Wednesday – Oil Inventory and Earnings Previews

112 thoughts on “Wednesday – Oil Inventory and Earnings Previews”

1. WLL:

   Something they don’t publicize, but where majority of their reserves are found is in their West Texas asset. Huge CO2 flood with much more potential.

2. Tex – right, EOR stuff is bigger now, Williston stuff is spicier.

3. Pritchard ups BEXP target from $4.50 to $6

4. Z – do you remember what caused the gap up in crude on July 17? Just wondering about that being filled near term.

5. Dollar was weakening during that period and crude had found a bit of a bottom in the lower $60s, you’d also gotten a bigger than expected draw down on crude stocks.

6. Good morning… Tech Trader weighs in… 60/40 short with a lot of volatility, but it is a “strong trend” day.

   HeadTrader not saying yet, what he thinks… but on “strong trend” days, he rarely 2nd guesses TT

7. BOP – you mused at what was holding BJS up yesterday, best thought is “the market” and then maybe covering.

8. Full color report from TT — For Today: Finally. Switch game plans. Sell. Short the morning bounce usually early, and any rally near 11:10 and 11:35, for a sell off through lunch. Look for a few points with odds of 60/40. Be sure to tighten stops after any sell off in the morning and especially after 11:25 and 11:30. Tighten stops again at lunch at 1:45 and 1:10 as usual, if you are pushing short positions into the afternoon.
   Gamblers: The real gamble today is trading after 2:10 since the odds drop to 50/50 and most patterns are all over the place.

9. z — #7… those were the only props i could think of. Remove those props and…. well, we’ll test that today. Unless shorts are still waiting in the weeds to pounce on my prey.

10. Durable goods were below expectations by the way:

    http://www.marketwatch.com/story/durable-goods-orders-sink-25-in-june-2009-07-29

11. boardwalk pipeline problems might affect chk and swn..

    cog didnt react well to earnings.

    wondering out loud if this qtrs hk and swn q2 release will not be well rec’d

    any commmets

12. nfx down hard

13. z — good sale on the NFX the other day… timed that about right. Seems we are destined to give back a little of the mrkt gains, as some of the earnings stragglers come in. That’s ok. Volatility gives us good entry points.

    Just noodling…

14. Bill – I think they both beat on the top line, I think BWP is pretty well known.

    I’m still out of NFX, waiting for it to touch about $37 for re entry plus watching oil and gas here.

15. STR – reporting two 25+ mm/d Haynesville wells completed for $9 mm each.

16. Howard Weil cuts VLO to market per from Outperform.

17. Z – I gather you are out of CLR at present?

18. Dman – I came out late last week, left a bit on the table there. Will likely buy it back closer to report date.

    BOP – you might want to look at the STR presentation, they mentioned liking acreage in the Bakken on reservation land that they have, referenced a 1700 bopd ip from another operator.

19. Caris cuts VLO price target from $16 to $14.

20. BJS trying to fill that gap in the chart now. If it looks likely to hold $13.50, should it get that low, I’ll take my $15s off the table and keep my $12.50 puts a bit longer.

21. z — thx for the head’s up on STR… will look. Been playing phone tag with KOG, but should have some new info to post here soon.

22. z — if you were a bettin’ man… what would be your bias as to the price of oil, post storage report today. Higher? Lower? Just planning the trade. (Plan the trade, trade the plan.)

23. BOP – tough week to ask that. I’ve been looking for down utilization which reduces crude throughput (demand for crude) and the API appears to be showing that as happening. On the flipside, they are implying an improvment in gasoline demand which would be supportive for crude. Then you have imports. Pretty important to the big numbers. Once the initial reaction is out of the way I think demand or lack thereof for products rules. If the API is right or close to right about the products storage change I think crude is higher than here even if you get the big build in crude (as long as there is an accompanying increase in imports that was the principal driver for the storage boost).

24. z — thanks.

25. STR pointing out the improved basis out of the Rockies. Directly benefits BBG.

    WLL was commenting on this during their last conference call as everyone hoped the Rockies Express line getting gas East would significantly shrink the differential.

    STR says pace of storage refill has slowed a lot in the last 4 weeks. Witness the draws we had on gas storage as of last week in the west. Gas storage in their area is now average for this time of year vs well above average several weeks ago.

26. STR is not my typical E&P because it has all the other parts of a gas transportation and storage company that I don’t care to mess with but it is a good mix of high rate Haynesville, emerging Bakken, and now Granite Wash, in addition to their bread and butter play in the Pinedale Anticline.

27. STR is also deferring completions. Next year won’t be the year of the drill bit, it will be the year of the frac. Companies who drilled wells this year will complete them over time to maintain or in some cases grow production.

