13
Jul

Monday Morning

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Earnings this week are not yet focused on energy but reports from "Big Tech" (INTC, GOOG), "Big Financial" (GS), and "Big Pharma" (ABT) will no doubt influence overall market action. Oil was getting a bit of dead cat bounce earlier this morning which sold off as I was typing this and while I still don't think we are in danger of a sell off there to much lower levels like some pundits, newly emboldened by falling oil as a reason for, um, falling oil, I do think that oil will be in for a fight this week to maintain $60 and establish a near term trading range between $60 and $65. This soft price action is virtually guanranteeing that OPEC does not lift official production rates at its September meeting and I am seeing comments from a number of ministers saying "no action will be required at the next meeting". I put some other fairly cogent thoughts together over the weekend here.

 

The Week Ahead:

  • Monday 7/13: None
  • Tuesday 7/14: Retail sales, PPI, Inventories
  • Wednesday 7/15:  EIA Oil Inventory Report, Empire State, CPI, Industrial Production,
  • Thursday 7/16: EIA Natural Storage Report, Jobless Claims, Philly Fed, Home builders index
  • Friday 7/17: Housing Starts, Leading Indicators
  • Saturday 7/18: August equity option expiration

In Today's Post:

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

Holdings Watch:

  • $10KP:
    • $14,200
    • 62% Cash
  • The Wiki Tab is updated

 

Commodity  Watch:

Crude oil fell 10% last week to close at $59.89. The 12 month crude strip is now trading at $64.30. This morning crude is trading off $0.25+, reversing earlier gains.

  • Nigeria Watch #1: Another day, another pipeline to blow up. This came from MEND late Friday ~ "Our fighters revisited the recently repaired Chevron pipeline linking Alero creek through Abiteye to the Chevron export terminal in Delta state and destroyed it again." This pipeline was the one sabotaged in May which signaled the beginning of the recent uptick in militant activity in the Delta and which cause CVX to shutter 100,000 bopd. 
  • Nigeria Watch #2: MEND said it attacked the Atlas Cove Jetty (tanker dock) in Lagos state overnight. "The depot and loading tankers moored at the facility are currently on fire," MEND said in a statement.

Natural gas dropped 8% last week to close at $3.37. The 12 month strip is now trading at $4.81. This morning gas is trading off a little over 5 cents due to mild weather last week which will likely yield a bigger injection this Thursday. Thankfully for gas, we should see the hottest weather of the season to date this week.

  • Weather Watch:

    • Week Before Last: 64 CDDS which helped to generate a 75 Bcf injection in last Thursday's report.
    • Last Week: was mild, with 60 CDDs vs a prior forecast of 68 and normal of 71. The injection this Thursday will likely be around 80 Bcf.
    • This Week's Forecast: Hot at 77 CDDs, mostly concentrated in the south and west, this would be the hottest week of year to date. I'd like to see the number come in right around here as this would provide a nice comp to last year when we saw 79 CDDs (normal for the week is 74). Having the weather in line with year ago helps to further pinpoint the variance in industrial demand this year.
  • Tropics Watch: Three tropical waves meandering westward across the Atlantic; nothing interesting as of yet.
  • Rig Count Watch: New cycle low for gas directed rigs...

... And The Horizontal Count (which includes the oil shales as well as the busy Louisiana Haynesville directed rigs) Isn't Exactly Smoking Higher Either.

 

Stuff We Care About Today

NBR Takes Impairments:

  • Small asset impairments, best to get out of the way prior to earnings next week.
  • They saved fine tuning guidance for the Q but did say they expect EBITDA for the year to "exceed $1.3 billion". The Street is at $1.456 B.

BRNC Announces Utilization Rates (or lack thereof)

  • 29% utilization in June with an average day rate of $16K vs:

    • 31% in May with $16.9 Kpd
    • 58% for 1Q09 with $16.7 Kpd
  • While utilization is poor, the flattening rates does jive with the comments of a number of E&Ps of late pointing to a recent flattening of day rates among U.S. focused land drillers.

Dry Bulk Thoughts

  • No change to recent thinking: avoiding the group for now.
    • Too much capacity for current demand,
    • Too much incremental capacity for furture demand
  • Recent rally in day rates is fading as it had no fundamental support
    • Link to rates, note the swoon, especially in the big ships
    • This brief rate rally caused ship scrapping to ease.
    • Everyone would like to see more scrapping to push the reset button on the group
      • PRGN's CEO  thinks we need to see 38% of the ships current in service "disappear" in the next 18 months to stabilize supply and demand.

