchers now… here are today’s parameters for the 7-yr UST. Results at 1pm EDT.

    Yield = look to where the “when-issued” 7-yr yield is, just prior to results; currently about 3.40%

    Bid to cover = recent historical range 2.11 to 2.52 (higher is better)

    Indirect Bidders (perceived foreign bank participation) = range 28 – 39% (don’t put a lot of weight into this… see PackMan’s link in #13 above)

    That’s the score-card for today. We’ll see how the game plays out.

  37. 37
    Sambone Says:

    By Madalina Iacob
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–Crude oil futures climbed in tentative trading Thursday
    as the threat of crimped supply was offset by concerns about still-soft demand.
    Light, sweet crude for August delivery traded up 57 cents, or 0.8%, at $69.24
    a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures
    exchange rose 66 cents to $68.99 a barrel.
    Oil stuck to a narrow range, rising as high as $69.50 before a report showing
    rising jobless claims tugged the market lower. Initial claims for unemployment
    benefits in the U.S. rose 15,000 to 627,000 in the week ended June 20, bucking
    analysts’ expectations of a decline and suggesting fewer commuters using
    gasoline. The dollar also strengthened at the time, squeezing investors using
    oil as a hedge against a weaker greenback.
    “The dollar strengthened after the numbers came out and pulled the oil market
    back off,” said Tom Bentz, a broker and analyst at BNP Paribas Commodity
    Futures Inc. “The market is struggling to sustain rallies.”
    New production problems in oil-rich Nigeria buttressed prices.
    Royal Dutch Shell PLC (RDSA) confirmed a militant attack had forced the
    shutdown of a pipeline facility in the troubled Niger Delta. The Movement for
    the Emancipation of the Niger Delta earlier had said they targeted a pipeline
    that feeds the key Bonny export hub as a warning to Russia not to invest in
    Nigeria’s oil and gas industry.
    Nigeria has shut in more than half a million barrels a day in output as
    fighting has escalated between the government and militants. Jim Ritterbusch,
    president of energy trading advisory service Ritterbusch and Associates, said
    that with U.S. crude inventories falling in the past several weeks, further
    attacks could start to support prices.
    U.S. crude stocks declined by 3.9 million barrels to 353.9 million barrels in
    the week ended June 19, the U.S. Department of Energy reported Wednesday. But
    demand in the world’s foremost oil consumer remains 6.6% lower than last year,
    and gasoline stockpiles are rising even with the summer driving in full swing.
    “I am not expecting a pop in demand,” said Stephen Schork, editor of the
    Schork Report energy markets newsletter. “We have come too far, too fast and we
    should see some correction (in prices) soon.”
    Front-month July reformulated gasoline blendstock, or RBOB rose 2.35 cents, or
    1.3%, to $1.8660 a gallon. July heating oil rose 3.09 cents/, or 1.8%, to
    $1.7690 a gallon.

    -By Madalina Iacob, Dow Jones Newswires(Gregory Meyer contributed to this report)

    Dow Jones Newswires
    06-25-09 0929ET

  38. 38
    zman Says:

    ZTRADE:

    KOG – Added shares in a personal account for $1.10.

  39. 39
    VTZ Says:

    Nothing has changed for me regarding gold.

    I think that gold is bottoming here around 920-930 and if that does not hold then 880.

  40. 40
    Nicky Says:

    We may have just seen a failed wave v on spx – we did see a lower low on Dow – and be ready to move up.

  41. 41
    jpntexas Says:

    Z what are your feelings on the PXD July calls now? txt rcvd

  42. 42
    zman Says:

    JPN – I’m milking them for a rally here but will likely end up taking a hit on the $30 strike. I may add a lower strike but its not pressing until we get closer to earnings. I don’t see a near term catalyst from the company but I do think that HK announcing more positive results from the EFS is around the corner and this could lift the names with exposure to the play on the list in today’s post. I think that during their 2Q earnings call, they will have an opportunity to further express why they liked what they saw in the first well despite the frac up they had in completing it to a broader audience on the Q&A and that that should help the stock.

  43. 43
    BirdsofpreyRcool Says:

    Thoughts on KOG… it’s evolved from a near-death, mini-micro cap, looking for a Sugar Daddy… to a mini-micro cap, managing a nice chunk of acreage, right in the heart of the Bakken play. I like the fact that they are trying NOT to be a well-watching company, trying to take the focus off the results of any one or two wells. Lynn has said that he would prefer to just report operations quarterly (hint: stop leaking results on single wells and setting expectations… but, small community makes it tough to keep tight holes really tight holes).