28. my gut on 22

    numbers will be better and oil will be up and today losses in ep will recover to breakeven

    i bot some hk, dnr, vq this am

29. STR comments on Haynesville declines:
    70 to 80% first year decline still seems right. I’d note that the 70% is a lot lower than people previously thought. They say the terminal decline rate (past a year and out as long as 20 years) is still a wildcard.

30. bill — thx. Gut feelings usually the best.

31. Re 28 – Can’t fight the gut. I think gasoline has a shot at a good looking set of numbers. Diesel needs to get better and fast and I don’t just don’t see the signs of it happening. Maybe a restock for retail for Christmas… dunno. People are sick of not shopping. I am seeing a very slight increase traffic in the big box retailers.

    Inventories in 15 minutes.

32. And Bill, if we do get a bullish looking set of crude numbers, I too would expect E&P to reverse and go green.

33. Listening to STR Q&A

    Good question about CFTC reducing speculator contract size affecting liquidity and therefore the ability of E&Ps to hedge. STR says they are waiting to see what happens. They think we could see the hedges move to overseas exchanges. Hopefully the govt. will take another look at this before they act next month. Questioner says to look at opinion page of WSJ on the CFTC issue.

34. One thing is striking on E&P calls this quarter and to a lessor extent last quarter.

    Fewer buyside guys asking questions.

35. EIA Inventory Report

    Crude: up 5.1 mm
    Gasoline: down 2.3 mm barrels
    Distillates: up by 2.1 mm barrels

    Crude Imports: 10 mm bopd
    Utilization: 84.6% vs 85.8% in the prior week

    Gasoline demand: 9.17 mm bpd, that’s not good enough.

36. Oil fell from down $2.10 to down $2.85 immediately on the number. Most of the issue is the high crude imports number.

    Good to see gasoline stocks come down but it was due to lower utilization and not higher demand.

    My sense is oil doesn’t fall out of bed here but doesn’t go green later in the day either.

37. BOP – I’m sticking with all my statements in #23.

38. z — i hear ya. Tough stuff to call… but, that’s what we do for a living, eh? Try to call stuff that is tough to call. THX

39. VLO moving on down. That lack of demand for gasoline, distillates, jet fuel just not doing it for the refining group.

40. Regarding the oversized build in crude, the imports surging to 10 mm bopd for last week was an 800,000 bopd rally week to week. This alone added 5.6 mm barrels to crude stocks relative to the week before. These big jumps in crude imports are often logistically difficult to repeat on a consecutive basis so you are likely to see imports fall well off this level next week.

41. ZTRADE:

    WLL – Added (10) more WLL August $45 calls (WLLHI) for $1.00 with the stock at $42, off 5% on the day after a weakish looking set of EIA inventory numbers and amidst a week market back drop. WLL reports after the close today. See today’s post for my thoughts on why I’m trading the name for earnings.

42. z, not as brave as u on WLL went out longer in case mkt rolls over a bit here. BOP, did KOG say that they had moved completion rig in yet?

43. on tidewater

    http://www.tradewinds.no/finance/article541729.ece

44. Bill – had not looked at the TDW earnings yet, anything noteworthy?

45. I havent gone thru it, but large charges for non payments from venezula in there

46. West – brave may not be the right word, we shall see. I was tempted to double the contracts (triple down) on this one but my sense about the broad market kept me from doing it.

47. FSLR just about the only thing green on my screen. Its had a slight dip ($5) since I entered, they release after the close tomorrow with a conf. call 30 minutes later.

48. West — re: KOG, no answers yet… still playing phone tag.

49. Bought fair amount of NFX in here-may be a tad early-depends on what crude does.

    The gen market-I’s seeing a lot of comments that the bull is alive, etc, etc from those other than CNBC-prob means it will roll over-maybe inversely to the DX, which is starting to firm up-copper rolling over as well-maybe Chinese are thru buying for now as I understand their warehouses are full.

50. Vol seems very light on energy stks’ sell off

51. Oil off nearly $4. I’d call that falling out of bed. Hard for the stocks to fight but it does look more like a buyers strike than a sellers panic.

52. z – re 115 last nite it was a short comment comparing WLL – CLR. It made one of them look like a better value, but cant remember which one. i/d guess it was wed, thurs or fri of last week

    bill my kid gets to participate in cash for clunkers, so its not all bad!!!

53. Kyle – do you recall if it was in the post or in comments?

54. WLL is definitely the cheaper of the two on forward cash flow per share and is largely hedged at OK prices for oil. They’ve drilled some dual and tri lateral horizontals in the Bakken and are in the sweet spot of the play with some of the highest IP wells (and highest reserves per well) in the play.