  • Recent broker upgrades of the group and names within the groups have failed to inspire rallies of more than 24 hours ... generally not a good sign. Maybe these guys are early but I think it is more a case of  "everything is quiet right now, watch me jazz this stock / group".

  • Other points of interest:

    • DSX leased one its Panamax ships for 11 months for $18,000 per day on Friday. The spot quote on Panamax ships on Friday was $23,659 so this long term charter doesn't say much about perceived tightness.

    • Cantor as of last week was calling chartering activity "relatively robust"
    • Contract cancellations/delinquencies remained a problem during 2Q so you just won't know, in most cases, whether or not your drybulk name is having a problem until they report.

 

Odds & Ends

Analyst Watch:

  • SWN - Barclays ups target from $45 to $48, maintains Overweight
  • UPL - Barclays cuts target from $46 to $41, maintains Equal weight
  • DRYS - Jefferies cuts target from $9 to $6, keeps Hold rating
  • JASO - Needham starts them at Buy with a $5 target.

 

93 Responses to “Monday Morning”

  1. 1
    BirdsofpreyRcool Says:

    Good pre-mrkt overview

    U.S. Stock-Index Futures Climb; Goldman Sachs Gains on Upgrade
    2009-07-13 13:10:55.379 GMT

    By Whitney Kisling
    July 13 (Bloomberg) — U.S. stock futures rose, signaling the Standard & Poor’s 500 Index may gain after four weeks of losses, as analyst Meredith Whitney advised buying shares of Goldman Sachs Group Inc. and said banks may advance 15 percent.
    Goldman Sachs gained after Whitney gave the firm the only “buy” recommendation among the eight companies she covers, while Bank of America Corp. climbed after the analyst told CNBC the shares were the “cheapest” among U.S. bank stocks. JPMorgan Chase & Co. and Wells Fargo & Co. each rose at least 2.2 percent.
    S&P 500 futures expiring in September rose 0.6 percent to 879.20 at 9:08 a.m. in New York. Dow Jones Industrial Average futures added 0.5 percent to 8,124 and Nasdaq-100 Index futures climbed 0.5 percent to 1,423.
    “We need to have a healthy banking sector for this economy to work properly,” said Keith Wirtz, who helps oversee $19.8 billion as chief investment officer at Fifth Third Asset Management in Cincinnati. “Any positive commentary or news will be good for the banking stocks, will be good for the psychology of the market.”
    U.S. stocks fell for a fourth week last week, matching the longest stretch of declines in a year, after consumer sentiment dropped more than estimated and oil’s steepest retreat since January dragged down energy shares. Investors will this week be looking at reports on retail sales and factory production to gauge the strength of the economy after a $787 billion stimulus bill passed in February.

    ‘All Eyes’ on Goldman

    “People are questioning the strength of the recovery and whether there is need for a second stimulus package,” said Alberto Espelosin, who helps manage the equivalent of $10.5 billion at Zaragoza, Spain-based Ibercaja Gestion. “All eyes will be on Goldman’s earning’s tomorrow.”
    Goldman Sachs, JPMorgan Chase & Co., International Business Machines Corp. and Google Inc. are among 34 companies in the S&P 500 Index scheduled to report results this week. Analysts estimate profits at S&P 500 companies fell an average 35 percent in the second quarter and will decrease 21 percent from July through September, according to data compiled by Bloomberg.

    ‘Going to be a While’

    “It’s going to be a while before we’re confident we’re going to have a strong, sustainable recovery in place,”
    Treasury Secretary Timothy Geithner said, according to the transcript of an interview with “CNN’s Fareed Zakaria GPS”
    show broadcast yesterday.
    Goldman Sachs climbed 3.7 percent to $147.10. Whitney, founder of Meredith Whitney Advisory Group, upgraded the shares to “buy,” her first such rating on a U.S. bank since she started the firm.
    Goldman Sachs may post the largest profit since it set earnings records in 2007 when it reports earnings on July 14.
    The company will probably say it earned $2.2 billion, or $3.65 a share, excluding some items in the three months through June, according to the average estimate of analysts surveyed by Bloomberg. The stock may reach $186 from $141.87 on July 10, Whitney said in a note to clients.
    Best Buy Co., the world’s largest electronics retailer, rose 2.5 percent to $33.60 in New York. The shares were raised to “outperform” from “perform” at Oppenheimer & Co., which said market “sentiment toward Best Buy has turned decidedly negative lately.” The shares have dropped 13 percent since April.
    Bets against the S&P 500 rose to the highest since April last month as investors shorted more shares of health-care, technology and financial companies, according to data compiled by U.S. exchanges and Bloomberg last week.