    KOG is still debt-free and is generating cash doing some wheeling-dealing acreage and NRI swaps. They know what they have. They know what they are. They know what they can… and — more importatnly — can’t do. So, KOG is now less of an “event-driven” stock (IMHO) and much more of a micro-mini pure play on the recurring-Christmas present we call the Bakken. (Bakken = the Gift that just keeps on giving.)

  44. 44
    Nicky Says:

    CNBC reporting that it appears that Bernanke about to be given a hard time – apparently they have evidence/emails to back up the allegations.

  45. 45
    VTZ Says:

    Bring in Larry! I kind of expected this to happen. Not that it’s really going to change anything.

  46. 46
    zman Says:

    NG inventories in 10 minutes, oil and gas not yet doing their typical pre report cha cha.

    V – is it your understanding that at present, Alberta is not going to gun for the oil sands guys with a harsh, costly cap and trade program?

  47. 47
    Nicky Says:

    Wait until the snake Paulson is brought on later.

  48. 48
    BirdsofpreyRcool Says:

    Cool idea, Lou! Way to go!! This would guarantee to drive money out of the US market and severely reduce liquidity. What a genius! (Like, ONLY Wall Steet holds for less than a year??)

    Gerstner Says Short-Term Gains Should Be Taxed at 80% (Update1)
    2009-06-25 11:38:30.558 GMT

    By Matthew Benjamin and Judy Woodruff
    June 25 (Bloomberg) — Louis Gerstner, the former International Business Machines Corp. chief executive officer, said that short-term investment gains should be taxed at 80 percent as a way to counter the culture of greed on Wall Street.
    “If you buy something — a stock or a bond — in the morning, and you sell in the afternoon, the tax probably ought to be 80 percent,” said Gerstner, also a former chairman of Carlyle Group, the world’s second-largest private equity firm.
    “If you hold it for six months, maybe it ought to be 60 percent,” Gerstner told Bloomberg Television.
    Selling an investment after five years should carry a zero rate “to try to get the incentives for investment to go back to being a true investor and not a trader,” he said.
    Gerstner acknowledged that such a change would be “controversial” yet argued it is necessary to encourage investors to think about the longer term. The top tax rate on gains from investments sold within one year is now 35 percent.
    “We do have a greed or an inefficiency that comes out of excessive focus on the short term,” said Gerstner, who bemoaned an investment climate driven by quarterly earnings and a 24-hour news cycle. He was an executive at American Express Co. and RJR Nabisco Inc. before joining IBM.
    Gerstner, 67, also criticized compensation practices, saying “there’s been astoundingly unnecessary, excessive executive compensation in certain instances.”

    Government Rules

    He said the solution isn’t government rules or caps on pay.
    “I despair of a government solution,” Gerstner said.
    “We’ve had governments attempt to control executive compensation for 40 or 50 years.”
    Instead, Gerstner called for more disclosure and oversight of boards of directors by shareholders, “because ultimately the boards need to make these decisions.”
    “The system can fix itself without rigid rules,” he said.
    Gerstner, who approves of generous compensation for executives who add shareholder value, called for an end to golden parachutes for failed managers. “We have to see an elimination of pay for people who get fired and then wind up with these huge payments,” he said.
    Gerstner acknowledged that Wall Street executives he knows wouldn’t like his plan for higher taxes on investment gains.
    “They wouldn’t like it at all,” Gerstner said. “Wall Street is driven by transactions. That’s what they live by. They don’t live by long-term investment decisions.”

  49. 49
    zman Says:

    Wow. Lou is off my Christmas card list.

  50. 50
    zman Says:

    94 Bcf. Nice number.

    gas at time of report: up 9 cents

  51. 51
    VTZ Says:

    Alberta is focused on energy intensity targets that are reasonable. Any program to cap and trade would be a federally instituted program (likely proposed by the Liberals).

    Alberta has pledged 2 billion to assist with carbon capture and sequestration research and commercial development. I believe Alberta will be the first to implement a CCS system. I know of multiple projects that are on the go and are awaiting approval for a piece of the 2 billion dollar pie.

  52. 52
    zman Says:

    No revisions, 94 Bcf injection is clean.

    Should get a rally from here in gas although it is not happening just yet and is in fact dipping a couple of cents

    SWN up 40 cents
    HK up 55 cents
    RRC up 30 cents
    SD up 46 cents

  53. 53
    VTZ Says:

    That being said. I’ve mentioned before that upgraders are one of the best places to capture CO2 therefore they have a huge advantage over coal, for example.

