01
Oct

Thursday – Hello October

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Post problems today. Lost half the post as I was posting. Said really clever things about ATW, that you won't see until later.

A slew of Eco Data This Morning:

  • Jobless Claims came in at 551K vs 531K expected and 530K last week, personal spending came in a little high to expectations giving futures a boost.
  • After the bell we get:
    • ISM - expected a rise to 54%
    • Construction spending - expected flat
    • Car sales - expected 9.3 mm

 

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 - XCO, ATW, IPAA Day 2 wrap, IPAA Day 3 preview
  6. Odds & Ends

 

Holdings Watch:

  • $10KP II:
    • $18,900
    • 39% Cash
    • The Current Holdings Tab is updated.
    • The $10KP II Spread Sheet tab is updated.

Yesterday's Trades:

  • WLL - Added (5) WLL $55 October calls (WLLJK) for $3.10 to my current (5) call position after the EIA reported better than expected product demand figures in its Wednesday report. This is a swing trade and I will continue to trade this cheap Bakken name on oil movements until it is no longer cheap. They speak tomorrow at IPAA. I continue to hold a position in the $60 strikes as well.
  • ROSE – Added (5) ROSE November $12.50 Calls (RSEKV) for average cost of $2.84. Thin trader as options go. Presentation at IPAA in a few minutes, probably no definitive well results from their first efforts in the Eagle Ford and Bakken but we should get some flavor. I went with long options to cover me through the quarterly release.
  • WLL – Sold the overweight position in WLL (5 of 10) of the $55 Calls for $4.10, up 32% in a few hours with the stock trading a little over $58.

 

Commodity Watch:

Crude oil jumped $3.90 to close at $70.61 yesterday after the EIA reported small bumps in demand for both gasoline and distillates (see slide show below). This morning crude is trading flat.

  • Iran Watch: Big 6 meeting today, details to follow. 
  • China Watch: In the last 24 hours China has:
    • Been outed as a potential interested party in DVN's deep water Gulf of Mexico assets (hey China, take a look at NFX who you already partner with on your side of the globe),
    • identified as close to pouncing on a large field in the North Sea held by a major
    • invested in the Kazakhastan's #2 oil producer via the China wealth fund.
  • In this same time frame, the U.S. has recommitted itself to passing a cap and trade bill.  

Natural gas traded in a fairly narrow range close to even after a fairly sharp lower open, closing down $0.03 at $4.84 yesterday.  The Street was apparently torn over the EIA's supply numbers with some on the side of "see, these are the long awaited production declines" while  others fell into the camp of "big deal, we have too much gas in storage to support a rally". These last guys will buy into higher gas ... higher. This morning gas is trading off sharply prior to storage.

Natural Gas Preview

  • My number: 60 Bcf
    • History:
      • Last Week: 67 Bcf on cooling degree days of 40
      • Last Year:
      • 5 Year Average:
    • Weather: 43 CDDs, heating degree days not enough to talk about last week. That is about to change.
    • Imports: Down 0.4 Bcfgpd from the prior week at 8.7 Bcfgpd and down 0.7 Bcfgpd from the year ago week.
  • Street Consensus: 61 Bcf

EIA Oil Inventory Review


ZComments: Better numbers on the demand side, got the weaker than expected build in distillates I was looking for. 

CRUDE OIL - Refiners continue to process MORE crude than last year (four weeks and counting of positive YoY comparisons). This will stop soon as capacity tails off into the Fall maintenance season. Stocks at Cushing resumed their fall which will be helpful in supporting crude at or near current levels (you won't be hearing people as what capacity is there anytime soon). 

 

 

GASOLINE: Starting to turn the corner on YoY demand.

 

 



 

DISTILLATES: Expect a rally in demand here in the very near future. Stocks remain bloated but can fall rapidly with sustained cold.

 




 

Stuff We Care About Today

XCO Punts Non Core Assets In Oklahoma For A Good Price

  • $540 mm for mostly gassy proved reserves of 252.5 Bcfe (or $2.14 / Mcfe), sold to a private group
  • pretty good for the reserves and very good for XCO’s balance sheet.

ATW - To be added back soon

NOG Wrap

  • 65,000 net acres in the Bakken
  • To date they have participated in 142 Bakken wells (lots of small working interest wells)
  • 26 wells awaiting completion
  • 967 bopd 2Q exit rate, current rate is > 1,200 bopd (I think I heard that right, will have more when I receive a copy of their presentation)
  • 600,000 BOE EUR, $7.50 F&D, partner mostly with EOG and Slawson, claim to be lowest cost producer in the play.
  • Interesting based on Mkt Cap vs Acreage, will have more after I work it up, meeting sounded well attended.

IPAA Day 3:

WLL - 11:50 EST

  • Last two presentations have been carbon copies, looking for some more large IP Bakken wells

MCF - 12:15 EST

PQ - 1:55pm EST

  • Looking for an indication of when they will get busier with the drill bit again

KOG - 3:45 EST

HDY - 4:10 EST

Odds & Ends

Analyst Watch:

  • Nada

 

142 Responses to “Thursday – Hello October”

  1. 1
    zman Says:

    NG getting smacked pre numbers. Don’t see a catalyst, just lack of buyers and continued doubters/naysayers on the production numbers.