    CIT Slides

    CIT Group Inc. lost 15 percent to $1.30. The century-old lender that hasn’t been able to persuade the government to back its debt sales, says its demise would put 760 manufacturing clients at risk of failure and “precipitate a crisis” for as many as 300,000 retailers.
    CapitalSource Inc. fell 7.1 percent to $4.20. The loan provider to small and mid-sized businesses said it plans a public offering of about 17.5 million shares of its common stock.

  2. 2
    BirdsofpreyRcool Says:

    Hearing “whisper number” for GS is as high as $5/share. Street is at $3.65

  3. 3
    VTZ Says:

    Meredith Whitney upgraded them this morning.

  4. 4
    BirdsofpreyRcool Says:

    TechTrader is still enjoying the sea breezes in Key West. He often takes 4-day weekends during July and August. This tells you several things — 1) July and August trading is not worth putting in a 5-day work week… and 2) TechTrader has made a lot of $$ over the years (which is why we pay attention to what he says).

  5. 5
    BirdsofpreyRcool Says:

    MEND was busy putting together their long-range stategic plan over the weekend. They are expanding their scope.

    MEND plots Trans-Saharan pipeline attack
    2009-07-13 13:10:04.691 GMT

    LAGOS, Nigeria, July 13 (UPI) — Nigerian militants threatened major attacks on the Trans-Saharan gas pipeline as their demands for international oil companies to leave the country grow.
    The Movement for the Emancipation of the Niger Delta launched a series of attacks on oil pipelines run by oil majors Chevron and Royal Dutch Shell in recent days.
    Meanwhile, Algeria, Niger and Nigeria signed agreements to plan construction for the $10 billion Trans-Saharan gas pipeline recently to bring as much as
    1.05 billion cubic feet of gas to Europe each year.
    Last week the pipeline gained renewed interest when Russian gas monopoly Gazprom said it would invest in the project through a joint venture with the Nigerian National Petroleum Corp.
    MEND in its latest threats against national pipelines said the Trans-Saharan gas pipeline is among its targets, reports the online Oil and Gas Journal.
    “We will ensure that it faces the same fate other pipelines are facing today,”
    a statement from MEND read.
    Nigerian military officials claim MEND does not have the capability to conduct anything more than small-scale attacks, though the sustained militancy in the region has resulted in declines in Nigerian oil production from 2.6 million barrels per day in 2008 to 1.8 million currently.

  6. 6
    zman Says:

    Morning fellas.

    WLL upped to Buy at SunTrust

    Did Whitney talk oil lower while she was on, lol. It was up 70cents when her interview started, now down 65 cents. NG getting whacked on the weak weather last week.

  7. 7
    VTZ Says:

    Or it tells you that the majority of the last 30 years have been a bull market 😛

  8. 8
    VTZ Says:

    Goldman stopped bidding oil and starte bidding their own stock probably.

  9. 9
    zman Says:

    CRZO also upped to Buy at ST

  10. 10
    zman Says:

    V re 8, no way, not them.

    BOP – any word from HT?

  11. 11
    BirdsofpreyRcool Says:

    HT has been wrapped up on the financial sector… went long FAS on Thurs when the GS whisper numbers started to get attention. He has said for a while that last week didn’t count and that the mrkt was due for a sell-off, b/c that is what people wanted the mrkt to do. He says that this week is earnings-driven. If we get a strong number out of GS tomorrow morning, we should see a bit of a rebound. But, with $5/share kicking around the Street for GS… it had better be a heck of a beat.

  12. 12
    BirdsofpreyRcool Says:

    Sterne Agee —
    BUY = SWN XTO APA DVN OXY
    Netural = CHK UPL RRC NBL

  13. 13
    zman Says:

    BOP – Sounds about right, I’d throw in the last two weeks before last week as well as generally a waste of time, directionless/meaningless trading. Oily names starting to catch some upgrades, still little news out of the group.

  14. 14
    zman Says:

    BOP – a lot of people seem to be warming up to SWN of late, say your TPH comment there, not the first I’ve seen suggesting a production beat. I’m just waiting until 1) gas finds some footing and 2) we are closer to release of the numbers and after some of the non energy names that release this week that will move the market. I still think they are going to see some poor realizations of the Fayetteville but they are well hedged and the problem should be under control during 3Q.

    I bet ya HK beats on production guidance as well and I’d put odds at 50/50 for an upward revision to guidance for the year with the release of the quarter.