    The hydrogen manufacturing units generate a relatively pure stream of CO2 that does not require even close to as much scrubbing or separation as coal or other emitters.

  54. 54
    Dman Says:

    Nicky, Paulson has been previously known to get down on his knees to beg, so maybe that skill will come in handy again.

    (Explanation for those who don’t recall: this was in a WH meeting near the end of the Bush presidency. They were trying to get Congress to sign on to the first mega-bailout. I can’t even remember what this one was called, there have ben so many. Paulson begged Pelosi for votes, but Pelosi had to remind him that it was Republicans who were holding out. Kind of a shame they didn’t stay holding out, IMHO.)

  55. 55
    zman Says:

    NG traders wanted a smaller number despite the consensus being around 100 Bcf. Hmmm. Yes we are very full on storage, yes we are going to a record level of storage, but last week’s number which sold the market from the $4s to current levels was anomalously high and this balances that out. So at least industrial demand is not getting worse. And electrical demand is picking up.

  56. 56
    Dman Says:

    Z – not to worry, if the tax goes to 80%, I’m sure some enterprising Chinese exchange will figure out a way for us to trade options on HK 🙂

  57. 57
    zman Says:

    V – Do you have any idea on an added operating cost per barrel for the CSS? Large, small, minimal impact.

  58. 58
    zman Says:

    Dman – Cayman Brac is a nice place too.

  59. 59
    Dman Says:

    They’re a fickle bunch, those NG traders. They don’t ask for much, just a weekly inventory report tailored to their exact specifications that they decided on 5 minutes before the report!

  60. 60
    VTZ Says:

    To sequester 750k-1 million tonnes of CO2 per year it would cost roughly $1-1.5 billion of capex. The operating costs would be relatively small. The cost per barrel is essentially nothing relative to the capex/opex of the projects.

    Older economics I’ve seen say that the impact is something like 1-2$/bbl added costs to reduce the CO2 intensity below most conventionals.

  61. 61
    VTZ Says:

    1-2$/bbl overall… including capex.

  62. 62
    VTZ Says:

    If pricing would improve on CO2, the breakeven price is something like 80-120$/tonne depending on the project.

  63. 63
    VTZ Says:

    I’ve seen some coal plant economics and the breakeven can get as high as 180$/tonne. If the governments are willing to cough up some cash, those breakevens would improve.

  64. 64
    benbobby Says:

    Zman, is the government still adding to the SPR on a weekly basis?

  65. 65
    zman Says:

    Thanks much V

    Benbobby – only 500,000 barrel last week, seems to be slowly stalling out as they get towards full. Now at 722.8 mm barrels.

  66. 66
    zman Says:

    When CNBC looks like Court TV, its time to head to the beach. If I was Ben I’d be tempted to threaten these guys, lol.

  67. 67
    BirdsofpreyRcool Says:

    z — #66. Ha. Just thinking the same thing. Think they are trying to jawbone Ben out of wanting another term? He might be grateful, to be replaced by Summers.

    Hate to see he replaced (now that he has walked through the fire and “gets it”)… but, guess it depends on who Nancy wants.

    Headed out for a while.

  68. 68
    zman Says:

    Watching congressmen ask questions of Ben is akin to second graders asking Einstein about relativity. Except the second graders have better math skills than the politicos.

  69. 69
    BirdsofpreyRcool Says:

    Short read. Or, just skip to the conclusion. Debt and equity are seeing things very differently. Eventually, equity will come around… but, should make for a volatily summer.

    http://www.capmarkets.com/ViewFile.asp?ID1=302011&ID2=319316057&ssid=2&directory=11608&bm=0&filename=More_On_Retail_vs_Financials_6-25-09.pdf

  70. 70
    zman Says:

    Thanks BOP, interesting, so they higher highs.

  71. 71
    zman Says:

    Surely the market didn’t just rally on the Geithner comments; Ben seems to be handling himself well; next waypoint is 7 yr auction at 1 EST.

  72. 72
    ram Says:

    Has the Fed Gov’t ever considered adding another SPR?

  73. 73
    zman Says:

    Ram – yes, Bush/Bodman proposed adding a site in 2007, that would bring the SPR up to about 900 mm barrels. That is currently stalled, not going to happen soon.

  74. 74
    zman Says:

    Oil nudging back over $70 with the broad market rally. Energy stocks up but volumes uniformly light for this time of day. Everybody still watching the “trip the Ben” show.

  75. 75
    zman Says:

    Sheesh, Ben should defend himself more often. Oily names doing well, gas starting to play catchup.

  76. 76
    Dman Says:

    Z – re LNG, it would be very odd if Chinese imports were up 59% but “Asian” imports were down. Like you say, I think something is missing from their picture.

