09
Oct

T.G.I.F.

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Slow News Day Watch: Not a lot going in the energy world today aside from an IEA oil demand forecast upgrade. Good day to continue to organize thoughts on 3Q reporting season which kicks off next Friday with (HAL). Tthe emerging trends for 3Q09 have been added to the Calendar tab. I raised my cash position substantially yesterday as per my nearing-the-end-of-expiration plan and will be continuing that process today, hacking back positions or eliminating them entirely. Given the recent strength of the broad market I will be a bit slower than usual with my rolls to November options as I look to position for upcoming news and earnings results (that whole sell high, buy low thing).

In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Natural Gas Storage Review
  4. Stuff We Care About Today
  5. Odds & Ends

Holdings Watch

  • $10KP II:

    • $29,700
    • 58% Cash
    • The Current Holdings tab is updated.
    • I will update the $10KP tab on Monday.
  • Yesterday's Trades:  Busy data yesterday.

    • EOG – Half out $85 Calls for $2.50, up 72%.

    • WLL – Sold the $55 October calls for $4.90, up 58%. I continue to hold the $60 strikes here but may scale out on further strength.

    • WLL – Sold the (10) $60 calls taken yesterday for a buck for $2 with the stock at $60.70. I continue to hold the original (10) calls here.

    • HK – Sold half (15) of the HK $24 calls for $1.15 (on the mid and easily with the stock at $24.82), up 124%. I continue to hold the other 15 of the $24s as well as $25 and $26 strikes.

    • SWN – Sold half of this one as well, out on (15) October $45 calls for $1.05, up 62% with the stock at $44.65, up 4% on the day.

    • EOG – Out of the remaining (5) EOG $85 October calls, (EOGJQ), for $4.40, up 198% with the stock sitting just under $89. I’ll reposition here in a week or two for earnings.

    • ROSE – Sold the (5) November $12.50s for $4.20, up 46%. No knock on the stock but I don’t like how thin this particular strike was. I will likely reposition into November $17.50s or something similar before earnings. I continue to hold the common in the ZLT.

 

Commodity Watch

Crude oil rebounded $2.12 to close at $71.69 yesterday on the back of a strong equity market and a dollar that threatened to break recent technical support. This morning crude is trading down about a buck.

  • IEA Watch: Raising Oil Demand For 2009 and 2010...Again.
    • 2009: Raised by 200,000 bopd to 84.6 MM barrels
    • 2010: Raised by 350,000 bopd to 86.1 MM barrels
    • IEA also noted that OPEC compliance has fallen to 62% and that it expects the Cartel to boost production through year end.
  • Ben Watch: We will raise rates when the market shows "sufficient improvement" but said he expected rates to stay low for an extended period. Sounds like slow times in 2010. The dollar caught a small bump from the comments overnight but is already peeling back gains, holding just above 76 and not far from its recent lows.

Natural gas rose 6 cents to close at $4.96 yesterday despite a larger than expected gas storage injection (see below for thoughts on why that was). This morning gas is trading off slightly.

Natural Gas Storage Review


ZComment: Well, I bricked that one but like I wrote in the post, the shoulder season can be pretty squishy and "the fix" on gas prices appeared to be in seconds before the number hit as buyers started scooping up contracts and then kept buying despite what would normally have been termed a lousy number. The shorts must be shaking their heads with the realization that even poor numbers are not enough to prompt a recent influx of longs to abandon their positions when the writing is on the wall regarding both rising demand and falling supply. A few things to think about here:

  • There are 3 to 4 weeks left in the normal injection season. Given how full storage already is, misses like yesterday are pretty small in the big scheme of things and this may be part of why traders yawned at the number.
  • Next week may reverse this number back as cold weather should show some more demand
  • I continue to think we are still likely to end the season with storage in the 3,700 to 3,850 Bcf range.