  15. 15
    BirdsofpreyRcool Says:

    HT thinks we sell off then close higher. He is flying w/o TT today, so let’s see how well he does on his own.

  16. 16
    zman Says:

    FST on the tape with more Haynesville results; moved the stock last time around.

  17. 17
    zman Says:

    FST

    2nd horizontal well completion:
    20.3 MMcfepd
    6,500 psi
    3,500′ horizontal , 10 stage frac
    Cost $9 mm
    Red River Parish, LA
    Nutshell: pretty good results, they are a small player here, stock not yet moving

  18. 18
    BirdsofpreyRcool Says:

    #14 — yeah… SWN set to report earnings on 7/30 after mrkt. That is Dog Years away, in this mrkt. But, worth keeping on the radar screen.

  19. 19
    BirdsofpreyRcool Says:

    z — what are you modeling for EUR on a well like the one FST just reported?

  20. 20
    zman Says:

    I think they are thinking its 6 to 8 Bcfe although they’d be smart to say its too early to tell.

  21. 21
    BirdsofpreyRcool Says:

    Just sort of thinking about the profitibility of the HV vs Bakken. If it costs $9mm vs $5mm to drill and complete. A lot of moving parts, tho… infrastructure in HV, not in Bakken, for example, means differential is steeper.

  22. 22
    zman Says:

    BOP – well, looking at where oil and gas are now, I can tell you where the better IRR is, sadly lol. NG in real danger of going to the $2s if it doesn’t get better support from the forecast soon.

  23. 23
    BirdsofpreyRcool Says:

    Pickens turning attention to natural gas
    2009-07-13 13:58:09.113 GMT

    WASHINGTON, July 13 (UPI) — T. Boone’s Pickens, whose ambitious Texas wind farm plan ran into distribution problems, is turning to natural gas in his attempt to lessen U.S. dependence on foreign oil.
    Two years ago Pickens, a Texan who became a billionaire in the oil business and now runs the BP Capital Management hedge fund, announced that he planned to erect the largest wind farm in the world in the Texas Panhandle.
    He foresaw a farm of more than 400,000 acres on land that is constantly buffeted by stiff winds. Turbines 400 feet tall would dot the landscape and generate 4,000 megawatts of electricity. The project carried a $12 billion price tag.
    “We’ve got more wind than anybody else in the world, just like they have more oil,” Pickens told ABC News at the time. “I think that’s the future of this country.”
    The plan was to reduce the need for the United States to import oil from countries “that really are not friendly to us.”
    Pickens spent $60 million advertizing his wind farm scheme, but the plan has been postponed because the proposed site is too far from transmission lines and tight credit during the recession has led to delays in financing.
    Pickens told NPR’s “All Things Considered” that he expected funding to be more available by 2011 and transmission systems would be ready by 2013.
    Until then, Pickens is looking for natural gas to reduced oil usage. Pickens was on Capitol Hill last Wednesday posing with a posse of members of Congress who support the NAT GAS Act. That measure would extend the alternative fuel credits for natural gas used as a vehicle fuel and expands the number of vehicles eligible for tax credits for using natural gas.
    It would also require that by 2015, 50 percent of vehicles placed in service by the federal government be capable of running on compressed or liquefied natural gas. If the bill is enacted, the tax credit for passenger cars and light trucks that use natural gas would be $12,500. The current credit, which expires next year, is $5,000.
    The U.S. Environmental Protection Agency said vehicles operating on natural gas cut toxic emissions by more than 90 percent, and natural gas has the ability to displace all of the petroleum used by heavy-duty vehicles. More to Pickens’
    point, 98 percent of the natural gas used in the United States originates in North America.
    He said the recent drop in oil prices — it is less than half the record $147 a barrel of a year ago — may have made the drive for alternative fuels less vital to many people, but the overarching problem of oil importation remains.
    “The price is cheaper so the pain is less but the security issue is still No.
    1,” Pickens told “All Things Considered.”
    As to natural gas, Pickens said: “It’s cheaper. It’s cleaner by 50 percent than oil and it’s available to us.”

  24. 24
    zman Says:

    GST the only thing I’ve got sort of working this morning. This 4 weeks in a row of downward action for the market is for the birds.

    SWN off a buck this morning as worry over gas offsets analyst thinking.

    WLL down now from up a buck as the same goes for worry over oil.

  25. 25
    zman Says:

    Re 24 – and that’s not to disagree with the analysts here, I think WLL (and CLR) as Bakken players go are bargains here. And I do like SWN but as BOP says, “dog years” away from earnings at month end.