  77. 77
    Nicky Says:

    61.8% retracement of the fall in oil comes in at 70.90

  78. 78
    Nicky Says:

    76.4 is around 72.00. Above that and new highs on the table I would say.

  79. 79
    zman Says:

    D – It does seem odd doesn’t it. Japan used to be the big dog in terms of Asian LNG imports (some U.S. volumes still go to Japan each month: http://tonto.eia.doe.gov/dnav/ng/ng_move_expc_s1_m.htm)

    but I think people have been missing out on some volumes going to China. We don’t see gas being tankered at sea and if the U.S. is the only other market with significant storage capacity (Europe is more of a spot market and Canada has their own gas so not a big import market there) then the gas from all of these new facilities has to be going somewhere else…my guess is China since we know its not Russia, s. America, Africa….

  80. 80
    Nicky Says:

    SPX has resistance at 918,923.

  81. 81
    choices Says:

    Not sure what is going on with CHK, it can’t get out of its own way, as they say, for the last several days.

  82. 82
    choices Says:

    Z, you have mentioned Q2 earnings a few times as something which might have an effect on the energy stks-a lot of these stks which have calender year ends will announce Q2 sometime in third week of July for the quarter ending Jun 30. The third week is of course Jul option expiration-is this the time frame you are focusing on.

    Thanks.

  83. 83
    kyleandy Says:

    z – i look at your eagleford chart and TXCO really jumps at u in terms of acreage. anyway of finding out if they;re insolvent or have some chance of recovery. seems like their acreage gets more valuable with each completed well in the shale.

  84. 84
    zman Says:

    On phone, back to you in 5 minutes

  85. 85
    elijahwc Says:

    FYI on proposed Natty ETF:

    Commodities Fund Would Prevent Contango
    By Don Dion
    TheStreet.com Contributor
    6/25/2009 12:00 PM EDT

    United States Commodity Funds LLC is currently pushing for another 12-month commodities fund, this time centralized around the futures contracts associated with natural gas delivery in Louisiana’s Henry Hub.

    The firm, originally known as Victoria Bay Asset Management, is credited with the launch of many other similar funds, most notably U.S. Oil Fund (USO) , U.S. Gasoline Fund (UGA) , U.S. Natural Gas Fund (UNG) and U.S. 12-Month Oil Fund (USL) .

    Taking a page from USL’s book, this upcoming fund (with a projected expense ratio of 0.60%) is expected to bundle a full year’s worth of futures contracts, rotated on a monthly basis. That is to say, at the end of each month — two weeks before the expiration of each nearest month contract, to be precise — the fund will drop its oldest contract, swapping in the upcoming year’s equivalent. Such investment practice ultimately facilitates the stabilization of the fund as a whole. In particular, monthly cycling helps protect against contango, or the phenomenon of far future delivery prices exceeding those of a nearer future delivery.

    The damaging effects of contango are all too real for United States Commodity Funds LLC, given their recent impact on UNG. Since natural gas is currently trading in contango, every time the United States Natural Gas rolls its futures forward, it inevitably loses money. Granted, the presence of contango is highly variable for each commodity (as an example, oil was previously trading in contango), and it may disappear altogether by the time this new ETF hits the markets. Nonetheless, the innovative mechanism of rotated contracts helps insulate against a sizable financial threat overall, ensuring a higher degree of stability. This upcoming ETF is sure to be a welcome alternative investment next to UNG. Look for the fund to hit the NYSE Arca within the year.

  86. 86
    elijahwc Says:

    And, the on point response:

    Howard Simons
    A Fund Cannot Prevent Contango
    6/25/2009 12:25 PM EDT
    Don, replacing a front-month roll with a twelve-month strip distributes the basis costs of each futures contract but does not eliminate them. Each contract’s basis still represents the spot price plus the interest rate cost of carry plus the physical storage costs minus the convenience yield.
    Futures = Spot*exp(rate*days/365) + storage – CY

    Unless the producers are willing to buy insurance by selling futures contracts at a discount to fair value, the long position in any of these contracts or strips of contracts must first overcome the cumulative cost to become profitable before changes in the commodity’s price are taken into account.

    If the behavior of market makers in single-month contracts is any indication, the months 13-24 in a 12-month strip contract will rise relative to months 1-12 as they anticipate the arrival of the chumps’ (er, “investors”) roll.

    In addition, as strip prices are less volatile than front-month prices, particularly as a market shifts from a carry into backwardation, any holder of these funds who sees the front-month future rise and the fund rise less is going to scream bloody murder.