  2. 2
    elijahwc Says:

    On the news feed:

    BP BP adds announces Tebe Oil discovery in Offshore Angola – DJ (53.23 )

    DJ reports the co said it has made another oil discovery in deep water offshore Angola, the nineteenth find in a cluster of fields that it plans to develop in groups. The Tebe discovery was drilled in Angola’s block 31 in a water depth of 1752 meters and reached a total depth of 3325m below sea level. The well results confirmed the capacity of the reservoir to flow in excess of 5,000 barrels a day under production conditions, the company said. It gave no information on the quantity of oil in the discovery. “This is one of many (discoveries) we are trying to put into clusters in this block,” said a BP spokesman.

  3. 3
    BirdsofpreyRcool Says:

    Lots of reasons for the mrkt to go down… not a lot of visible reasons to go up. But, I think this will change, either on eco-news and/or when banks start reporting on Oct 15th. Until then, volatile with a downward bias would not surprise me.

    Think we end the year higher from here, tho. So, that is the target to keep in mind.

    From X-Asset Class Strategist this morning… http://www.capmarkets.com/ViewFile.asp?ID1=124498&ID2=354871909&ssid=1&directory=6571&bm=0&filename=10.01.09_Time_to_be_Cautious.pdf

  4. 4
    elijahwc Says:

    NY proposes disclosure of FRAC compositions

    http://readme.readmedia.com/news/show/DEC-Proposes-New-Safety-Measures-Mitigation-Strategies-to-Gover
    n-Potential-Marcellus-Shale-Drilling/959276

  5. 5
    BirdsofpreyRcool Says:

    For today… TechTrader is 60/40 short the morning. But HeadTrader points out that eco data at 10am could change that direction. Or not. We shall see.

  6. 6
    zman Says:

    Announced corporate layoffs hit 18 month low.

    Getting emailed low of “end of the bull market as we know it” pieces

  7. 7
    BirdsofpreyRcool Says:

    Market wants to see how the CIT situation is resolved. Market disappointed that Roger Penske is backing away from his GM Saturn deal. Market can’t quite figure out what the Ken Lewis resignation means.

    Market in cautious mode.

    IG13 105 bps

    HY13 90 15/16 pts

    (new indices, rolled from series 12 to 13, so not precisely comparable to prior quotes; have to hit the “refresh button” on your mental levels here)

  8. 8
    zman Says:

    Re 5 – At 10 EST we have ISM, construction spending, pending home sales, car data later in the day. I think the only way that data turns the market is if it is better than expected. Lately numbers have been on the slightly disappointing side. And when I say disappointing, I only mean in context of economist’s estimates which have gotten overly friendly with trendology and out of touch with reality. Recoveries are bump. Especially ones with big, lumpy stimulus involvement.

  9. 9
    BirdsofpreyRcool Says:

    #6… No. This is not the “end of the bull market.” But we are going to pause here, it seems.

    I’m not a cheerleader for a higher market… but it will close the year higher from here, I think. Not a LOT higher, but higher. Importantly, not headed back to where we were. Credit Market in a completely different place than last year… see what TDG announced yesterday… a B3/B- rated company, issuing debt to pay a special dividend to shareholders. Wow. Unusual for a public company. But something (shareholder-friendly) you can do, when you think operations can support it and the debt market is open.

  10. 10
    zman Says:

    Oil flat. Pretty remarkable considering a bounce in the dollar and a nearly $4 move yesterday which looked like a bit of an over reaction. Oil probably eying Iran talks, then the markets today and tomorrow.

    PQ comments also got blown out of post. Basically up guidance slightly in 3Q, borrowing base matches what they have drawn but they have cash on hand and are adding a rig to the Woodford. Sounds like they are inching back towards growth mode, they speak later at IPAA and I am not willing to chase them here.

    ATW – signed the Beacon to a $110 Kper day contract with Hess off E.G. This rig had been idle since July, one of three ATW rigs not working in their small fleet. Provides better visibility on 2010 earnings. Earnings acceleration with this story is very strong through 2011. I’ve missed the run from mid 20s but will have to take a hard look at them if we get a market discombobulation.

  11. 11
    zman Says:

    Oil ranging above $71 by the time I finished typing #10.

  12. 12
    zman Says:

    WLL – taking it’s morning constitutional, again, down 70 cents. I’m not a day trader and I don’t play at being one on the internet. But if I were …

  13. 13
    BirdsofpreyRcool Says:

    Eco numbers… ISM down, but pending home sales up. A lot. Mrkt focusing on the bad number (ISM) now. But good numbers should catch headlines soon.

  14. 14
    BirdsofpreyRcool Says:

    Post numbers…

    IG 105 unch’d

    HY 90 7/8 down 1/16th

  15. 15
    zman Says:

    Re 13 – goes back to my economists got ahead of themselves theory. Typical. Things don’t move in straight lines. PMI yesterday was a warning, dubarable goods a week ago. I’d bet factory orders follow tomorrow.

  16. 16
    BirdsofpreyRcool Says:

    High Yield index now UP a bit… to 91

  17. 17
    BirdsofpreyRcool Says:

    Frankly, trading the rest of today doesn’t mean much. If we close down, it just makes it easier to digest tomorrow’s employment report. If we close up, there is more pressure for that employement report to be “good.” But just like the first 2 weeks in July, I think we bounce around and trend lower, until bank earnings start coming out, Oct 15th. Good (?) environment for video-game-day-traders… tough wait for the rest of us.

  18. 18
    zman Says:

    BOP – Mostly agree, throw away day. I may have some trading to do around gas if we get market moving numbers (probably SWN). And around oil (WLL) if Iran comments aren’t conducive to world peace. CNBC a Bernanke snooze fest.

