Monday Morning And All Is Green

110 thoughts on “Monday Morning And All Is Green”

1. Is the oil rally following the dollar’s decline?

2. SW Energy downgraded to Underperform from Market Perform at Raymond James
   (41.43)

3. … and the strong equity futures, yes.

   Good luck to Raymond James on getting on the deal team next time SWN has a financing. That’s a bit of a cheap shot cutting on the pipeline curtailment when the internal drivers continue to get stronger and a second core area looks to be coming closer to fruition.

4. NG suddenly surging, up 30+ cents, something must have blown up, have not yet seen news….

5. huron consulting blew up

   down 30 bucks on an accounting retstatement

   Huron was formed from remenants of arthur anderson which blew up with the enron scandal

   so this is a mini enron redux

6. back to 4

   the ng stocks seem to be picking up steam

7. Bill – That move is jumpy even for natural gas. This is the kind of unexpected and seemingly random kind of volatility which I was referring to in the post in answering the “why don’t you short gas here” question.

8. good point

   poor huron workers

   first the lost their azz when Arthur andersen blew up, then they rebuild lifes and get wiped out again

9. Z – what’s the SU deal in a nutshell? Implications?

10. Oh, OK I just saw that it is a completion of an existing deal, not a new one.

11. I guess SU is up just with oil, not deal related

12. D – Yep, deal announced about 2 months ago, think strong SU with retail outlets and more exploration (although for comp purposes they had to punt some stations). I think the total savings is a $1 billion per year of costs. Idea would be to spread risk over a bigger asset base, lowers funding costs for all of SUs oil sand expansion projects, and other synergies. It was bid up early but that was probably overnight oil, don’t think they were sweating getting it closed, had already gotten reg approval.

    Open should be pretty green. I repeat that I will be taking profits all week and trading into smaller positions on this week’s earnings names.

13. BOP is out today so no update from the trading desk. If anyone hears Epperson come up with a reason for the gas price launch let me know.

14. Ok, just saw Epperson. Talked about WTI, Brent, the dollar, then even sugar and copper. No mention of natural gas which is now up 7%. No wonder the CNBC ratings are so lousy.

15. Raymond James getting kicked in the head on that downgrade of SWN.

16. ZTRADE:

    WLL – Sold the remaining (10) August $45 calls (WLLHI) for $3.60, up 254%. I continue to hold the September $50s but may let them go soon.

17. ZTRADE:

    OII – Sold all (10) August $50 Calls (OIIHJ) for $4.30, up 175%.

18. SWN is through the June high at 42.75, now 42.85. Letting it run a bit longer. Like to take lower strikes out later today or tomorrow.

19. Z – think you meant the July high in SWN.

    Chart is amazing given the NG backdrop.

20. Dman – I did. Was just thinking that when the entire portfolio is up almost 25% it is time to take some chips off the table. At least for me.

21. still no clarity on the NG jump?

22. Dman – Nope, still nothing I can find. Epperson on again, this time mentioned gas was up on the back of oil. Partly true but the jump and fast trades to up 35 cents at one point would indicate someone thought something was up.

23. HK resting comfortably over $25. My strategy here in addition to what I wrote in the post.

    If they come out with an operations update in the morning I will likely sell the August calls into the rally and add some September calls. They have earnings out Wednesday morning and I would not put it past them to do a deal if the stock gets into the high $20s as Floyd has never seen a shale play that he didn’t want to develop. He should have well results in the EFS that are best in class and not just one or two wells but 5 or 6 to talk about. That should be received well. If no operations update in the morning tomorrow than I will hold the Augusts through the earnings report unless it really surges between now and then.

24. WLL – that’s just a shamwow big move there. I continue to hold the September $50s as my oil focused long. At this juncture I am not going to chase EOG or CLR for earnings unless they get a good pullback.

25. NG testing $4 from below, up 9+%.

26. Z……How do you feel about the Sept WLL position? Big move in a short time frame

27. rogue trader spike followed by a wave of “oil up & bound to be a hurricane soon” ?

28. Natural gas – still no big jump out and grab you headline. I do see a story on Europe adding storage capacity for LNG, but I doubt that’s it. If they were to start building more capacity it could be a bit of a game changer for gas prices on the high seas. Europe is more a spot market and the idea that they would want to remodel themselves after the U.S. would be new news. I doubt they go that far but its interesting to see them mull it over.