 

Stuff We Care About Today

(RIG) Reins In Rigs

  • RIG stacked 4 Jackups and 2 midwater floaters
  • Global Jackup utilization had fallen to 74.2% according to Rigzone, flat with month ago levels, but down from 79% 6 months ago and 90.6% 1 year ago.
  • Positive implications for the other Jack Up intensive driller portfolios, with ESV and RDC likely catching the most benefit.

 

The Orange Charts for the E&P names have been archived on the metrics tab at upper left on the site.

The Emerging Trends for 3Q09 have been archived on the Calendar tab.

Odds & Ends

Analyst Watch:

  •  PCX - raised to Market Perform at BMO
  • PTR - Upped to Overweight at HSBC
  • SNP - Cut to Neutral at HSBC
  • TS - Initiated at Buy at UBS

 

134 Responses to “T.G.I.F.”

  1. 1
    bloodystupidjohnson Says:

    Options question: Z how do you a) decide on the position sizes per trade, and b) decide on total position sizes per stock?

  2. 2
    BirdsofpreyRcool Says:

    Good morning.

    TechTrader calling for a 60/40 LONG trade as the one that works best today.

    HeadTrader thinks we see activity this morning, but it falls off at lunch, and goes moribund in the afternoon. Three day weekend with Columbus Day on Monday.

  3. 3
    BirdsofpreyRcool Says:

    The rally in high yield continues this morning, while investment grade CDS just kinda sits there. European debt trading opened weaker, so credit desks will look to our own stock market open to get a sense of direction. Meanwhile, the rally in high yield continues (worth repeating, so I did).

    IG 103 bps

    HY 93 1/8 pts

  4. 4
    BirdsofpreyRcool Says:

    CVX trading up in pre-mrkt. They released their 3Q operations report after market clost last night.

    Citi just announced the sale of Phibro to Occidental Petroleum. Phibro used to be the gold standard in energy trading… is it still?

  5. 5
    zman Says:

    BSJ – I look at them from a dollar cost averaging basis. I try to go with 3 to 5% of the options devoted dollars for an entry position, with the thought that I will add a second and third piece down the road. Not always, it depends on how the underlying moves.

    On aggregate size, that’s a comfortableness issue with the stock and the story of the stock at the time. The higher my comfort level, the more I’m willing to commit. I try not to do anything that won’t let me sleep at night in terms of overweighting or stepping out on strike vs current price.

    A lot of it is therefore what you’d call gut. When a stock moves down just after I’ve entered a long position my first reaction is not “doooohhhh!”. It’s hmmm, “does that make sense?” If the answer is “no”, then I wait and watch and maybe add. Lots of moves in the stocks are just market related noise and that’s often an opportunity. If the answer is “yes” that stock should be falling at least for the minute, due to new information or due to a technical breakdown, I may punt but I’m more likely to dig into the details, to see if the new data is more or less relevant to the near term prospects of the stock than is my original entry thesis. My biggest options winners are almost always losers at some point during their short little lives.

  6. 6
    zman Says:

    4 – Yep, but also Kryptonite now with their compensation package guarantees.

  7. 7
    zman Says:

    BOP – three day holiday for the Feds, market open however.

  8. 8
    BirdsofpreyRcool Says:

    Monday is not a settlement day as the banks (and credit market) are closed… but, you’re right, the stock market is open.

  9. 9
    zman Says:

    Yeah probably a very slow day …

    Movie quote Friday Watch:

    Admiral, if we go BY THE BOOK, like Lieutenant Saavik, hours could seem like days

    …still, I expect some forays into green with the SP trying for a beat of yesterday’s high before the close.

  10. 10
    BirdsofpreyRcool Says:

    z — TechTrader agrees with you

  11. 11
    1520sbroad Says:

    Z – to flash forward a bit – anything in particular you are looking for from EOG earnings wise, announcments, well results etc.?

  12. 12
    Jerome Blank Says:

    KOG looks like it’s trying to break out above the daily consolidation triangle forming over the last few weeks

  13. 13
    zman Says:

    EOG

    Reiterated guidance on 2009, maybe a touch of an upgrade on the liquids side.