  26. 26
    zman Says:

    A quick trader in WLL can do well on a day like today, despite the wide option spreads.

  27. 27
    BirdsofpreyRcool Says:

    Update on the potash market. Not looking as healthy as it once was…

    http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a_opuWH.LKKY

  28. 28
    zman Says:

    GST on the tape completing their Australian sale. In the end they will be virtually debt free.

  29. 29
    BirdsofpreyRcool Says:

    HT says we are thru the highs on futures… should go higher from here

  30. 30
    zman Says:

    Nicky – can you update us on SP resistance levels when you get a chance?

  31. 31
    PackMan Says:

    SWM some guy on Bloomberg Asia was talking them up this weekend as best pick in E&P space; lots of growth. Guy from Macquarie I think. FWIW.

  32. 32
    BirdsofpreyRcool Says:

    Macquarie used to be considered the “Goldman Sachs” of Australia. At least, that’s how they described themselves….

  33. 33
    Nicky Says:

    Morning all. Resistance for SPX at 888, 890, 895.

  34. 34
    Nicky Says:

    Oil looks to have finished an ABC wave iv at this mornings highs and the move of that high is clearly a v for me. It could be done to the downside or we may make a couple of probes lower. I notice the 200 dma is at 56.45.

  35. 35
    zman Says:

    Thanks much Nicky. Broad market is I guess anticipating GS to be good in the morning. Without the support of Dow up 110 I imagine oil would be $1.50 to $2.00 off this morning for no other reason than it wants to be and keeps breaking whole dollar support levels and then surging lower, resting, then breaking the next one.

    Group going green-ish with the market.

  36. 36
    VTZ Says:

    Z – 2 things.

    Around energy protectionism, it sounds like post-merger Suncor/Petro-Canada will still have the “Petro-Canada Clause” which states that no one entity can own more than 25% of the company which will make it impossible for China/foreign bidders to buy it out unless they are approved by the govt.

    I’m going to bite on some oily names soon.

  37. 37
    zman Says:

    Does anyone subscribe to the NYT. I’d like to see the rest of this story that starts…

    Two natural gas companies — Southwestern Energy and Petrohawk Energy — have become the top two holdings in the portfolio. But Mr. Rice said that this was …

    I received a google alert and this is as much as I can see. I think the Rice referred to is Dan Rice, who I used to do a little work for, would be interested to see if the story goes ahead and outlines his thoughts on natural gas prices. Very smart chap.

  38. 38
    zman Says:

    Thanks V. Wonder if they would care if XOM or BP bought it?

    Hear ya on the oily names, I added a little more CLR and EOG (which trades oily, not gassy) last week. Going to add some more soon.

  39. 39
    john11 Says:

    Here’s the ny times stuff Z that is pertinent to the HK and SWN mention…review mutual fund activity.

    Daniel Rice, the co-portfolio manager, bases much of his strategy on forecasting supply-and-demand dynamics for energy. For example, Mr. Rice predicted recently that oil would sell for $80 a barrel, on average, over the next 15 years. But he said that the shares of oil producers were trading as if oil would average $58 a barrel.

    The BlackRock fund also puts much emphasis on small-capitalization stocks. About one-third of the portfolio is invested in either small-cap or microcap stocks, according to Morningstar.

    “Small caps tend to be more sensitive to the underlying commodity prices,” Mr. Rice said. Consequently, he said, “if there are times when we think that energy prices might come down, we might play the large-cap integrated energy companies.”

    The BlackRock Energy and Resources Portfolio Investor A fund rose 32 percent in the second quarter. It has a sliding-scale, front-end sales charge starting at 5.25 percent for initial investments below $25,000, and charges shareholders about 1.25 percent in annual expenses.

    Two natural gas companies — Southwestern Energy and Petrohawk Energy — have become the top two holdings in the portfolio. But Mr. Rice said that this was largely because of share price appreciation. During the first half of this year, Southwestern Energy rose almost 35 percent, and Petrohawk Energy rose more than 40 percent.

    Four coal companies are also among the fund’s top 10 holdings: Consol Energy, Peabody Energy, Arch Coal and Massey Energy. Mr. Rice said that all four had lower-than-average production costs for the coal industry.

  40. 40
    VTZ Says:

    I’m going to guess that they would care because it sounds like one of the main reasons they are allowing the merger is to create a true “Canadian Champion”.

    It would be pretty hard to take out anyways with its combined market cap and a premium.