    We don’t want that.

    These commodity funds are irredeemably bad ideas for everyone except the fund manager and those selling them.

  87. 87
    BirdsofpreyRcool Says:

    kyleandy — TXCO was a midgit who couldn’t make it through the credit crisis. Declared BK in mid-May. Rarely rarely is there anything left for equity on emergence from BK (after the lawyers and advisors and bankers take their “fees”). So, have to drop back to 2nd best in EFS. Will be interesting (and informative) to see who buys TXCO and for how much. Until then, one less ticker to watch on a daily basis.

  88. 88
    zman Says:

    re 81. Most things are in the same boat, they’ve had a few days where they departed from the group, underperforming, always seem to catch up. No catalysts until 2Q earnings most likely, other than possibility of improved gas supply numbers early next week. I hold the common but no options for now in CHK. I think they will continue to muddle along with well results taking a back seat to VPPs and other asset monetizations as they work down debt (very slowly).

    Re 82 – It’s been a long, slow summer already and we just got started. Most names will have a little more news on the 2Q calls than the 1Q. I prefer to play 2Q with August or later calls and I think that leading up to 2Q numbers we will see the oilier names outperform due to the marking to market of estimates. The analysts already have this process in motion and should being upping numbers for the oily unhedged set next week. That’s CLR for sure although I saw it catch a hold rating this morning so it also depends on your oil outlook for the back half of 09 and into 10.

  89. 89
    zman Says:

    7 year note auction, right in line according to Santelli. “barn burner”

  90. 90
    BirdsofpreyRcool Says:

    really good 7 yr auction

  91. 91
    Paul in Kansas City Says:

    I know Howard Simons personally and he has been a great mentor to learn from.

  92. 92
    zman Says:

    BOP – thanks for covering the TXCO. They are partnered with APC in those wells (and with SM on some) and I think in a more certain commodity price environment APC might scoop them up to solidify its position. APC is not big as E&P goes in the shales so it makes some sense that they go after them but so far no joy.

  93. 93
    1520sbroad Says:

    BOP – do you have stats on the 7yr? with respect to #13 from earlier?

  94. 94
    BirdsofpreyRcool Says:

    7 yr Auction Stats

    3.329% yield (didn’t look at the WI just b/f, but musta been higher)

    2.82 bid/cover

    67.2% indirect bidders

  95. 95
    zman Says:

    7 yr auction:

    http://www.marketwatch.com/story/treasury-sells-27-billion-in-7-yr-debt-at-3329

  96. 96
    zman Says:

    Ben done.

  97. 97
    BirdsofpreyRcool Says:

    the WI 7 yr was 3.40 this morning, when i posted the scorecard… so, 3.33 is a pretty strong showing.

  98. 98
    1520sbroad Says:

    Z – nice piece on the Eagle Ford this morning. I followed SM for a while a few years back – they had some good rockies area production at one point (when gas didn’t have a 3 handle.)

  99. 99
    zman Says:

    1520 – I’ve gotten close to paying attention to them a number of times. Most recently on the Haynesville, now here. Good hedges for quite some time, saved the last couple of quarters for them. That and the fact that they have gotten into under-promise and over deliver on both volumes and costs for the last couple of quarters.

  100. 100
    BirdsofpreyRcool Says:

    wonder if Ben is a drinkin’ man… if so, Gentleman Jack for lunch, maybe?

    The House Oversight Committee makes Mr. Potato Head look like he’s wearing a Beaver Insignia Ring.

    (for all you MIT grads)

  101. 101
    choices Says:

    Re: #86-I do not think there is any question that UNG is a bad choice to follow Nat Gas as Z has many times stated-I have attached a very busy comparable graph of a few stks and ETF’s as well as $natGas and UNG-over the 200 day period, UNG lags $NatGas by over 10%.

    FWIW:

    http://stockcharts.com/charts/performance/perf.html?HK,CHK,CLR,UNG,XLE,OIH,$NATGAS,SWN,EOG

  102. 102
    zman Says:

    Ben has got to be thinking of his next gig, no job is worth sitting through that on top of the last 9 months of his life.

  103. 103
    BirdsofpreyRcool Says:

    Homebuilder rallying. Good 7 yr auction means lower 10 yr yields (which mortgages are priced off of).

  104. 104
    BirdsofpreyRcool Says:

    And we want these people to put a healthcare package together for us? NO THANK YOU.

    Rant over.

  105. 105
    choices Says:

    Re: sorry, #101 won’t work-not sure why the stockcharts graph will not transmit.