    No change in oil hedge position (none)

    More good Bakken, Barnett combo results

    Bakken Lite news – longer laterals, bigger wells expected, again

    Maybe something from their new Canadian oil play, Waskada

    Maybe something from E. Texas Haynesville wells – Street’s watching this.

    First announced results from the Marcellus.

    They should reiterate that they are at their NAM natural gas nadir and its upward momentum from here.

  14. 14
    1520sbroad Says:

    #13 – thanks

  15. 15
    BirdsofpreyRcool Says:

    Jerome — if KOG breaks out, does it try to test a 3-handle you think?

    From what I was told, the completion on well pair 7&8 was started last weekend. Although we won’t get official results until the end of Oct/beginning of November, people watching the activity in the area will be able to gauge the reaction, if history is any go-by.

  16. 16
    zman Says:

    1520 – not comprehensive, just off top of head. I will have the usual work ups on what I want to see out over the next two weeks.

  17. 17
    zman Says:

    SDM names moving well compared to the group again, KOG, WRES, HDY, GST

  18. 18
    Wyoming Says:

    Star Trek: The Wrath of Khan

  19. 19
    1520sbroad Says:

    16 – i’ll keep an eye out for the full work up on EOG. They have been one of my Sept – Oct success stories and have more than balanced out a set of SPY and QQQQ puts that i have been carrying – dooohhh!

  20. 20
    zman Says:

    A couple of good points emailed in by he who lives under the shadow a compliance department:

    Z: Spoke a little with company. Will chat again after I review fleet report. To answer your JU question. They have 0 exposure to GOM. Much more of their fleet is involved with crude. They do NG in the Mideast. They would not breakdown what % of fleet is crude vs NG due to customer wishes. Are going to cold stack 1 – 2 more rigs. Just always come away very impressed with operating results. Gross margins, cash flow, ebitda, low multiple. Could be a catch up sector. Not enough shorts however. S

    Z: Pemex has new President. NE sees him as favorable to more drilling. S

    We are seeing more jackups stacked (see post re RIG doing same). This is good news for the other JU specialists, I sort of like RDC. Probably helps ESV.

    I think it also benefits ATW and though I’ve missed that one since first bringing it back up in the lower 20s, I expect nothing but continued strength from them on the earnings call and may take some calls soon there. Jerome, can you do the PF thing on them? Thanks.

  21. 21
    zman Says:

    Re 18 – you want a mug or shirt?

  22. 22
    Wyoming Says:

    Reality check. Here is how a Coiled Tubing Unit pulls over a crane. East Texas, red stuff is hydraulic fluid, not blood.

    http://screencast.com/t/Sa2YflHjVF8E

    http://screencast.com/t/2zeFjqw87H8

    http://screencast.com/t/bIWKJVsVr

  23. 23
    Wyoming Says:

    21: Mug would be cool and longer lasting, more memorable. Where I live, a T-Short like that might get me beaten up. Oil bad um-kay.

  24. 24
    zman Says:

    Oh come on.

    We have:

    Got Bakken?
    Got Shale?
    Got Gas?
    OFT

    versions

  25. 25
    jat Says:

    I like this OXY-Philobro thing. It’s a little foreign to my conception of OXY, but I like it.

    BTW, the Saavik thing could be Khan or Search for Spock, couldn’t it?

  26. 26
    zman Says:

    Re 22. I told you not to drink and drill.

  27. 27
    Jerome Blank Says:

    #15, good morning,BOP, I think it does, KOG remains on its buy signal,reversing into a col of O’s with the trade down to $2, would like to see it break out and reverse back into x’s on a print of $2.75, from here my initial target is $3.25. I may hold for more depending on price action.

  28. 28
    zman Says:

    Yep – Wrath of Khan – hours seem like days on days like today.