    CLR has the largest acreage position in the play and is working hard to confirm that the TFS and middle Bakken are separate reservoirs which could translate into big reserve gains for them when they accelerate drilling. They are completely unhedged to oil.

55. Some color on WLL’s Richardson Fed 11-9H, ip 10-22=08 for 4184 bopd, 2316 mcf, 1819 bowpd. Cum prod thru 5-09 as follows, they r hooked up to gas line but are still vent 20% of production, 189,473 bo, 102438mcf, 11004bw. This well is still avg 600bopd & 338mcfpd. At one time I new what the stripable liquids were for the gas but know that it is very good. This is an extremely profitable well.

56. SPR has gone three weeks now without an increase. Demand was off with refiners but I do think this pull back of nearly $4 is an over reaction. My confidence in repeating that on such a blood red day is driven by the imports component. Enough said, we shall see but I would not expect much downside follow through tomorrow and Friday unless the broad market does roll over.

57. Thanks for the color West, good IRRs on wells like that at these prices. It will be interesting to see if they have some more big operated wells in the Sanish and also in a prospect area to the south. Also, should see some non-operated wells completed that had been deferred in 1Q.

58. >driven by the imports component

    last week imports maybe driven by the dip to 60 4 weeks ago, there has to be a lag effect

    This week glut, plus higher prices means imports should drop in the coming weeks

    tanker rates have plumetted as ships go begging for cargo’s

59. z – in comments

60. Good point Bill

61. Food for thought by Dave Rosenburg this am.
    “We have been and remain long-term commodity bulls, but over the near-term, caution may be the watchword. The reason for this is because China is the key demand-driver for the group and Steve Roach pens a fascinating but disturbing assessment on page 22 of the FT after years of being rather bullish (see I’ve Been an Optimist on China. But I’m Starting to Worry). Basically, what it boils down to is short-term-ism in the fiscal stimulus package, which has re-engineered a credit bubble (bank loan growth is running at a record pace over the past six months and is three times the pace of a year ago) and the public sector capex drive has accounted for 88% of Chinese GDP growth so far this year (double the contribution over the past decade) — this is clearly unsustainable. According to Mr. Roach, China accounted for an amazing two percentage points of global GDP growth in the second quarter, which helps explain the export bounce in the rest of the continent. Unless private sector investment and personal consumption begin to take over, the prospect of a reversal is not trivial. “

62. Interesting read:

    http://www.calgaryherald.com/Packers+Plus+leads+drilling+revolution/1828440/story.html

63. NG getting pummeled, down 23 cents now or 6.4%. That’s probably the worst mover in the commodity complex today.

64. Something to keep an eye on in the northern part of Nigeria

    http://news.yahoo.com/s/ap/20090729/ap_on_re_af/af_nigeria_violence

65. Thanks Eli.

    Starting to see a touch of green here and there, nothing to write home about.

    Solars moving back up.

66. Waiting for SWN earnings, I went back to check its latest presentation=June 09.

    FWIW:http://www.swn.com/investors/LIP/latestinvestorpresentation.pdf

    re #61: Shanghai Stock Exchange off 5% last eve

67. http://www.swn.com/investors/LIP/latestinvestorpresentation.pdf

    sorry-link was boloxed up in #66

68. Louisiana data shows HK has completed 37 horizontal Haynesvilles vs 26 as of last conf call. Got this from a broker note, not confirmed but their trustworthy. This data is a bit delayed so we should see more than 11 completed by next week’s conf call.

69. For those of you who like to play with State O&G websites:

    http://sonris-www.dnr.state.la.us/www_root/sonris_portal_1.htm

    to search for a well you would click sonris light in the upper left corner, then wells by organization, then enter name of company, say Petrohawk, you want the operating company in their case, then you’d take a look at the wells coded 10 as those are producing. You can see all the drill stats, the date completed and the IPs.

70. the market was trying to rally until this came across the wires

    http://finance.yahoo.com/news/House-Dems-to-move-ahead-on-apf-94162676.html?x=0&sec=topStories&pos=main&asset=&ccode=

71. Re 70 – Wonder what kind of pork those guys bagged.

72. #70… it was the mtg with Rahm Emanuel that did it, I’ll bet. Who wants to be knee-capped?

73. 71 lol

    well, now they can enjoy the month off .

    they really worked hard!

74. My kingdom for a website or a news story with some actual details of what is currently in the two versions of the bill. Most stories I see just talk about the “drama”.

    WLL and OII report after the close wit calls in the morning.