  19. 19
    zman Says:

    Site should be speedy now, after slow refreshes of late. Let us know if it is not.

  20. 20
    zman Says:

    Natural gas inventories in 10 minutes.

    NG down 23 cents, has been off as much as 30. Street estimates drifted lower since the start of the week. Last week’s number split the difference between me and the Street. This week my estimate of 60 Bcf is in line. Curtailments / increased demand and the lower imports figure could put the number as low as 55 Bcf.

    I would not expect a rally in gas on an inline number.

    This number will be the last of the cooling load influenced numbers and a quick shift to cooler temps will be needed to support gas as we approach the end of injection season (about 5 weeks from now).

  21. 21
    Denise Says:

    Back and catching up with the board

    BOP-enjoyed your Tues view on dis&inflation. I am basically in agreement.

    My take away-you are in agreement with Gross on higher short term rates?

    On another note regarding the Chinese-

    While slogging threw “One Billion Customers” awhile back this concept stayed with me. It was valuable to pick up insight on their culture-

    The Chinese are a shame based culture and do not share the same moral compass as us and other cultures. No qualms if one is not caught.

  22. 22
    zman Says:

    Adding to the China Watch in today’s post, China in talks to invest in Tullow oil project in Uganda.

    Tater – thanks for the update on your charts page. Link at upper right (Tater’s TA) for those of you who don’t know of Tater’s technical work.

  23. 23
    zman Says:

    EIA Natural Gas Inventory Report:

    64 Bcf – a little high to consensus, basically that’s within survey error.

    Gas at time of report: 4.60, down 23 cents. Gas selling down slightly on report

  24. 24
    zman Says:

    NG down 30 cents

    This will give the gas bears focused on the absolute level of storage a headline to promote

    “Natural gas hits all time record storage level”

    Given the economy, where production was, and where storage started, this was a foregone conclusion since April.

    ….

  25. 25
    zman Says:

    Denise – excellent quote. My version is “Complacency = Death” .

    Wrath? No, you have me all wrong. But I do get uncomfortable with calendar based predictions of doom, supporting arguments not withstanding.

    more comments on gas in a bit…

  26. 26
    Denise Says:

    Wrath because it is a paid site

  27. 27
    zman Says:

    D – oh. Gotta go get their permission or I’ll have to yank it. I so don’t like getting sued.

  28. 28
    zman Says:

    GMXR – interesting comment from last night’s IPAA presentation.

    They are saying frac costs in the Haynesville have fallen 20% in the last 30 days. That’s on top of all the cost reductions we have seen year to date. Makes you wonder about the NAM focused service companies ability to raise prices.

  29. 29
    john11 Says:

    Anybody familiar with RAME, Ram Energy presented last night and got a Rodman rec this morning, big move today.

  30. 30
    zman Says:

    D – I threw that comment into the pending stack. Let me know if you get permission and I’ll unfile it.

    NG pretty torn in here, down 33 cents but threatening a bigger plunge.

    If you look at historic injections from this point through the end of injection season (basically the next five weeks) you still get a storage range of between 3,720 and 3,880 Bcf. The average injection this decade from here to the end would get you to 3,875 Bcf.

  31. 31
    zman Says:

    John – I don’t, but that one has in the past been a pretty fast mover and has sported a high multiple at times (although not at present). That kind of trading is bothersome/unpredictable.

  32. 32
    john11 Says:

    Thx Z.

  33. 33
    choices Says:

    Z-which Kazakh oil company did the Chinese fund invest in (mentioned in your post above)?

    Thanks.

  34. 34
    zman Says:

    Choices – here’s that story:

    http://www.marketwatch.com/story/china-wealth-fund-buys-into-kazakh-oil-producer-2009-10-01

  35. 35
    zman Says:

    Market listening to Ben and sliding pre payrolls tomorrow. No trades from me for now, probably none today.

  36. 36
    BirdsofpreyRcool Says:

    Denise — #21… I used to trade treasuries, don’t anymore. But from a “risk-return” perspective, I don’t know why I would sit in short-term treasuries right now. Unless it was asset/liability matching. The next move by the Fed (although I don’t think it is any time soon) will be to raise interest rates. I think that is what Bill Gross is focused on. Rasing interest rates should reassure the “inflation is going to the moon” crowd and keep longer-term interest rates fairly low. How low? Depends on what our current administration does… more supply has to be met with higher yields… just don’t see a way around that.

    With respect to “healthcare” and “tax-and-trade,” if those pass, I think we see a mass exodus of foreign money OUT of the US. It will be interesting to watch treasury rates during the debate on CAT… I don’t think the Bond Vigilantes will take that kind of repressive/regressive/over-the-top stupid, foot-shooting legislation lying down. I’ve read several foreign banker recommendations that their clients abandon the US completely, if those “policies” are forced down the throat of America.

  37. 37
    zman Says:

    EPA holding up 79 coal mine permits for additional review. 50% of U.S. electricity generation comes from coal. Roughly 20% natural gas, 20% nukes, and the rest is hydro, wind, solar, biomass, oil (oil is 2 to 3%). Not a big squeeze on rates by holding up the permits now as U.S. coal producers have been temporarily shutting mines due to low demand but this is another ominous sign of energy price inflation and retarded domestic growth down the road.

  38. 38
    BirdsofpreyRcool Says:

    Investment Grade Index widens by 2 more basis points…

    IG 107 bps

  39. 39
    zman Says:

    NG down 35 cents

    Oil down a buck now with the market at/near lows.