  29. 29
    zman Says:

    Thanks for that KOG read Jerome.

    If you have time, could I get looks at ATW and WRES for kicks.

    Group looks like its trying to pull away from flat on the day.

  30. 30
    bloodystupidjohnson Says:

    Z, views on HAL, seems week today, but that could just be profit taking or moving with RIG.

  31. 31
    zman Says:

    Re HAL – watching it through earnings next Friday. May participate before but only if it really runs into earnings. Wall Street love affair continues there and I’m not stepping in front of the train again.

  32. 32
    BirdsofpreyRcool Says:

    #27 — thank you, Jerome.

  33. 33
    zman Says:

    EOG at 90

    Content to wait for a big red day and see how far it comes in before getting long for earnings.

  34. 34
    BirdsofpreyRcool Says:

    A $90 stock is a weird animal. For some reason, stocks do not stick at 90 for very long. They either drop back to 85, or move to 100. But you don’t see them hang at 90. Hence the old saying “A 90 dollar stock is a 100 dollar stock.”

    Wonder why that is.

  35. 35
    zman Says:

    BOP – dunno, maybe its the law of adages.

  36. 36
    elijahwc Says:

    Jerome, a personal favor please, could you add MHR to the names in #29. I’m afraid I don’t have your seismic chart skills.

  37. 37
    zman Says:

    ZTRADE

    HK – Sold the remain (15) HK $24 October Calls (HKJO) for $1.45, up 214%, easily on the mid with the stock at $25.22. I continue to hold $25 and $26 strikes here.

  38. 38
    RMD Says:

    Just in case I’m right…GOM stocks Z mentioned last night are working on P&F charts like CHK at 24, though some are still incomplete. GLF is further developed as a chart so I picked MMR (to keep my quality down and controversy up).

  39. 39
    Wyoming Says:

    Got Bakken would be sweet as I keep hammering that same thought in the Halls. Re 22, If I/we were in East Texas or HS, that would not happen. I keep expressing that we need HS and Bakken exposure, of course I am only an Engineer so don’t speculate on us. Technically, the CT started running in the hole, out of control, in hole. The operator slammed on the brakes (literally) to the reel and the forward momentum of the pipe pulled the crane over, bent the lubricator and snapped off the well head.

  40. 40
    zman Says:

    RMD – are you going to see Aubrey in NYC next week? If so, no pie throwing.

    Wyoming – hear ya. Sounds time consuming/expensive.

  41. 41
    RMD Says:

    No, driving home next week.

  42. 42
    zman Says:

    Ram – HK through 24 convincingly.

  43. 43
    zman Says:

    HK through recent high from mid Sept. of 25.37, to my layman’s technical eye it could go 25.80 pretty quick.

  44. 44
    ram Says:

    Yes, I would say so.

  45. 45
    ram Says:

    What would HK have to print in order to go on a full blown buy and possibly set up a WILDZ trade for next week?

  46. 46
    zman Says:

    Adding to EOG comments above – Jefferies out with a note saying people (I guess people like me) are expecting big updates on Bakken Lite, Barnett Combo and E. Tx Haynseville. Jefco says don’t hold your breath on details since the company is still in acquisition of acreage mode. Disagree on the Bakken Lite, I think we will see bigger IP wells announced up there. E. Texas I think they have to come clean on the call regarding their much anticipated well which they declined comment on last quarter.

    They go on to say liquids focused drilling will get more capex than gas in NAM going forward (agree) and that the mix will be 50/50 by 2013 (sounds about right).

  47. 47
    zman Says:

    Ram – Probably on do that on a pull back red day down to about $24.65. I consider those 50 $26 strikes to be ZWild enough for now.

  48. 48
    bloodystupidjohnson Says:

    Gee, Jefferies really going out on a limb with more liquids focused drilling. Papa has been saying that at every conf, and earning call for over a year.

  49. 49
    zman Says:

    That highly anticipated E. Tx Haynesville program is in part being drilled with HK. Don’t see them staying quiet again.