  41. 41
    Nicky Says:

    Oil feels like the only commodity now not moving up. The Ag names are moving higher as are metals, $ moving down, when the heck is oil going to respond?

  42. 42
    zman Says:

    Thanks much John, that’s the guy, used to be a client, funny they didn’t give him air time on natural gas thinking.

  43. 43
    zman Says:

    Imports watch:

    LNG inched lower to 1.1 Bcfgpd (mid July, still no tsunami)

    Canada eased back to 7.0 Bcfgpd.

    Total imports of 8.1 Bcfgpd are 1.2 Bcfgpd less than last year, all due to lower Canadian volumes.

  44. 44
    Dman Says:

    Z – if you know the title to an NYT sory, you can usually see it just by searching the title on Google & then clicking the link. This works even when you run into the paywall if you try going via the NYT site itself. Strange but true. Works for most newspapers (eg WSJ).

    So if you go to:

    http://news.google.com.au/news?hl=en&client=firefox-a&rls=org.mozilla:en-US:official&hs=B2i&q=%22Two%20natural%20gas%20companies%20%E2%80%94%20Southwestern%20Energy%20and%20Petrohawk%20Energy%22&um=1&ie=UTF-8&sa=N&tab=wn

    … and click on the 1st link, you’ll get the NYT story.

    BTW, Dan Rice has a view on oil for the next *15 years* !! That’s some crystal ball.

  45. 45
    Dman Says:

    #44 should have clarified … you don’t even need the title: I just searched for the phrase you mentioned.

  46. 46
    Dman Says:

    Z – don’t know if this is old news, but anyways …

    http://oilandgas-investments.com/natural-gas/new-us-natural-gas-pipeline-displacing-canadian-gas/

  47. 47
    zman Says:

    D – you smart man. Thanks!

  48. 48
    zman Says:

    D – the pipeline is getting basically stranded Rockies gas to market, very good news for the likes BBG (probably the company with the most impact) to NFX, to APC and COP.

  49. 49
    choices Says:

    http://www.nytimes.com/2009/07/12/business/mutfund/12energy.html?_r=1&scp=6&sq=Dan%20rice&st=cse

    half way down in the article.

  50. 50
    Dman Says:

    Z – I should confess that I didn’t figure it out myself: I saw an article in Editor & Publisher that mentioned it. The newspapers want to encourage traffic from google, so they don’t throw the paywall in your face if you click from the google site (or from yahoo etc, I guess). For multipage articles, I think it is only good for the 1st page.

  51. 51
    choices Says:

    #49 redundant-did not see earlier posts.

  52. 52
    zman Says:

    Dman – thanks for that tip, I’ve seen it work before but never figured out what triggered that, thought I had just gotten lucky.

    Group feels like it wants to go higher next few days, been pretty handily sold, with only last Thursday running counter trend. Bottom fishers should step in pre earnings, especially in the oily names.

  53. 53
    Dman Says:

    Nicky, oil may be listening to you.

  54. 54
    zman Says:

    Crude down a dime as GS trade winds down. I jest but it does appear the market is shifting around that quickly between stocks and asset classes. Last leg down for oil may be the release of MEND leader Henry Okah, followed by the youtube video release of him bombing something the next day.

  55. 55
    choices Says:

    Z-Which oily names are you watching?

    Thanks

  56. 56
    zman Says:

    SU – oil sands, generally moves with oil

    CLR – Bakken oil, big acreage, unhedged

    WLL – another interest Bakken player

    BRY – west coast crude with a Haynesville shale chaser.

    DNR – CO2 oil recovery name, interesting, leverage to oil works better here with higher prices so not playing now as I see sort of limited upside by 4Q (I said $65 to $75 for 4Q in the wrap post)

    EOG – big cap gas with an oily twist in a number of oil shale plays. They have drilled the best wells in the Bakken, should see much better differential to WTI in Q2, better transportation as well so we could see a bottom line beat, and I’ve heard of two big wells there drilled in the quarter, one in North Dakota, one S.Texas.

    WRES – not really watching just holding, more a long term come back play although I have some options that once looked good, now not so great but I bought longer term there.

    KOG – Bakken micro cap

  57. 57
    VTZ Says:

    Did something just happen in the last hour? I went to grab a coffee and a lotto ticket and the CAD made almost 1 cent move vs USD and gold is up.

  58. 58
    VTZ Says:

    There wasn’t economic data. News?

  59. 59
    Dman Says:

    V – looks like technical action on the daily USD/CAD chart: recent upmove looked wobbly. But … the spike down is very sudden.