    WLL call starting.

  40. 40
    zman Says:

    WLL – No changes that I see to the presentation. No new wells added.

  41. 41
    baylor3217 Says:

    Nicky, can you give me some thoughts on SPY Puts for Oct at the 103 and 104 level?

  42. 42
    zman Says:

    WLL call sounds like a recording of the last presentation. They sound like next news on 3Q call, not before.

    MCF up next.

  43. 43
    DrLink Says:

    Refiners May Violate Loan Terms as Fuel Demand Stalls (Update1)
    By Jessica Resnick-Ault
    http://www.bloomberg.com/apps/news?pid=20601072&sid=afa_UIN_g3n0

  44. 44
    zman Says:

    Iran meeting update:

    http://news.yahoo.com/s/ap/20091001/ap_on_re_eu/eu_iran_nuclear_talks

  45. 45
    baylor3217 Says:

    Zman, what are your thoughts on Oct WLL 55 Calls? Seems no news on the call this morning.

  46. 46
    zman Says:

    I’m holding what I have for now, would add on the weakness were it not for eco data due out tomorrow. May still add there and at EOG.

  47. 47
    zman Says:

    Baylor – as it happens I was contemplating that when you asked…

    ZTRADE:

    EOG – added (5) $85 October calls (EOGJQ) for $1.45 with the stock at 82.26, down with the group on a week day. Risky in front of tomorrow’s jobs numbers. Will revisit on significant weakness.

  48. 48
    zman Says:

    ZTRADE:

    HK – Added (10) more HK $24 calls (HKJO) for $0.60 with the stock at $23.35, down almost 4% on weak market and weak gas prices.

    SWN – Added (20) more SWN $45 Calls (TKQJI) for $0.35 with the stock off 3.6% at $41.15.

  49. 49
    BirdsofpreyRcool Says:

    This just in from TechTrader — had the short for this morning, but after 3:10 pm all bets are off as these days tend to bounce and bounce hard.

    Just passing along a rare, intraday comment from TechTrader.

  50. 50
    zman Says:

    Anyone have a good link to the MCF presentation? Their website isn’t updated for it.

  51. 51
    john11 Says:

    http://www.vcall.com/CustomEvent/conferences/IPAA/20090929/agenda.html

    use this access Z.. Ken Peak’s presentation is hilarious, doing the Big lebowski throughout.

  52. 52
    zman Says:

    Thanks John, just remembered your comment from yesterday, am getting hooked to MCF now.

  53. 53
    zman Says:

    Love MCF always pointing out that their biggest cost/partner is the IRS.

  54. 54
    BirdsofpreyRcool Says:

    Credit Market update —

    IG 106 bps… down from the wides of the day

  55. 55
    zman Says:

    John – this presentation is about as good as their old Alice and Wonderland one. Gotta like the low cost producer, no non sense attitude, like the whopping 7 employees, and finally, like the hypothetical run through on their tax effected return, payback, falling share count, reserves per share etc.

    RMD – I don’t see playing it via options but I may own a little common soon.

  56. 56
    zman Says:

    MCF – No options to management this year or to directors. Share count will stay same. Don’t need to do an offering, don’t need to borrow more.

  57. 57
    john11 Says:

    MCF been in my IRA for quite a few years, Ken Peak always makes me feel like a partner.

  58. 58
    RMD Says:

    MCF’s economics lesson for the industry- and how the indusrty is unprofitable- will probably be ignored by analysts, yet needs some thought.
    Presentation unlike any other!

  59. 59
    zman Says:

    …And you may ask yourself why the Street does not cover MCF. Answer is that MCF doesn’t need the Street. Unless an analyst wants to down grade a Shelf competitor of theirs and needs them as a comp to say the downgradee is expensive that is.

    John, frankly, they are one I forget about, repeatedly. I don’t traffic in the shelf names much. Especially since the onshore shales came to prominence and crushed finding costs to the point that anyone of the low RP treadmill which is the nature of the Gulf of Mexico shelf will likely be on a short price leash for the foreseeable future I just don’t see the point. But that doesn’t mean there won’t be some winners.

  60. 60
    Nicky Says:

    Afternoon all. Bearish count gained some traction this morning. It appears that one of the minor cycles is still bottoming. Depending on how low this goes in this wave will depend on whether we see new highs for this move or the top is in and any bounce is just a retracement. The count is messy to say the least which points to a wave iv triangle.

    Support at 1035, 1025, 1013, 1010.

  61. 61
    zman Says:

    EPA on CNBC – heard about this earlier. EPA saying they don’t need a bill to limit emissions. Says has power to implement limits without legislation.

  62. 62
    baylor3217 Says:

    Picked up 2 WLL Oct 55 C for $2.80

  63. 63
    zman Says:

    Nicky – thanks for the levels. Your buddy Joe Terranova said the dollar is going lower.

  64. 64
    bill Says:

    I think the mcf ceo is the real deal
    No debt, low cost, no overhead

    as you pointed out in # 53

    >Love MCF always pointing out that their biggest cost/partner is the IRS

    which is true for every business in the us…im constantly amazed why the politico’s just don’t get it..

    Job 1 how can I make Us business more competitive/thrive

    Today they beat up on coal and energy business’s

  65. 65
    zman Says:

    Hear ya, Bill, hear ya.