29. Dman – could be but other than those three tropical waves traversing the Atlantic there is not much thought that anything happens this week at least.

    K – I killed off the last of the Augusts and am considering taking the Septembers as well as they are a double now and I can always buy them back lower. I don’t mind leaving some cash on the table after these kinds of gains either.

30. NG at $4

31. … and I should add that nothing has changed on the fundamental front. We will likely get the smallest injection of the season to date this Thursday but from an over all storage standpoint we are going to be more than a little bit pregnant with gas in September let alone by Halloween when the withdrawal season begins.

32. What is your thinking on LINE at this price?

33. ZTRADES:

    SWN – sold the (15) August $42 calls (TKQHC) for $2.00, up 44%, with the stock at $42.75.

    Sold the (5) August $40 calls (TKQHH) for $3.30, up 26%.

    I continue to hold a small August $45 Call position.

34. 31- If you believe this and gas up .26 currently, then you better short before thursday. IMHO you will not see $3 this year….

35. Z – but we are now close to the peak of hurricane season, so the capacity for a “pop-up” event has got to be there.

    i.e. the water is calm but warm. But was that the spike? Dunno. Someone hit a button by accident? Coffee spill on the keyboard 🙂

    Now natty is falling but the stocks are ramping!

36. Cargo – I’m continuing to hold it in the personal account, up 68%. Would add it now? I’m not but would on pullback. I think it goes ex-dividend this week and I would not be surprised to see these guys in late 3Q or early 4Q pick off the assets of some distressed player up against a bank redetermination for a low $/Mcfe price but only if the deal is immediately accretive. These guys have an excellent track record of buy low and monetize high and milk in between. My sense is that if gas prices are not comfortably over $4 by 4Q then we will see some forced asset sales to pay down bank lines, again, amongst the smaller players out there including some privates.

37. Reef – Its a tough call I agree. I won’t short natural gas for all the reasons in the post. I will get less long however through periods of uncertainty. I think on a regional basis we’ll see that gas on gas comp and it will kill some local prices. The move this morning I think is probably just short covering. I hope not to see sub $3, just dunno. I do know that at these prices people are going to be wondering “what surplus?” this time next year as the conventional declines become rather obvious by then.

38. There goes S&P 1,000.

39. z-just looking at physical markets over last 90 days shows a real “floor” of about $2.75 wellhead, equating to north of $3 AT nymex. I think $4 this early is dreaming and we can expect to see $3.40 Friday.

40. Canadian mkts closed today-holiday.

41. Reef – I can’t argue with any of that. I just went from 32% cash to 56% cash with this morning’s trades and I plan to up that percentage into the 70%s before Friday.

42. ZTRADE:

    FSLR – Adding (2) August $160 calls for $5.90 with the stock trading sideways at $155. I continue to hold the September $180 call here as well. After listening to the call again and managements comments on the potential impact on income of the rebate program in German my sense is that the downside to earnings has been more than adequately reflected in last Friday’s swoon in the shares. But I’m not going in large as you can see.

43. Z – any thoughts on how GMXR are travelling?

44. Dman – nothing fresh, had not planned to play the E. Tx Haynesville gang this earnings season. Will snoop about.

45. No doubt the dollar is driving a lot of the green screen. Dollar index now at Sept 2008 levels. But I think the action against commodity currencies (AUD & CAD) is more significant. They are a bit stretched in these moves, but if the dollar is crashing, they could get more stretched before snapping back some. I was surprised to see Marc Faber (in his newsletter over the weekend) calling for a bit of a bounce in the dollar, based on a purely technical analysis. That’s a brave contrarian call, and he gets those right too often to ignore. (He is very bearish on the dollar long & medium term).

    I think the dollar *will* bounce, but from where? It’s now at 77.6. in the middle of a gap from September that will fill at 77.3. Nicky, you out there?

46. ZTRADE:

    HK – Added (20) September $26 Calls (HKIP) for $1.45 with the stock at $25.35. I’m overweight here and plan to purge some but not all August calls today. Earnings due out Wednesday, see post for comments.

47. With the DX collapse down to 77.6, the Euro is trading at 1.442-hard to figure why the Euro is strong-Europe has same problems as US in spades with various govts taking their own course. Seems like a blow off with commods but I would not be shorting the DX down here altho looks like nothing but air below. Watching gold if it breaks 980-960 where it is now supposed to be minor resistance.