  50. 50
    zman Says:

    BSJ – I said the same before. It’s a gassy name that is going oil and condensate rich, faster than people thought. Not a bad thing to focus on as people are still skeptical about the sustainability of this little rally in natural gas next year. They called it a stealth oil play which I agree with.

  51. 51
    zman Says:

    Have to laugh at the thought of it watch:

    Jefco reporting HK seems genuinely fearful of issuing more equity now.

  52. 52
    BirdsofpreyRcool Says:

    HK — is “genuinely fearful” supposed to make up for their serial abuse of the capital markets? Guess Floyd/Stoneburner got an earful, on their last round of NY dinners.

  53. 53
    zman Says:

    Nicky – any market thoughts, we’re flat lining in a pretty tight wedge, triangle, flag, what have you, here.

  54. 54
    zman Says:

    HK – Balance sheet very different now. Last deal + Permian sale goes from 46% debt to cap to 32%, with a lot more liquidity. I feel better after a deal is done than waiting for one. Also, you’ve got the end of HBP drilling in the Haynesville mid 2011, so capex requirment falls by about half then on what they have to drill to hold their leases. Will they do another deal? Sure, but its not pressing at the moment.

  55. 55
    bcinca Says:

    Anyone follow IVAN…Ivanhoe Energy?..up$.38…16.5%…news or just a newsletter recommendation….Thanks

  56. 56
    zman Says:

    They caught a price target upgrade from Macquarie to $4.15.

  57. 57
    zman Says:

    EOG back to even on the day, group faded pretty hard in the last 15 minutes with no real move in the broad market. Feels like a buyers strike. Volumes a typical Friday weak.

  58. 58
    VTZ Says:

    Ivanhoe Energy shares leap on oil field, upgrade
    17 Sep 2009 – Reuters
    TORONTO (Reuters) – Shares in Ivanhoe Energy Inc IE.TO rose as much as 32 percent on Thursday after the small Canadian company said an Ecuador oil field contained billions of barrels of oil while an investment bank boosted its target price for the stock.

    Ivanhoe shares rose 47 Canadian cents, or 21 percent, to C$2.72 by midmorning on Thursday on the Toronto Stock Exchange after earlier touching C$2.98.

    Ivanhoe said late on Wednesday that its Pungarayacu heavy oil field in Ecuador likely contains about 6.4 billion barrels of oil, though the company offered no estimate for how much of that could be recovered.

    The company said it will use its proprietary upgrading technology — which converts heavy oil and tar-like bitumen into more valuable light oil — at the Pungarayacu field and at its planned Tamarack project in Canada’s oil sands region.

    Ivanhoe also said on Wednesday that it had improved its HTL heavy-oil upgrading process, cutting operating and capital costs.

    The news prompted Macquarie Tristone to bump up its target price for Ivanhoe Energy’s Nasdaq-listed shares (IVAN) to $2.75 from $2.25 with an “outperform” rating. The Nasdaq shares rose 38 cents, or 18 percent, to $2.55 on Thursday morning.

    ($1=$1.06 Canadian)

    (Reporting by Scott Haggett; editing by Rob Wilson)

  59. 59
    Jerome Blank Says:

    Re:#29, ATW…another huge “bear trap” off the 7/08/09 low print ($21.40), a daily hammer reversing the stock and it never looked back, incredible…stock remains on a P&F buy signal with a $50 price objective, but it feels a bit tired…this stock is been on quite a rip higher, based on the daily price patterns over the summer, it looks like a good buy on 3 box reversals, ie:back in o’s ,bang reverse…but if you can hold retraces, from this level ATW stays on a buy signal until a print of $32

    WRES, working on that now…

    Hi Elijah, Re#36, thank you…be back to MHR it in minute…it’s been crazy all morning….

  60. 60
    zman Says:

    Thank Re ATW J – been waiting on a pull back for a long time now.