    IPAA Watch:
    PQ at 2:15 EST
    KOG at 3:45 EST

  66. 66
    zman Says:

    Iran to open secret nuclear plant to inspectors, “probably in a few weeks”

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

  67. 67
    BirdsofpreyRcool Says:

    High-beta kids taking it on the chin today… This feels a lot like July 1st. We had 13 days of down, then earnings season turned it around.

    Most other buy-siders i talk to today consider this a healthy “back-and-fill” by the market. But, it could go on for a few more days, or two more weeks.

    The real panic will be to watch what is coming out from Washington, of course.

  68. 68
    baylor3217 Says:

    seems the market is overall anticipating a bad number tomorrow. like someone knows something. i’ve come to believe people always have that info ahead of time and are able to trade around it.

  69. 69
    Nicky Says:

    Z – jury out on dollar right now. At the moment Joe is wrong! I thought we needed one more leg down but it may not be necessary. Everything is at a fairly crucial point here including metals.

  70. 70
    Nicky Says:

    Baylor I think the last half an hour will be telling for tomorrows numbers.

  71. 71
    Dman Says:

    I think it isn’t really a question of how bad the number is. The numbers have been bad for a long time. Everyone expects the number to be bad. It is just that the market may have finally reached heights where it begins to look silly, at least for a while, to keep advancing in the face of more bad news.

    The wiley Marc Faber thinks that more bad news will end up being good for equities, because the Fed will rush to print more money. But for that to work, there has to be some volatility & chaos. Which has been absent for a while now.

  72. 72
    zman Says:

    President Obama to talk about Iran talks at 3:05 EST.

  73. 73
    BirdsofpreyRcool Says:

    HeadTrader going out on a limb and saying to “watch for the 3:10 ET bounce”

    He is leaning toward TechTrader’s camp on this one.

  74. 74
    BirdsofpreyRcool Says:

    Of course, TechTrader doesn’t have BHO’s Stern Speech in his model… maybe that changes things.

  75. 75
    zman Says:

    PQ presentation about to begin. Don’t expect them to say much as there is really not much going on but good to keep current. Stock reversed early gains from today’s pr.

  76. 76
    Nicky Says:

    We need a close above 1047 on the SPX otherwise things are starting to look more bearish…

  77. 77
    BirdsofpreyRcool Says:

    Make that the 2:10 ET bounce…

    TechTrader usually quotes in central time, HeadTrader already converted it.

    So, bottom line, TT and HT think we start to bounce up in about 10 minutes.

    Just something to watch for.

  78. 78
    Nicky Says:

    BOP looking at oil a bounce for the indices looks like a real possibility

  79. 79
    zman Says:

    PQ nutshell:

    * Most leveraged name to the Woodford.
    * Adding 1 rig in the W.S.,
    * Spuds first well in quite some time for them tomorrow.
    * Good IRR given the reduction in drilling costs ($4.2 mm a pop now), but cash flow challenged at current prices. Cash flow from the Gulf Coast will fund this (and they do have cash).
    Plan to complete two previously drilled but not completed W.S. wells.
    Trying to get back to a production growth profile in 2010.

    * Whistling Straits prospect drilling now – 93 Bcfe pre drill gross reserve estimate (they have 24% of this target). They had 185 Bcfe of booked reserves for the whole co at YE08.

    * In the Fayetteville, PQ continues to be a go along, minority working interest partner (most less than 10%) of a well, in a lot of gross wells drilled (3 main operators CHK, SWN, HK)

    * Plan to spend = cash flow in 2010.

  80. 80
    zman Says:

    BBEP up next at IPAA. I think I’ll get a bite to eat.

  81. 81
    zman Says:

    Nicky – it will be interesting to watch oil in the after market as the President talks about Iran. Oil flat on an ugly day like today with the dollar getting a bounce and after a $4 up move yesterday says that traders are paying attention to the Iran deal. I don’t think stern language is going to be enough or Iran will just delay and keep building. In the immortal words of Eddie Murphy “May I suggest you use your night stick officer?”

  82. 82
    Nicky Says:

    Oil looks to be in iii of v up Z. Its keeping me from turning totally bearish on the indices as I just don’t see the market falling big time until oil does. The close today for the market is key for me.

  83. 83
    BirdsofpreyRcool Says:

    Speaking of deflation….

    New York Mets Will Lower All Season Ticket Prices Next Season
    2009-10-01 18:24:45.654 GMT

    By Michael Buteau
    Oct. 1 (Bloomberg) — The New York Mets are lowering prices for all 2010 season tickets with some seats being reduced by more than 20 percent.
    The price of the least expensive seat will remain at $11, the Major League Baseball team said in a statement. The Mets have 67 wins and 92 losses and trail the Philadelphia Phillies by 25 1/2 games in the National League’s Eastern Division.
    The average ticket price on a full-season basis will drop more than 10 percent with reductions in select locations in excess of 20 percent. The team didn’t disclose average pricing details.
    “The Mets are sensitive to the economic realities facing our fans and we have lowered our ticket prices in response to these challenging conditions,” said Dave Howard, the team’s vice president of business operations.
    The New York Yankees last month announced plans to raise the cost of 3 percent of the tickets at Yankee Stadium, while the price of 13 percent will fall.

  84. 84
    zman Says:

    Natural gas story siting “record gas in storage”

    http://finance.yahoo.com/news/Natural-gas-tumbles-with-most-apf-2350082926.html?x=0&sec=topStories&pos=7&asset=&ccode=

  85. 85
    RMD Says:

    Bill re: MCF, except for them being in the GOM, the way they run the co. is just about exactly how a private co. should operate. I’m curently investigating the rel’nships with JEX, REX and COE, who JEX is, etc.