48. Z – FSLR – from last friday …notablecalls …

    First Solar (NASDAQ:FSLR): Downgraded at Credit Suisse
    First Solar (NASDAQ:FSLR) is getting downgraded to Neutral from Outperform at Credit Suisse this morning following earnings out last night. The firm is lowering their target to $135 (prev. $200).

    Earnings momentum peaking. While there has been a widespread concern on FSLR’s margins, FSLR’s stock in the meantime has benefited from its consistent track record of beat and raise quarters in the past. While CSFB expected upside to the quarter, FSLR’s reported Q2 results were well above consensus. However, they think Q3 will be the last good quarter for a while for similar upside surprises; and they expect a period where estimate resets are asymmetrically skewed to the downside as we move into 2010. Firm expects the stock to look ahead of this peaking earnings momentum and pull back to lower levels.

    Reasons for downgrade (short summary):

    1) earnings momentum peaking. CSFB thinks Q3 will be the last good qtr for a while for similar upside surprises; and they expect a period where est resets are asymmetrically skewed to the downside as we move into 2010.

    2) rebates could accelerate price competition and will sharpen focus for customers and investors around pricing. We also expect Asian c-Si suppliers to match or beat these rebates in return.

    3) ASP declines are winning the battle over vol growth;

    4) rate of cost reductions could moderate. Our call is a reflection of the new risk/reward on the stock; still believe FSLR has a compelling technology and capable mgmt team that can deliver on longer-term roadmaps.

    Notablecalls: This is a powerful downgrade from CSFB Solar Energy team. I’m actually surprised they didn’t downgrade the stock to Underperform (the language is that strong). The stock will have 8-10% downside in store today.

49. Hmmm, the DX, AUD & CAD charts are all way beyond their 200 day SMAs. A little mean reversion wouldn’t be a huge surprise. But what if everyone is relying on that?

50. Dman – I’ve paged Nicky. A lot of folks are on vacation this week and next.

51. Thanks Pack, they may be right, hard to say. I think it is a bit overblown but I’m not putting much $ behind that.

52. My immediate USD target is 76 for a bounce… then down to 72.

53. Morning all. I am here!

    Indices. Finally 1000 plus on the spx so the bulls have their way. It isn’t done but its close. 1007, 1010, 1014 and then 1032.
    SPX 38.2% fib is at 1014. COMPQ 50% fib is at 2063. DJIA 38.2% is at 9451.
    For me the only question is how big a top is this going to be? Wave wise it looks like THE top but cyclewise it doesn’t.

    $ – I too am looking for a low. I have been saying for months 76 – 77 and I am sticking with it. We are in wave v down and $ sentiment is at extreme bearishness so we are about to see a huge rally in the $.

    Oil – It looks like the move to $58 was a b wave and we are now in wave C which will consist of five waves up and we are currently in iii of v. I am expecting at least a double top if not higher.

54. Dman – I hear what you’re saying about CAD. It’s gone from 84 cents on the dollar to about 94 in no time. But, fundamentally it also should be worth more than USDs because our banks aren’t collapsing and we are an exporting nation, so I’m not really worried about the MAs. Australia is in the same position and neither country has bank/financial problems.

55. VTZ – 73 is not out of the question. I think the equity market may start to get very nervous if the $ really starts to crumble.

56. Nicky – well, at least such a $ tumble would be good for the exporters.

    Any thoughts on NG? No hat eating for me this week at least, I think.

57. I just don’t see a catalyst for USD strength anytime soon. Each week is another slap across the face to anyone thinking of buying USDs because of the bond offerings.

58. I continue to firmly believe that the last thing thats holding up the USD is the long bond strength but as that fades then we are in for the beginning of a controlled fall.

59. Bloomberg TV just reported that the World Health Organization has rased the H1N1 alert to a level 6 which is a pandemic. They are investigating whether, once vaccines are available, a requirement will be put in place to have all US resident vaccinated twice, one shot followed by another 30 days later. They are commenting that, if so, this would place a huge burden on the US health care system.

60. I am not looking at $ fundamentals at all – in fact I totally agree with you that it should crater before all is said and done. But wave wise this move is almost done.

    Nat gas – will take a look but I am still look for a cycle low into September.