  106. 106
    zman Says:

    re 101. Thanks choices, I had trouble loading your chart until I deleted natgas as a variable.

    What the chart tells you is:
    1) energy stocks trade together (kind of obvious but nonetheless very true)
    2) growth names outperform less growth names. SWN on top, then HK makes sense
    3) less debt or strong balance sheet outperforms – again the HK
    4) hedges don’t often help when the commodities move down, lack of hedges do help when the commodities move up.

  107. 107
    ram Says:

    What part of EFS is being accounted for (by analysts) in future HK earnings- % of earnings?

  108. 108
    zman Says:

    104 – Ya gotta love the hit and run rant, lol.

    Any thoughts on 3 strong auctions for the dollar? My thought is dollar higher but so far not much.

  109. 109
    1520sbroad Says:

    #99 – i saw sm at ipaa a couple of years ago. i went to their breakout session too and they impressed me with their attitude. I think they have a relatively new CEO (2006) and some other mgmt team members. I’ll have to look back at my notes.

  110. 110
    VTZ Says:

    Oil Sands financing watch:

    OPC gets slaughtered on pricing equity offering (1.70 a share) for 88 million shares. Closing price was 2.60! They still need to issue another tranche as well.

  111. 111
    BirdsofpreyRcool Says:

    z — not to call you out (at ALL)… but HK’s debt is rated B3/B- and trades around a 10% yield. Personally, I have little doubt that they can manage that much debt, but I would not characterize HK’s balance sheet as strong. They are BIG tho, so that helps about 3,000 percent in bond-land.

    The thing about a B3/B- rated company that can manage it’s debt… you get leveraged returns on equity… so will outperform a less-leveraged balance sheet in an up-mrkt. If you think the mrkt, nat gas, economy is gonna rally, you WANT to own equities of single-B rated companies.

  112. 112
    zman Says:

    Ram – It would be small, say a percent or two if anything. They aren’t in development mode here so with relatively few wells on an analyst would put this in an exploration wedge in the model, something you may or may not put in your numbers. HK has nothing in their guidance for the E.F.S. at last check so if they crank a couple of new wells out per quarter we could see some upside to guidance. My suspicion is they inch up guidance with the 2Q release. Not a lot but right direction.

  113. 113
    BirdsofpreyRcool Says:

    #108… heh heh heh. Surgical, stealth strike rant. (no pun intended)

  114. 114
    ram Says:

    ZMAN – Has any of HK’s peers used EFS for earnings. If not, do you see a peers guidance dragging up HK?

  115. 115
    zman Says:

    #3 from 106 – meant again the SWN, lot lower debt to cap. Man, I need a vacation.

  116. 116
    zman Says:

    Ram – Not to my knowledge, literally a handful of wells. Nobody would model that yet. As far as dragging HK up, no, probably not yet. Any good wells in the play reflect well on HK as they have a strong position, as does PXD. One thing to note is that here, like in the Haynesville, HK seems to regularly be releasing stronger IPs than the peers.

  117. 117
    BirdsofpreyRcool Says:

    115 — and i thought you said HK just to see if i was awake.

    I feel like the little yapping Debt Dog on this site… but, just trying to protect the herd (and myself).

  118. 118
    BirdsofpreyRcool Says:

    (maybe i should have said “squawking bird”… )

  119. 119
    ram Says:

    Do you feel that HK is doing well compared to its peers in the HS because of technology, location, or both?

  120. 120
    zman Says:

    Ram – location, then better completions. Wyoming or TexW feel free to call me out on the later if you disagree.

  121. 121
    ram Says:

    I always agree with you as long as you are telling the truth.

  122. 122
    ram Says:

    Is HK on the verge of a breakout to the upside?

  123. 123
    zman Says:

    I would not know, I’m not a chart guy.

  124. 124
    ram Says:

    Sorry, wasn’t asking you, ZMAN. Tater – is HK on the verge of breaking out to the upside?

  125. 125
    zman Says:

    President Obama about to speak on CNBC about new energy bill.

  126. 126
    zman Says:

    Good – I’d probably just be lying to you if I said yes anyway, lol. Tater’s chart page shows HK running into resistance between 22 and 22.60 if my eyes are reading the pink rectangle correctly.

    POTUS on energy bill now.

  127. 127
    BirdsofpreyRcool Says:

    I can sum up the speech: “If it’s a hydrocarbon… tax it, kill it, reinject it into the ground. If we don’t, all the baby polar bears are going to drown.”