  86. 86
    zman Says:

    RMD – non binding agreements with those entities to id prospects as I understand it. It has worked well for them this far.

  87. 87
    BirdsofpreyRcool Says:

    Count on Mother Goldman, who knows all… earlier in the day, GS changed their non-farm payroll number estimate to -250k from -200k. BBerg consensus is -175k.

    Hence, the sell off…

  88. 88
    zman Says:

    BOP – yeah, they just got in line with ADP.

  89. 89
    Dman Says:

    BOP – that there is actual deflation in the “non-essential” part of the economy.

    Z- agree that there seems to be some Iran baked into the crude cake today. Hard to ‘splain otherwise. But as for the nightstick, well I would suggest sending Eddie in person to Geneva. Because at least then we could have a good laugh.

    But what exactly is Iran being accused of? Has the US govternment even said that? Seems to me that they are being accused of “wanting” a military program, but actually “having” a civilian program. So where does that get us? Nowhere. So I say send Eddie over. If there was any actual evidence (for example, sniffed out by the extensive US technical surveillance program inside Iran), why would anyone bother with these vague accusations? Why can’t the Israelis actually deliver any evidence, since they say their intel is so good? If there was *any* evidence at all of a weapons program, this discussion would be a lot simpler. It really isn’t easy at all to hide a nuke program these days. The sensors have gotten incredibly good. For one thing, I really doubt that the Iranians are so good with their handling of materials that they could have avoided releasing *any* signatures at all. This is the country that tries to photoshop missile launches and fake elections.

  90. 90
    Popeye Says:

    I need that afternoon bounce to start soon.

  91. 91
    apbd Says:

    Dman: Do the Israelis, within missle range, agree? In their situation, would you agree?
    apbd

  92. 92
    zman Says:

    President Obama speaks on Iran in 2 minutes.

    Market bouncing around LOD, energy at LOD. Crude down a dime. Natural gas off 35 cents.

  93. 93
    Dman Says:

    apbd – agree with what, specifically?

    The Israelis could turn all of Iran into molten glass at the press of a button. They have 200-300 nukes. Iran is well “within missile range” of those nukes. Israel has been less than shy about threatening to use them. So who should be more scared?

    Put it this way: if you are walking in Tehran, there is a (theoretical) chance you could be vaporized by an Israeli nuke. If you are walking in Tel Aviv, there is zero chance of an Iranian nuke vaporizing you.

    So where would you be more scared?

    I would also point out that we have all been within range of tens of thousands of Soviet nukes for 40 years or so. Yet there was *less* hysteria about that than there is about *non-existent* Iranian nukes. Doesn’t that give pause for thought?

    What was it that made that Soviet threat endurable? Deterrence. The Israelis have got deterrence well covered.

  94. 94
    Nicky Says:

    BOP – GS were right last time – could be very bearish.

    Z – I don’t suppose you saw Joe Terranova on Fast Money last night saying that he was long oil as because of the Iran situation everyone now had a legitimate reason to be long oil without being accused of speculating!!!

  95. 95
    VTZ Says:

    EnCana spinoff plans new oil sands project
    1 hour ago – Reuters
    By Jeffrey Jones)

    CALGARY, Alberta (Reuters) – The oil company set to emerge from the split-up of EnCana Corp plans a multibillion-dollar oil sands project that will employ new technology to coax the project’s heavy crude to the surface, executives said on Thursday.

    Cenovus, which EnCana’s spinoff firm will be called, plans to file applications in the next year’s second quarter for a project that could pump 80,000-120,000 barrels a day at a northern Alberta site called Narrows Lake, executives said during a conference call.

    The move comes after EnCana slowed development of its two producing projects, Foster Creek and Christina Lake, as it cut its capital spending over the past year to deal with the economic meltdown and low oil and gas prices.

    Narrows Lake is just north of Christina Lake. Christina and Foster Creek now produce a total of more than 100,000 barrels a day for EnCana and its partner, ConocoPhillips .

    Plans call for a steam-assisted gravity drainage project, where the company pumps steam into the earth to loosen up the tar-like bitumen so it can be pumped to the surface in wells.

    But Cenovus is shooting for the first use of a solvent-aided process, or SAP, to boost production at a major project, said Harbir Chhina, EnCana’s vice-president of upstream operations.

    “That project will have commercial SAP implantation in it,” he said. “So we’re very close to commercializing SAP and that should be the first application commercially that you see.”

    John Brannan, the integrated oil division’s president, said the company has not estimated a cost for the overall project, which is likely be developed in phases of 40,000 barrels a day.

    Expansions of current EnCana oil sands projects have cost under $20,000 per producing barrel of crude. But a stand-alone development such as Narrows Lake — which requires all new pipelines, processing equipment and roads — is expected to be pricier, Brannan said.

    For example, at $30,000 per barrel, a total cost of a 100,000 barrel a day project would be $3 billion.

    The company said it now expects its oil sands operations to produce 400,000 barrels a day by 2018, which is about two years later than forecasts it made before the economic crisis forced the industry to chop spending and delay projects.

    Last month, EnCana, Canada’s second-largest energy company, revived plans to split into a pure-play natural gas producer and an integrated oil sands producer and refiner. The transaction is slated to close at the end of November.

    As part of the joint venture with ConocoPhillips, the companies are 50-50 partners in the Wood River refinery in Illinois, which is being retooled at a cost of $3.6 billion to run more Canadian heavy crude, and the Borger refinery in Texas.