61. Lots of talk over the weekend about how a middle class tax hike is now a possibility for the administration. Wonder if that would stabilize the dollar as the nation would need less debt.

62. Thanks Nicky!

    V, I agree (as does Marc Faber) about the $$ fundamentals. It’s just a sentiment-extreme bounce that I’m worrying about. Also, the Fed & international central banks will choose such an extreme moment to try to prop up the $$ & if they don’t do it soon, like choices said earlier, there is only air below.

63. Nicky, I thought the WHO went to level 6 months ago. There has been no doubt for several months that a pandemic is under way. Swine flu has been widely propagating simultaneously in both hemispheres, which never happens with seasonal flu. The attack profile is also different, with more severe cases (hospitalizations) and deaths amongst young adults than happens with seasonal flu. Pregnant women are at particular risk, as are asthmatics. Having said that, most cases are only moderately severe, but need careful monitoring because they can go downhill fast.

    Public health experts have been saying for years that even a moderately severe flu pandemic (like this one) will flatten the US health system.

64. Market hugging 1,000 sp. Stock volumes are better than they have been of late in energy for this time of day but nothing to get excited about. I would imagine a lot of money on the sidelines is timidly thinking about entering here but afraid to chased the stocks in size.

65. Oil approaching $72, even for a non-fundamental based move, which this mostly is, this is ahead of itself. They always, always, always take the pendulum through the side glass and berry it in the hallway wall before pulling back sharply in the other direction.

66. GST up 10% post reverse split. Silly reason for a stock to run but it happens.

67. #61 Can they get that thru Congress?

68. Dman I thought so too re 63 but this was Bloomberg reporting.

69. Dman – dunno, kind of doubt it. But if it looks promising I would think that would slow the dollar’s descent. Perhaps I’m looking at it the wrong way.

70. Z – anything that would improve the balance sheet would (in theory) be good for the dollar, so I understand what you’re saying.

    But I worry about minor side effects, such as an armed revolution by the middle class. They watched $trillions in bailouts for bankers who are now getting billions in bonuses, so I can’t imagine they will take kindly to being asked to again shoulder the burden. If the pitchforks come out, I don’t suppose that will be good for the dollar!

71. z-10% move in NG. 2010 strip is 6.14. 2010-2101 is $6.47

72. Nicky, WHO went to Phase 6 on June 11:

    http://www.who.int/mediacentre/news/statements/2009/h1n1_pandemic_phase6_20090611/en/index.html

    Maybe Bloomberg only just noticed?

73. Looking around at what’s outperforming today, you can see people are buying names for earnings. SM up strong and drifting higher. I’d like to see this continue tomorrow for HK. APC and SM should give us the most recent look at EFS wells tomorrow and its probably not a mistake that the two JV partners are reporting on the same day.

74. Dman – That’s why tater has a cave!

75. Reef – time to see someone like SWN who is lightly hedged in 2010 take on some more contracts.

76. reef, what’s your guess on the NG move?

77. V – yep, tater way ahead of Bloomberg in all cave-related activities.

78. Dman- trying to stay in step to CL. $72/$4.04= ratio of 17.8. No move in NG would mean a 20 and it has not been that high in 20 years or ever! Historical data suggest a 8 to 16 range on ratio.

79. 11% move on NG. Short squeeeeze.

80. APC denying rumor there is something wrong with the 1 Bcfgpd I-hub

81. took a position in plll

    they farmed out some barnett wells to chk

    they seem to be living within cash flow

    50 % permian oil

    negative 50 % in ng

82. http://www.bloomberg.com/apps/news?pid=20601087&sid=a3eCd5zLF5q0

    No taxes to middle class according to that guy.

83. Following up on #61, tax revenues take biggest dive since great depression.

    http://news.yahoo.com/s/ap/us_plummeting_taxes

84. Trimming some oil service ETFs last repurchased at OSX 148, no real rhyme or reason, just profit taking in line with Z here. I’ve been early before, let’s see how this one goes…

85. V – He should get the people working for him into line then.

86. kog seems to be underperforming..HELLO

87. V – He should get the people working for him into line then.

    WRES holding pretty well, coming down to the wire on my Aug 2.50 calls there.