75. This week’s cover page for the EIA weekly report has a little commentary on the lingering impact of last year’s storms which came in late August, early September.

    http://tonto.eia.doe.gov/oog/info/twip/twip.asp

76. 30 minutes to NYMEX close, oil down $3.60, trending with market, could see a pretty sharp recovery into the close though. E&P share volumes continue to be very light for the time of day.

    VLO trying to break down, think that one can get to $16 or a little less eventually. Watching for an exit as I’m not greedy.

    BJS slowly but surely trying to at least fill the gap. I may cover the $15s today or tomorrow and play then next pop for a drop.

77. Re CFTC hearings.

    http://www.marketwatch.com/story/commodities-sell-off-amid-perfect-storm-2009-07-29

    I like Gheit; he’s a smart guy, but he’s been bearish through a big rally and I think that colors his thinking here. If the CFTC invokes position limits you can look for that trading to migrate away from the U.S.

78. No rally for crude into the close of Nymex, even with a little help from the broad market. People are pretty troubled by the CFTC stuff.

79. z, looks like u have a following in the WLL aug45s vol 1109

80. Regarding oil price “manipulation”, no one has ever explained to me how an ETF buying front month and rolling them every month “drives up” prices. Every month they are buying and selling an equal number of contracts, unless they are taking delivery.

    Similarly, tales of Goldman buying physical crude and storing it on tankers seem to ignore the ultimate question of what happens whne they do sell it.

    I think we can count on Obama’s appointees doing something stupid. After all, they represent the political class that thinks rent control is a reasonable way to deal with housing shortages.

81. Nobody is selling to me for even a small piece splitting the bid ask… thats for sure

82. West – nearly an equal number in the same strike puts though.

    CFTC guy earlier talked about position limits but in the same breath talked about trader compensation. So he’s had the closed door meeting with the president too.

83. They continue to shoot oil in the head in the AH, down 6.5% on the day to $62.84. I would bet the loss would be half that if we were’nt watching the CFTC debate a revamp of the current system on TV.

84. No Health Care Vote Before August Break
    Politics | Wed, Jul 29, 2009 at 11:43:44 am PDT

    The Blue Dogs have cut a deal with House Dems, and there’s not going to be a vote on health care before the August recess.

    The Energy and Commerce Committee will resume its markup of healthcare legislation Wednesday afternoon under a deal between Blue Dogs and House leaders, but there will be no floor vote on the legislation before August.

    Delaying a vote until August was a key demand of the Blue Dogs, along with reducing the cost of the bill by $100 billion and allowing states to create health “co-ops” that would compete with the government-run “public option” and private insurers.

    “We cut the cost of the bill, delayed a floor vote and ensured that the public option will not be forced on anyone,” said Rep. Mike Ross (D-Ark.) who has led the negotiations for the Blue Dogs. “Members will have time to go home to talk to their constituents and actually read the bill.” [What a concept. – ed.]

85. Dman – does TorS have a dynamic ticker function … shows building on the bid or ask for a group of stocks live?

86. Anybody see a reason for the rally in the dollar today … Clinton in China?

87. Beige Book not so bad, market could care less:

    http://www.marketwatch.com/story/recession-appears-less-severe-beige-book-2009-07-29

88. I’m thinking the real action in WLL will be in the Q&A tomorrow, but u have to take a position before that.

89. West – agreed. You could wait to see the numbers though as the call isn’t until 11 EST.

90. RE 86 Manipulation/Intervention yesterday and today to make it seem like the Chinese don’t have a reason to be worried about the USD and so that the USD isn’t crashing the day of and after their meeting.

91. West … and the reason I was thinking that is that if they get some kind of a bottom line beat it will likely be due to better than expected prices/differentials and not due to a production upside surprise. They may have some big wells in the pr though.

92. thats what I’m thinking .EOG’s wells that they put on line should be good also.They also have another TFS well sw under the lake that they will probably discuss.

93. Not that it means anything but OII and WLL outperforming their peers as we approach the close.

94. beerthirty

95. Is the WLL report good or bad?

96. Reading now, so far not bad, will have something out late tonight.

97. WLL — looks pretty strong… but, have to be sure to include the affect of the dilution of the newly-issed converts…

98. WLL — sorta wonder why the change in accounting treatment of the hedges? i mean, it’s non cash… but why? would it affect the borrowing base??

99. WLL – production guidance going up, cost guidance looks like its coming down on a per unit basis. Haven’t looked at well results yet.

    Wonder if the BEXP well mentioned is new info?

100. BOP-I had same question re #98-also not sure what what we are comparing as the change in accounting for hedges went into effect April 1-current consensus estimates for Q2 were -0.27-does that include the effect of including the hedges? Without hedges, income would have been positive.