  61. 61
    VTZ Says:

    Nicky said to watch the 72 dollar level on oil if I’m remembering right?

  62. 62
    bloodystupidjohnson Says:

    ATW – Z how do you handle those bid ask spreads? Right now Nov 40 is 35 cents.

  63. 63
    zman Says:

    Hypothetically speaking, with a wide spread like that I’d look at the level II, see that there’s more size on the offer than the bid and start bidding at the mid or just south of it and then walk up my bid as I see fit. On a day like today, I’d be reluctant to move it up quickly as a pretty good fade is underway on all of the energy sub sectors. It also depends on how bad I want it. If you have a definite time frame in mind (must do it today for instance) than the more quickly I’ll walk up that bid. It’s also going to depend on if I get joined or not on my bid. If I do, its less likely I get hit, all other things including stock price being equal, if it doesn’t happen pretty quickly.

  64. 64
    zman Says:

    Art Cashin = smart guy, also = stuck clock.

  65. 65
    zman Says:

    SP almost back to even. Not that it matters but we didn’t tick yesterday’s highs and I still think we will.

  66. 66
    elijahwc Says:

    Hard press on WTI, XAU and Emini’s just now.

  67. 67
    VTZ Says:

    Dollar just broke out a bit.

  68. 68
    zman Says:

    Next week watch:

    No ecodata Monday or Tuesday. Oil report will be delayed to Thursday. Big earnings reports seem to be concentrated mid to late week.

  69. 69
    zman Says:

    V – right because Ben said he’d have to raise rates … some day. Sheesh.

  70. 70
    Jerome Blank Says:

    WRES is currently on a P&F buy signal and held it’s retrace to the daily 50 day SMA on 10/2 with a nice bullish engulfing candle, but like KOG is currently in a col of o’s, WRES goes back into x’s on a print of $3.50…one thing to note…although WRES is on a buy signal, it is trading below major P&F trendline resistance at $4.25-$4.50, whereas KOG has already breached its downward trendline and thus could have an easier time going higher…I’m thinking out loud…hold KOG longer term, swing trade WRES to resistance and reevaluate at the trendline…love them both differently…

  71. 71
    zman Says:

    CNBC says Prechter on tape saying dollar has bottomed.

    This from three days ago:

    http://www.bloomberg.com/apps/news?pid=20601103&sid=azTL.7ZtDots

    He says stocks are over-valued. Kind of a broad statement that is irritating. Not E&P pal.

  72. 72
    Jerome Blank Says:

    Re:#36, MHR…on a P&F buy signal,but below trendline, ie:, strong P&F trendline resistance at $2.00-$2.25

    Elijah, are the fundamentals good on this stock, what’s the story…really ripping today…

  73. 73
    elijahwc Says:

    JB: Thanks for the P&F on MHR. No Fundie’s but emerging fundie’s. Run by a fellow named Gary Evans who in a prior life ran a company of the same name which eventually listed on the NYSE and later sold for a couple billion to Cimarex (XEC). He has reassembled the old team and resurrected the old name. It’s a bet on management that is proven bankable. They aim to be a consolidator, have the contacts to secure the financing, and I having been fortunate to enjoy the ride the first time now plan to revisit it. As for today, I have nary a clue on price action but acknowledge it for what it is and therefore the question. Thanks.

  74. 74
    zman Says:

    Terranova oil stock comments communicates a fundamental misunderstanding of “oil” stocks.

  75. 75
    zman Says:

    Ram – just to keep you posted, missed 25 and 30 cents bids on the HK $26s on this pullback just now. Would like to see the post lunch move on the SP before bidding but it got down where I thought it worthy of a quick swing trade.

  76. 76
    BirdsofpreyRcool Says:

    z — thank you for #54. Good reminders.

  77. 77
    Dman Says:

    From memory, I think Prechter was sending spam (quite a while ago) that he was going 100% short. If he is still short, then this dollar call is talking his book (shocking!).