88. Was there any consideration to adding to WRES here to lower cost?

89. Ram – on the calls? I guess I considered it. But I’m mainly here for the stock and last management presentation left me somewhat, um, bored out of my skull. Like the assets, not going to add pre numbers which should be improved from 1Q just based on price. Just don’t know if they will be able to say anything interesting at all at this time.

90. Sorry, the calls. O.K., so if management presents a boring CC, then the stock could stall. I understand that this is in no way any inclination of advice, whatsoever.

91. Ram – I hear ya, right, but I figure with them so beat up at this point but right at the strike, why sell? It is now a small position and they could say something worth noting on the CA regulatory side. Or maybe they decide to drill a well. Either could move the stock towards the upper $2s.

92. “them” in 91 refers to the August 2.50 calls, not the stock.

93. Understood. The SWN AUG 45’s at this juncture are close to the ave. cost. I didn’t see SWN in taters world. Was there any short term upward price goal until major resistance?

94. Ram – I didn’t ask him about that one but I’d guess some reason to see a pause in the $45 to $46 range. I just punted because I wanted some more cash, had a nice profit and booked it, and I still think gas could retreat rather smartly with no notice. Given the high correlation of SWN to short term moves in gas it seemed the prudent course of action.

95. Last 3 hours has felt like an expiration Friday. Like watching paint dry. Very green paint. Market needs to hit the reset button so that the stocks can move again. I am thinking I will hold all three HK positions into tomorrow and then decide about the Augusts prior to the call on Wednesday morning.

96. Where’s Sambone?

97. Vacation I’d guess. Probably waiting for a spinner to enter the Gulf before commenting.

98. Added from Nicky on oil:

    Z its possible but equally it go to 76 or even 80 – its a C wave and they can be wild! I think we may pullback to 70 first. But I also think it has now gone so high that the previous highs are going to be taken out ie its beyond all the fib retracements.

99. No spinners entering the gulf.

100. Not yet. It’ll happen.

101. KOG: page 2 of STR’s transcript says, “The good news, the Bakken play appears to be converging on our core acres block on the Fort Berthold Indian Reservation. Other operators have reported initial rates as high as 1700 barrels of oil equivalent per day on wells drilled near our core block, shown in yellow on slide five.”

102. Saw that RMD, yep its KOG’s well. Was a bit surprised STR didn’t get more play out of their pr last week. That wasn’t a bad quarter at all. Too “conglomeraty” for my taste but their E&P sub is performing well.

103. Great start to the week!

104. Good day. Beerthirty.

105. chk numbers are out

     http://www.chk.com/News/Articles/Pages/1316034.aspx

106. chk did another vpp deal

     Chesapeake-operated long-lived producing assets in South Texas in its fifth volumetric production payment transaction (VPP) for proceeds of $371 million, or $5.46 per mcfe of proved reserves. The assets included proved reserves of approximately 68 bcfe and current net production of approximately 55 mmcfe per day.

107. and then there is this

     Chesapeake is planning to sell certain non-Haynesville Shale producing assets in Louisiana in its sixth VPP in the next 90 days for approximately $225-$250 million and also other mature producing assets in the second half of 2009 for approximately $200 million. The company is also working to finalize agreements with a private equity investor to sell a 50% minority interest in its Barnett Shale and Mid-Continent natural gas gathering and processing assets in the company’s midstream subsidiary, Chesapeake Midstream Partners. The company anticipates completing the midstream transaction in the 2009 third quarter for proceeds of more than $550 million. Finally, Chesapeake continues to have discussions with several companies about a possible joint venture on some or all of its Barnett Shale leasehold in a transaction targeted for completion by year-end 2009.

     they took off hedges in q2 and with the rise iin ng they might look like heros

108. looks like capital spending up a little and net cash flow is down

     wondering out loud, i wonder if hedge montization was done for cash flow reasons as opposed a bet on higher prives or both

     In any event, i bet chk is chomping at the bit to offer 25 m shares to raise 500 m

109. bill: few talk about your ever-so-logical question in #108. % production hedges has fallen over the last 4-6 quarters (I have not looked it up but memory says 85% to mid 30s%, many VPPs and asset JVs, yet debt down not so much it seems. The LAST thing investors want is yet another equity deal imho.

110. re 109. Agreed. Last thing they want is a deal. Second to last thing they want is to hear about “accelerating activity”.

This site uses Akismet to reduce spam. Learn how your comment data is processed.