  60. 60
    Dman Says:

    V- maybe CAD just following oil?

  61. 61
    VTZ Says:

    Yeah I dunno, the currency markets are almost as spastic as stocks these days.

  62. 62
    Dman Says:

    For those following energy in the form of grains, the pop in wheat today could be due to this:

    “Govt cancels permission to export wheat; ban back in force ”

    http://timesofindia.indiatimes.com/articleshow/4773310.cms

  63. 63
    Dman Says:

    Z – can you remind me what the NG price is where you have to eat a hat? I’m sure you can get one made out of french fries 🙂

  64. 64
    zman Says:

    BOP – Take a look at GST, the debt side on another little penny, just got interesting. Wiping out their 12 3/4% Seniors, term note etc. Stock is basically flat since they announced the sale.

    Dman at $2.999.

  65. 65
    BirdsofpreyRcool Says:

    GST — will do. Always meant to look at them… but, the longer I held off, the lower the stock went. So, never got around to it. Could never figure out why CHK owned almst 14% of the common stock there. Any particular reason? (Other than Aubrey runs his company like a hedge fund.)

  66. 66
    zman Says:

    Nope, you summed it up.

  67. 67
    Dman Says:

    #64 Oops. Closer than I thought.

  68. 68
    zman Says:

    Dman – I honestly wish they’d go ahead and get there so we can all say, ok, now it’s definitely too cheap.

  69. 69
    zman Says:

    Adding to 65,66 … of course, calling CHK a hedge fund is a little unfair to CHK. After all, they know how to actually hedge. Hedge funds … not so much looking at returns last year.

  70. 70
    zman Says:

    Going for a nice close in crude, down just a dime again, well off lows from this am. Good GS tomorrow and we’re back in business above $60. Funny how that works.

  71. 71
    zman Says:

    Paired industry trade from a brokerage firm. Dundee cuts U.S. E&P and raises U.S. Airline industry in the Gustsy Move Mav of the day. I think they are way early on the airlines.

  72. 72
    BirdsofpreyRcool Says:

    #69 — i’ll concede you that point (in CHK’s favor)

  73. 73
    zman Says:

    BOP – Aubrey likes the asset, tried to own more of the stock but got blocked. If times were different now I’m sure it would be on his list of things to gobble on the cheap. As things do stand, he’s in debt reduction mode and is unlikely to pay the $300 mm or so it would take to bag them. Also, with more shale acreage than he can drill and hold at these prices acquisition of something that looks more like expensive exploration is probably not in the cards.

  74. 74
    zman Says:

    HK – if we don’t see that update tomorrow or Wednesday its unlikely to happen this week based upon their historical release precedent. They seem to be more often than not, Tuesday interim release guys. So if I don’t see it by Wednesday, I’ll punt the July calls that I can and reload with Augusts.

  75. 75
    zman Says:

    EOG working to make Asia dependent on North American gas. EOG signed an MOU to supply gas from its future BC production to feed the Kitimat LNG facility which will send gas to China, Japan, S. Korea

    http://www.kitimatlng.com/code/navigate.asp?Id=2

  76. 76
    ram Says:

    In the past, Analysts like to be bullish on airlines and restaurants if they smell a turn in the economy.

  77. 77
    ram Says:

    I wonder what will be perceived as a trigger for the turn?

  78. 78
    PackMan Says:

    EOG took off; Aug 75 calls not moving at all.

  79. 79
    zman Says:

    Hear ya Ram, just feels like with the combo of the E&P cut and the airline hike he’s making a call on fuel prices for the airlines helping them. They are as messed up as the autos and I think its going to take a bailout eventually to save them. Could be wrong, not my sector but I do watch them and own a little LUV.

  80. 80
    zman Says:

    Pack – still just too far out of the money there.

  81. 81
    ram Says:

    ZMAN – Did Little Rock make it in the 100 best places to live?

  82. 82
    VTZ Says:

    Oil at 60…

    BOP- Is CIT too big to fail?

  83. 83
    zman Says:

    Didn’t see the recent list. Austin is usually in the list though.

  84. 84
    BirdsofpreyRcool Says:

    VTZ — CIT has been so close to failing so many times… maybe this time it will really happen. But, “failing” can mean a lot of different things… did Merrill Lynch “fail”? I would imagine that some sort of deal (another shotgun marriage, perhaps) will keep financial mrkts from thinking this is another “Lehman.” But, I don’t think it will be another “AIG” either.

    Then again, I didn’t think Obama would destroy 233 yrs of contract law either. So, it’s a Brave New World, eh?