    But, I will point out that the “noise level” around the dollar, including words like “crisis” being used on TV, increased dramatically over the last week, even though the dollar was not materially lower than it has been lately. So there was some panic along the lines of “if it keeps going, it will get to zero!. EEeeek!”

    Of course, it *will* get to zero, just not all at once.

    Also, watching the dollar index is an illusion because the major components like the Euro and the Sterling are also in being printed like mad. The important action is against commodities & commodity currencies (AUD/CAD/BRL/NOK). Maybe they should be called the “Real currencies” because, well, Brazilians can actually say they have “Real money”. Tee hee.

  78. 78
    Dman Says:

    #74 – Z, if our trades are going to work, someone has to take the other side. If that is Joe T, then at least he is good enough to explain his thinking. BTW, Cramer has been admitting lately that he is confused by (the rally in) NG prices. We’re safe as long as he doesn’t subscribe.

  79. 79
    zman Says:

    HK rumored to be in deal with SFY in the EFS … not a new rumor just passing along.

    Dman – Re Cramer. He’s smart but I can’t stand the calls he makes on NG. Summer 2008 he was calling for $20+, now he doesn’t like it at $5. Hmmmm.

  80. 80
    ram Says:

    Thanks.

  81. 81
    bill Says:

    Bop…

    whats the head trader say for the final 3 hours?

    short covering or profit taking??

  82. 82
    zman Says:

    ZTRADE:

    HK – High risk trade. Added 30 more HK $26 October calls (HKJP) for $0.30 with the stock at $25.10 and a week to go in the options’ life. I’m like to sell my $25s today or Monday.

  83. 83
    BirdsofpreyRcool Says:

    BOP — so… any feel for going into the end of the day here?

    HT — slooooooooooooowwwwwwwww cash rally

    BOP — cool. works for me!

  84. 84
    Dman Says:

    Z – Todd Harrison has been writing memoirs at Minyanville, covering the period when he was HT at Cramer Berkowitz. He revealed that Cramer told him explicitly that he was bipolar (& being treated for it) and Harrison observed that Cramer would become manically bullish as stocks ran up & vice-versa. Not beating up on Cramer for his (alleged) illness, just saying you might have to interpret his stock manias through a medical lens.

  85. 85
    Nicky Says:

    Afternoon all. The dollar may have put in its low. Its starting to move impulsively to the upside.
    If so time is running out on the upside for everything else too.
    We don’t have a 3 day holiday – Columbus day we are open.

  86. 86
    BirdsofpreyRcool Says:

    The stock market is open on Monday. The bond market is closed on Monday. I’m an old bond dog… guess that is the direction my tail wags first. So, my bad.

    Columbus Day is “payback” for Good Friday. On Good Friday, stocks are closed but the bond market has to drag itself to work.

  87. 87
    zman Says:

    BOP – re 86, right but “work?” I never thought that’s what the E&P fixed income analysts were doing? Otherwise, why do they call the equity analysts to find out what was going on the companies, lol.

  88. 88
    Dman Says:

    Nicky, can you define what you mean by “impulsive”? You’ve used this a few times recently & I’m not sure what your exact meaning is.

  89. 89
    BirdsofpreyRcool Says:

    LOL… there’s some truth to that!

    Debt analysts are definitely “backward looking”… as interest payments can only be made in cash (and not promises).

    Equity analysts are all about the future as that is what drives the “embeded call option” value. So a wiley CEO can weave a good story and keep equity analysts’ interest up for years and years and (sometimes) years.

    No argument from me. Equity analyst get ALL the good stories!

  90. 90
    BirdsofpreyRcool Says:

    reef — you around???

  91. 91
    zman Says:

    LINE threatening to break its 2009 high, strong work 2 days after a secondary.

  92. 92
    zman Says:

    NG softening into the last half hour of trading.

    Probably due to the rig count bumping up a little higher.