  128. 128
    Wyoming Says:

    HK performance. The technique appears to be similar for all players. Maybe some differences but the debate would be equivalent to arguing Ford Vs. Chevy (night be a bad choice for comparison). So, IMHO, that leaves a difference of rock and operational expertise (not getting stuck, not able to get all stages off, …).

  129. 129
    zman Says:

    POTUS actually used the words “clean coal” but not natural gas. Ugh.

  130. 130
    zman Says:

    Cost to American’s ~ the price of a postage stamp per day. Suuuurrrreeee.

  131. 131
    Wyoming Says:

    BOP, Baby Polar Bear fur is so smooth and soft

  132. 132
    BirdsofpreyRcool Says:

    Wyoming — does it beat baby seal fur?

  133. 133
    zman Says:

    If you have nothing better to do:

    Full text of HR 2454: American Clean Energy and Security Act of 2009

    http://www.opencongress.org/bill/111-h2454/text

  134. 134
    ram Says:

    Thanks Wyoming. Uh, how would you know how polar bear fur feels like??

  135. 135
    zman Says:

    Funny that Cannacord cuts FSLR on the day Obama talks up clean energy and the stock falls $11 (7%).

  136. 136
    Wyoming Says:

    Ram – Lived in Alaska. Entitles me to make these ridiculous comments. BTW – every presentation I see involving Alaska has some sort of relative to AK mammal in it.

    BOP – I have a friend that would argue in favor of the seal fur … says it tastes better too

  137. 137
    BirdsofpreyRcool Says:

    Wy- — Newfie’s make GREAT friends… and even better Drinking Buddies!

  138. 138
    zman Says:

    Speaking of breakouts, KOG is looking more and more primed for one.

  139. 139
    BirdsofpreyRcool Says:

    z — think KOG just needs to make some sort of public statement re: that 2nd Unit Rig being resolved. Then we take our next leg up. Still fishing for info on that… don’t know where it stands. Will report back when I find out.

  140. 140
    Wyoming Says:

    BTW – the Monkey left me a long time ago and was last seen partying with the Former Japanese Finance Minister … saw a comment awhile back.

  141. 141
    BirdsofpreyRcool Says:

    Wyo — and you expect us to believe that? ha! Let the Monkey go. Free the Monkey. If he loves you, he will come back to you! 😉

  142. 142
    Sambone Says:

    Off subject;

    Can I write this off as a business expense?

    http://www.ananova.com/news/story/sm_3374702.html

  143. 143
    Sambone Says:

    (From THE WALL STREET JOURNAL ASIA)
    As Asian energy firm compete with Chinese oil companies for energy assets,
    they are finding themselves outbid at every turn.
    But they are having success venturing where China won’t: the U.S.
    Sinopec’s $7.2 billion acquisition of Addax has a familiar ring to it. The
    hefty offer made Korea National Oil Corp. the latest loser to deep-pocketed
    Chinese buyers. Also on that list is India’s Oil & Natural Gas Corp.
    Including the Addax deal, Chinese oil firms have bought $43.7 billion of
    overseas assets since 2005. India’s oil companies, by comparison, have spent
    $8.7 billion, the Japanese $7.1 billion, and South Korean firms $3.9 billion,
    according to Dealogic.
    There’s one area where companies such as Korea National Oil have an edge.
    Chinese companies have stayed away from U.S. assets ever since Cnooc’s attempt
    to buy Unocal in 2005 became a political punching bag.
    With Korea-U.S. relations on a much easier footing, Korea National Oil is
    hunting for acquisition prospects in the U.S. to achieve its target of
    producing 300,000 barrels of oil per day by 2012.
    Indeed, the company’s two largest overseas acquisitions were in the U.S. This
    year it paid $900 million for Offshore International Group, and last year it
    bought an oil field in the Gulf of Mexico for $1 billion. Five of the 10
    largest deals done by Japanese oil companies in the last four years have been
    in the U.S.
    Without China in the game, they certainly stand more of a chance.
    — Andrew Peaple and David Winning

    Dow Jones Newswires
    06-25-09 1447ET

  144. 144
    zman Says:

    Sure. You can also write off the cost of this site, but check with your accountant first.

  145. 145
    ram Says:

    How can a foreign company think of buying a U.S. company to improve their oil reserves?

  146. 146
    VTZ Says:

    Why is the US so anti-NG… makes no sense. Is there a history behind it or is it just the result of general misinformation and lobbying?

  147. 147
    zman Says:

    Ram – It’s the same concept as “drilling on Wall Street”. At times, it is simply cheaper to buy a company than it is to use the drill bit to explore for and then develop new reserves. So if you are going to spend $1B you have the choice of buying it or drilling for it and the simple math wins with a few caveats. The U.S. is somewhat xenophobic and some acquisitions have been blocked in the past. See Unocal with this regard and the Chinese back in 2005.