101. Choices – having done the job of coming up with the estimates on the sellside I can tell you that the majority of analysts will not put a mark to market hit in their earnings. They’ll simply exclude them as non-cash at reporting time. Also, the negative on the earnings would have been much bigger had they been including the hedge charge.

102. z — WLL… that’s just it… w/o the non-cash MTM of hedges, earnings would be positive… vs an expectation of -22 cents or so. So, looks like an earnings beat…?

     Is it trading in a/h?

103. BOP – yes, its an earnings beat, haven’t worked out the cash flow number.

     Production came in at 5.03 mm BOE for the quarter which was above the top end of guidance of 4.8 to 5.0 and above 1Q levels.

     They are taking up production guidance with the new low end of the range just above the old high end. That is good stuff that analysts and the buyside both like to see.

     Costs coming down on the Bakken wells and some other gems….will have more later.

104. And BOP, its a pretty good quality beat as you have production coming in high and cash operating costs coming in low.

105. and it looks pretty strong on a cash flow per share vs expctations too. so far, can’t poke any holes in it… looking good.

106. Strange but I have one trade of 200 shares @43.69=WLL time 16.46

     closed regular hours 42.76

107. OII came in above the top end of guidance, 0.87 vs a range of .75 to .85 with the Street at 0.81

108. WASHINGTON (AP) — A senior House Democrat threatened banks Wednesday that if they don’t volunteer to save more homeowners from foreclosure, Congress will make them.

     In a sternly worded statement, Rep. Barney Frank said Congress will revive legislation that would let bankruptcy judges write down a person’s monthly mortgage payment if the number of loan modifications remain low.

     Frank, chairman of the House Financial Services Committee, also said his committee won’t consider legislation to help banks lend unless there is a “significant increase” in mortgage modifications.

109. Thanks to md for the headsup that the natural gas monthly came out today. Will have the supply slide show in the morning.

110. WLL thoughts. Wll is the most active drlr in Bakken with 5 operated rigs and participation wi with EOG on their 4 rigs in the Parshall. The new oil pipeline and Enbridge contract should allow them to sell up to 65k bo, which is gold come this winter, and my understanding is that they control the whole 65k.Remember last winter EOG trucked oil as far as Cushing, OK. The increase in capacity at the Robinson Lake gas plant is excellent as I believe the strippable liquids are somewhere around 100 barrels liquid per million cfg. Also they are making money on their gas where a lot of operators are venting their gas and it raises the question on how long that will be allowed to continue. One thing that also kind of got proved up was the TFS under their acreage with recent well on the SW of their acreage, BEXP on the North of their ac, Braaflat on the East of their ac and EAC well on the West side of their acreage. It would look like most of their acreage would be productive of the TFS. You could probably say 300k bo eur for 1280 unit and be under actual amount. If one of you is on the call tomorrow please ask estimated eur for TFS. It is probably to early without enough good hard data to say at this point. You put the Bakken EURs with the TFS EURs and this is one of the best areas in the US….On their CO2 projects we r now getting confirmation that they will actually recover more oil than estimated and this will probably get better as better technology continues to evolve as there is still a tremendous amount of oil in place. This is as oily of an E&P companies as you could want with all of their reserves in the US. They also have alot of other prospects that have huge potential when they have extra cash available. Now that they have many of their money problems behind them they are probably ready for some upward movement and are undervalued at current price. My hope is that they don’t continue to dilute the stock with add’l offerings…. Just a side note , did anyone else notice the fantastic deals Kaiser-Francis made in the last year.

111. West: thanks for WLL update.

112. West

     Stetson Permits First Well in North Dakota and Completes Gas Well in Central Alberta

     July 29, 2009 – Calgary, Alberta – STETSON OIL & GAS LTD. (TSXV: SSN) (“Stetson”) today announced that it has received a state Permit to Drill from the North Dakota Industrial Commission for its first horizontal well on landholdings in North Dakota.

     Stetson and its partner expect to commence drilling operations in mid August, subject to receipt of the Federal Permit to Drill, expected to be issued in early August. Stetson plans to drill the well, Stetson Red Willow MHA 1-11H-148-90, to a vertical depth of approximately 9500 feet (2896 meters) and run open hole logs to evaluate the Bakken and Three Forks formations, following which, it is expected that the well will be plugged back and horizontally drilled in the Bakken formation for a length of approximately 4500 feet (1372 meters). The well is expected to take 26 days to drill and completion operations are planned to commence approximately two to three weeks following release of the drilling rig. Production results should be known in early October 2009. Stetson is the operator of the well and has a 48.75% working interest…

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