  85. 85
    BirdsofpreyRcool Says:

    SD out with 2Q operations update

  86. 86
    BirdsofpreyRcool Says:

    never mind… just saw the headlines… they announced that they will announce.

  87. 87
    BirdsofpreyRcool Says:

    i’d say HeadTrader called today pretty well. we get TechTrader back tomorrow too.

  88. 88
    ram Says:

    So if I want to get out of a contract, I can use the GM bankruptcy as a precident – just say it was only ink on paper.

  89. 89
    BirdsofpreyRcool Says:

    ram — not quite. You also have to point your finger and shout about the “Greedy Lender(s)!” But, that should do it. Worked for Obama.

  90. 90
    john11 Says:

    You can always throw in a mention of those “evil wall street speculators”…that helps too.

  91. 91
    zman Says:

    MEND leader Okah freed. Oil not affected.

  92. 92
    West Says:

    KOG, This is some recent offset well information from NDIC, RMOJ, Bakken Shale discussion group and KOG website presentation. Peak ND recently requested temporary spacing for nwnw4-148n-93w and provided the following information in that request: 40’thick, 320ac(4500′ lateral), 6%porosity, 25%H2O saturation, 988scf/bbl, (now it gets interesting) PRIMARY RECOVERY 13.8%, EUR 342,520BO, 330,190MCF GAS, OPERATING COST 5k/month plus $ 6/BBL H2O SWD, investment cost 6 mill.The Co. requested to be allowed to vent gas for 12 months as the closest gathering system is 16 miles away & would cost apprx. 2.5 mil to connect well. The Co. did not anticipate any pipeline solution until there was enough production in this area to justify cost, earliest anticipated completion date is Jan 2011. It should be noted that some wells to the southwest will be having their annual review in the next couple of months for venting approval and at present there is no indication that they will not be renewed. It is a possibility that at some point the state may not allow the venting to continue as they are losing tax revenue and this would shut in oil production.The well has cum 42,692 bo, 2,783mcf(vented) and 14,550 bow from 9-08 thru 5-09. The well is currently averaging 107 bopd, 77 mcfpd, and 30 bowpd. Original ip for well 829 bopd, 647 mcfpd and (from NDIC) 1160 bowpd…………………………….. Fredericks 6-31H, which is suppose to be a Three Forks Sanish well but is listed as bakken by infor on NDIC has the following information available: IP test dated 3/8/09, 465 bopd, 272mcfpd and 1202 bowpd. For the 3 months ending 5/09 the well has cum 16,783 bo, 9611 mcf gas, and 7968 bow. This decline curve will probably tell the story for pace of development for TFS in this area. There were no estimated eur for this well available and no other public information is available on this well that I can locate at this time…………….The reported production for most Bakken wells in this immediate area is about 100 bopd after about 5 months of production on a 4500′ lateral. Of course there are a dozen other variables that need to be applied, i.e. # of frac stages, length, etc. Most of the MRO wells in Baily Field are 10,000′ laterals with a single stage frac and average about 100 bopd and 44 mcfpd and 30 bowpd. The numbers game works here as there are 63 wells making 156,000 bop month, 84 mmcfg bpm and 41,000 bowp month. Most of WLL’s Sanish Field wells avg about 200 bopd with some now hooked up to their Robinison Lake Gas Processing Plant. These would be 10,000′ avg lateral length with mutli-stage fracs…………………………….Probably one of the most important events forth coming for KOG will be their tests Charging Eagle and Tall Bear wells south of the Little Missouri River. Aproximately 1/3rd of KOG’s ac gross lies in this area and bumps up against pinch out area that defines eastern edge of EOG’s production in the Parshall Field. The more experienced people on this site can review logs on KOG website presentation page 7 http://www.kodiakog.com/pdf/KOG-June2009-v2.pdf,but there would appear to be a large section in the middle part of the Bakken section, in the Charging Eagle log that is very tight.This could be good or bad, but it could be argued that it will be harder to have frac stimulate entire area or restrict penetration area. As stated this would be better addressed by someone with greater knowledge and experience……………Hopefully this information may be helpful for back of the envelope considerations. Best regards

  93. 93
    BirdsofpreyRcool Says:

    West — thank you. A lot of good data to paw through. Heard the roughly the same thing re: mid-late 2010, 2011 being the earliest KOG would hook into a gas pipeline. That is probably another reason why KOG is not rushing to crank out wells, but proving up their acreage on a planned schedule.

    Would love to hear anyone’s comments re: the well logs from the eastern edge of the Bakken production limit.

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