    Meanwhile, Cenovus expects current narrow spreads between prices of light and heavy-grade crude oil to persist due to falling Venezuelan and Mexican oil supplies in the U.S. market and growing capacity among refiners to process heavy oil.

    At a $67 a barrel oil price, the company realizes a price for its bitumen of $52 to $54, said David Goldie, vice-president of refining and strategic planning. After operating costs, it nets more than $40 a barrel, he said.

    Shares in EnCana were off C$1.08 at C$60.92 on the Toronto Stock Exchange on Thursday afternoon.

    ($1=$1.08 Canadian)

  96. 96
    zman Says:

    Nicky – so he’s long oil AFTER the $4 rally? Because on Tuesday he saw oil going lower.

    Obama gave the Iranians 2 weeks to comply with IAEA inspections of the new site.

  97. 97
    BirdsofpreyRcool Says:

    Nicky — #94 agreed. That is why I call them “Mother Goldman.”

  98. 98
    zman Says:

    V – What’s total oil sand capacity now?

  99. 99
    zman Says:

    KOG call in 10 minutes

  100. 100
    BirdsofpreyRcool Says:

    Dman — just an aside, but I don’t think I’ve ever heard Israel stating they thought Iran had “no right to exist…” So, it’s not really an apples-to-apples comparison for the average Iranian or Israeli on the street.

  101. 101
    Dman Says:

    From Minyanville: Goldman has upped their non-farm payrolls estimate from -200k to -250k (consensus -188k).

  102. 102
    BirdsofpreyRcool Says:

    z — you gots the link to the KOG presentation? I don’t see it on their website.

  103. 103
    Dman Says:

    Oops, just saw BOP already had #101 covered

  104. 104
    BirdsofpreyRcool Says:

    Dman — #101… some things are just worth mentioning twice!

  105. 105
    zman Says:

    BOP – see 51

  106. 106
    BirdsofpreyRcool Says:

    ha! like I said… some things are worth mentioning two times. thanks!

  107. 107
    Dman Says:

    BOP – #100 well, since they *have* threatened to attack Iran with nuclear weapons, I would say that *amounts* to a lack of belief in their right to exist. Come to think of it, Hillary has boasted of America’s ability to annihilate Iran, and John McCain sings songs about bombing them (not clear if he intended nukes).

    What would you think the average Iranian makes of all that when they watch it on their satellite TV? (Sat. TV. banned by the regime, but many people have them anyway).

  108. 108
    Dman Says:

    Nicky, do we have to wait till the close to be able to say its ugly?

    BTW, incredible to think that only 6 months ago, we woulda thunk that down 2% was actually quite a good day 🙂

  109. 109
    zman Says:

    Flipside thinking would be GS knows they nailed it last time so they set the bar low today, go long on the weakness that causes and then let the payroll number beat them today. Would go hand in hand with their oil higher call last Friday.

  110. 110
    Denise Says:

    Best quote of the week-

    Referring to Venezuela issuing $3 billion
    in dollar bonds (10 and 15 yr )to appease Venezuelan citizen’s demand for our dollars.

    “That to me is a sign the short-U.S. dollar trade is ripe for a reversal, when basically the biggest idiot in the house is short,” writes Nic Lenoir of ICAP, the major money broker, on ZeroHedge.com.

  111. 111
    VTZ Says:

    With all the insitu producers I couldn’t tell you. I’ll find a number for ya.

  112. 112
    zman Says:

    V – just ballpark vs total Canada production. Thanks.

    Lynn at KOG doing his run through, nothing new in the slides that I have found.

    Market punting into the close.

  113. 113
    Dman Says:

    Chris Martenson has a post saying that U.S. July oil demand was the lowest in 13 years. He points out that the GDP was 44% smaller 13 years ago. So either there is an energyless recovery, or it’s sort of not really a recovery.

  114. 114
    zman Says:

    D – I never said demand was recovering during that time frame.

  115. 115
    Dman Says:

    Denise – Germany also recently issued bonds in dollars. Not saying they are fools, just that it did seem like *everyone* was suddenly getting into the dollar carry trade.

  116. 116
    Dman Says:

    Z – 114. Right, but it’s the stark comparison of absolute demand from 13 years ago that caught by attention.

  117. 117
    Dman Says:

    Z – another way to put it is: nobody has come out & said that GDP has fallen by 44% since the crisis started.

  118. 118
    VTZ Says:

    Ballpark: with all the mine and insitu production we are ~1.8-2 million bpd as a mix of light sweet synthetic crudes and heavy oil blended with condensates/NGLs.

  119. 119
    Nicky Says:

    re 109 – z that occurred to me too! they are such crooks i would put nothing past them.

    It looks likely that any bounce will now be short lived and countertrend as we head lower into November.

    That said I have one bullish count that says we needed a lower low which we have just seen.

  120. 120
    VTZ Says:

    Z – I think about 1.4-1.5 million bpd gets exported to the US. THINK OF ALL THE DIRTY OIL!!!

  121. 121
    Dman Says:

    #119 at last we have a criteria to decide once & for all if GS is crooked. If the number is around 250k, they get off. If the number is “good”, convicted! Crooks!

  122. 122
    BirdsofpreyRcool Says:

    KOG — nothing new in the presentation. Just mentioned that they expect to complete wells 7&8 in “mid-October.” And I thought I heard “December” mentioned as the completion date for well 9. That would prove up pretty much all their FBIR acreage for the Bakken.