    Addax is particularly ironic in that their Taq Taq wells are in Kurdish held Iraq. They would not likely have been exploited so soon without the recent war. The Iraqis and Kurds have long been at loggerheads over development and these are not small but 30,000 bopd per well type things – you think the Bakken is good, lol. Anyway, so you have Kurds with more say in their prospects, Addax comes along and proves it up and then the Chinese buy it.

  148. 148
    zman Says:

    VTZ – search me. I understand the mentality a few years ago. We knew not of the shales and production was difficult at best to maintain. But now, the resource size is clear. And yet, the adminstration appears to be “anti-drill”. As I wrote back when I saw T Boone, the situation has been explained to the president. But look through that bill and you see much ado about electric vehicles and nothing about CNG or LNG. There is another bill, the Natural Gas Act that is being put forth that encourages gas as a transportation fuel but I think its absence from the big bill is telling about the administrations views on gas, be it clean or not, they don’t like drilling.

  149. 149
    ram Says:

    ZMAN – I meant that the U.S. would be more dependent on foreign oil if we allowed what companies could be drilling to be bought for the intention of that oil going abroad.

  150. 150
    ram Says:

    ZMAN – Do you know the equivalent measure of CNG to one gallon of gas for the same effect, i.e. 1 gallon of gas equals 25mpg and x.x of CNG equals 25mpx.xcng? I saw various costs of CNG while I have been travelling and it does not mean much unless you can quantify it.

  151. 151
    zman Says:

    CNG prices – this is on a fuel equivalant basis. Scale the map to about 3/4s out and you will see stations appear with prices.

    http://www.cngprices.com/

  152. 152
    BirdsofpreyRcool Says:

    HeadTrader thinks the rally continues into quarter end… but, he notes it’s “wishy-washy.” So, he wouldn’t bet the farm. But he did think we would sell off through yesterday, then rally into QE. Said so last week. And so far, it’s going according to his evil plan.

  153. 153
    zman Says:

    Ram – you might find this helpful as well:

    http://www.greencarcongress.com/2004/12/comparing_civic.html

    and

    http://automobiles.honda.com/civic-gx/

  154. 154
    VTZ Says:

    Have a good week folks… vacation time!

  155. 155
    zman Says:

    Back at ya V! Beerthirty!

  156. 156
    zman Says:

    There is some size on the KOG offer near the close…not everybody wants more.

  157. 157
    BirdsofpreyRcool Says:

    z — killjoy

  158. 158
    zman Says:

    Hey, I’m glad to see some size come out on the offer as the stock has been working through 5,000 and 10,000 share sales all day. And I’d rather it not spike up all at once as a move higher than the spike will take longer if we get more “I don’t know more than the ticker” types in the names. Happened to WRES a few weeks back when we came close to $3 from the lower $2s in a couple days. Then, as you rally back after the inevitable fall, you have to work through all those unfortunate souls who bought closer to $3 (which is what WRES is doing now). Much rather have the steady path higher. I do think we get the breakout above $1.20 before further word from the company but would be content with a much slower rise from there, with a subtle increase in avg daily volume to match.

  159. 159
    BirdsofpreyRcool Says:

    z — spoken like a truly wise student of the market. as usual, you are correct, sir!

  160. 160
    tater Says:

    ram,
    HK ideas – I’m beginning to lose that loving feeling. Not that I believe HK is going to nosedive or anything, I just mean that I think that my landmarks are beginning to fail. That support at 22ish (purple line on the daily view) was BIG support TA-wise, but it didn’t come to fruition. Granted, the general market had a bad hair day, but ….
    If you look at the volume bars on the 60 min chart for today, you can see a rhythmic-ish descending pattern of really pretty bars. I hate seeing that because it means somebody with a bunch of money has found a new playground.
    I have no idea what their intentions are, I only know that “they’re heeere”.
    So I don’t mean to just beg off and say I don’t know, I just think that my mojo is failing and I want to reserve judgement for a time when I feel more confident.
    I try to pick low hanging fruit. HK has a battle to fight at $22ish and I’d prefer to hop in after I see who wins the fight.
    (I’m sure it will be the fund with the most $)

    VTZ – reason for the bad NatGas PR in Washington? Come on, you of all people know the answer to that one. They neglected to mail the check!

  161. 161
    PackMan Says:

    BOP – 104 – healthcare …

    http://hopeychange.blogspot.com/2009/06/obamacare-updates_23.html

  162. 162
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