  123. 123
    RMD Says:

    BOP #122; I heard complete #9 next week, results in Nov.

  124. 124
    Nicky Says:

    I am wondering how bad – 250k would really be anyway. It strikes me that this may now be priced in after today.

  125. 125
    BirdsofpreyRcool Says:

    RMD — thank you. My audio wasn’t the greatest.

  126. 126
    jiveyjr Says:

    I heard it like you did BOP…9 results in Dec.

  127. 127
    BirdsofpreyRcool Says:

    Nicky — today really felt like July 2nd deja vu all over again. So, maybe a few more (smaller) down days ahead, if we go Ground Hog Day and repeat the end of last quarter.

  128. 128
    BirdsofpreyRcool Says:

    jiveyjr and RMD — i’ll just have to go ask, then, to be sure. But, i know KOG is carefully managing their cash flow, so just looking at the calendar and estimating the number of days to complete isn’t the full story. thanks for your help.

  129. 129
    jiveyjr Says:

    thank you BOP…it’s a very exciting little company

  130. 130
    BirdsofpreyRcool Says:

    Larry Fink from BlackRock on the tape also saying that he “sees US stocks ending the year modestly higher than here.”

    So, too early to throw in the towel. Continue to look for good entry prices in your favorite targets.

  131. 131
    BirdsofpreyRcool Says:

    jiveyjr — KOG is a High Beta Baby, for sure!
    But the fact that they have no debt means I worry less about them than one would think, given their wild stock price gyrations.

  132. 132
    Dman Says:

    BOP – still mulling the issue that US oil consumption is at 1997 levels. Doesn’t that provide clear evidence that the GDP fakery has accumulated to the point where it can be out by 30-40%? Does that perturb your growth view … or is the latter completely independent of official stats?

    Looking at it in reverse: imagine what would happen to crude if they actually managed to crank the US economy to any real extent.

  133. 133
    zman Says:

    Dman – the relationship between total products supplied (which is a measure of demand over time) and GDP is positively correlated but not linear.

    I’m not sure what he’s call oil consumption. If you look at average total products supplied in:

    1997 July: 17,973 Mbpd
    2009 July: 20,156 Mbpd

    So, I’m not sure what the guy’s point is.

  134. 134
    BirdsofpreyRcool Says:

    Dman — my growth view incorporates official (and unofficial) stats. Not sure I understand your question. The fact that oil consumption is at 1997 levels but that the economy has grown since then? So, it’s all smoke and mirrors? I’m kinda dense… don’t get your point. Also, not sure I understand what data he is pointing to.

    Frankly, the economy could do loop-dee-loops, for all I care. I am trying to reconcile data across a number of markets (debt and equity and derivatives) to make $$. I continue to believe there is more money to be made being long now, than short. This feels a lot like July 2nd to me… and if you let that 6-day drop spook you, you missed out on a 20% increase (from July 13th to Sept 30th) at the most, and a 15% increase at the least (just continued to hold from June 30th thru Sept 30th).

    My professional money mngr friends raised a bit of $$ over the last week (as did z), and some of them were putting some of that cash back to work today. They might be early. The mrkt might go lower on tomorrow’s data. But, I believe the mrkt will be higher than today at 12/31/09.

    Caveat — Health Insurance and Cap-and-Trade pass. If they do, I will change directions and short the mrkt to make $$.

  135. 135
    BirdsofpreyRcool Says:

    KOG — official answer… wells 7&8 are starting their completion this weekend. Expect to have reportable results before Halloween.

    Well 9 will probably be reported in “early December.”

    Hearing there were a lot of people who stuck around to listen to the KOG story. Big change from last year. Hope they liked what they heard.

  136. 136
    Dman Says:

    Z, BOP, I’ll try & clarify what data was involved & what my questions are aiming at & get back to you on that.

    BOP – my point has nothing to do with current market action. It’s just that the Martenson post appeared today is all. As I pointed out earlier, six month ago we seeing much wilder gyrations. But I take your point that we are looking at markets, not the economy. And anyways your deflation scenario is hardly a growthy one…

  137. 137
    BirdsofpreyRcool Says:

    No… leveraged growth is done and over. And growth due to the one-time benefit of moving to low cost manufacturing countries is winding down. So, we return to 2 – 3% GDP growth. The New Normal.

    Means careful sector and stock-picking are more important than ever. Look for scarcities and pinch-points. I happen to believe that oil is one of those. But, nothing happens in a straight line, eh?

  138. 138
    BirdsofpreyRcool Says:

    FSLR is replacing Wyeth in the S&P500, just fyi.

  139. 139
    Dman Says:

    Z – this is the data in question:

    http://tonto.eia.doe.gov/dnav/pet/hist/mttupus1M.htm

  140. 140
    BirdsofpreyRcool Says:

    Dman — I don’t mean to sound snippy. I know you’re just trying to point out useful data. Thanks.

  141. 141
    Dman Says:

    BOP – for some time, analysts trying to understand China have used electricity production as a proxy for the economy, since all the actual economic data is manipulated.

    Martenson has been emphasizing the unreliability of US economic data & concentrates on trying to find “straight” proxies. Z has of course been noting the weak demand, it’s just that I hadn’t realized that the disconnect between energy and econo-statistics had gotten so large. At least some of the recent rally has been accompanied by assertions that growth has resumed, so maybe there’s a disconnect there between assertion and reality.

  142. 142
    zman Says:

    Dman – just back from soccer, will have a look and address in post. Thanks.

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