    Rig count watch:

    Oil up 2 to 305 vs 429 year ago
    Gas up 14 to 726 vs 1548

    Horizontal up 19 to 463 vs 626

    Somewhat surprised to see OIH all still much lower than other energy and the green S&P

  93. 93
    VTZ Says:

    RE 89: Being “backward-looking” the same reason the credit rating agencies completely botched everything.

  94. 94
    reefguy Says:

    Friend in Mich. What is up?

  95. 95
    Dman Says:

    DRYS, EXM having a bad day. Any particular factor? I was wondering whether it might soon be time for a run from the drybulkers.

  96. 96
    zman Says:

    Drybulk – don’t see a catalyst. I’d be happy to listen to or read about one but I can’t find one.

  97. 97
    BirdsofpreyRcool Says:

    VTZ — I take enormous umbrage at that remark!

    You are wrong. They were not “backward looking.” The rating agencies found a whole NEW way to botch it. They overlooked the fact that the composition of the inputs to their models had completely changed. Instead of baking a cake with flour and eggs, the primary ingredients had been substituted. They were adding crap and smelly fish heads to the batter, baking it, and still claiming to sell it as “cake.” That was NOT backward looking. That was _______ (fill in the blank with your fav expression here).

    As a long-time bond investor, I will defend our ability to look at balance sheets and cash flow and indenture statements and bank obligations and minimum capital requirements and covenants and a whole lot of other “financial statement footnotes.” Concepts that have only recently entered into the vocabulary of the average institutional equiy investor.

    I’m not mad. But I could not let your comments just hang out there, unadressed. OK?

  98. 98
    BirdsofpreyRcool Says:

    reef — you still watching the txco situation?

  99. 99
    BirdsofpreyRcool Says:

    Dman — there was an article on Bloomberg this morning about the dry bulk fleet. It doesn’t show up on the public bloomberg site, but ii can post it, if you wish (it’s a tad long… but, hasn’t stopped me before).

  100. 100
    reefguy Says:

    BOP- from outside now…

  101. 101
    zman Says:

    Mellow BOP, mellow.

    Try this:

    https://wbx-files.s3.amazonaws.com/jacksonpollock_by_miltos_manetas.swf

  102. 102
    baylor3217 Says:

    Is DRYS a good long term buy? I remember it being $100 a year or so ago and it’s now a $6 stock. Did they also do a Stock split along the way? Admittedly don’t follow this stock and know the highs were when bulk rates were way higher with oil at $147. Don’t have a long term context on those rates though.

  103. 103
    zman Says:

    Baylor – I don’t like management there. There were naturally split if you get my meaning.

  104. 104
    BirdsofpreyRcool Says:

    you know… i thought about using little emoticon to show i wasn’t as “mad” as i sounded in print. but, i know how you hate those… so, i let it rip… knowing it would look “over the top.”

    Wasn’t meant to be.

    But, the work of debt investors is greatly underappreciated and misunderstood. And yet, it is the “dog” to the equity markets’ “tail.” The tail thinks it wags the dog…

    today’s must read
    http://www.capmarkets.com/ViewFile.asp?ID1=315455&ID2=335887481&ssid=2&directory=11608&bm=0&filename=We_Are_Wrong_Again_10-9-09.pdf

  105. 105
    VTZ Says:

    RE: 97 – I don’t buy it because they said, “Let’s see, these are mortgages, right? These other things are mortgages right? If housing prices still go up forever, we’ll be ok. In the past housing prices have gone up forever.”

    They clearly understood what they were doing when they packaged the garbage away and that’s well-documented by personal accounts and news reports. In the past, the market had gone up forever so they didn’t think it would be a problem.

    I do agree that the composition changing was what had the impact but because prices have done nothing but go up they became complacent. If they didn’t understand that the composition changed they should be fired anyways, but I don’t buy that. They understood and packaged them as AAA because they didn’t see the change coming: backwards looking.

  106. 106
    Dman Says:

    BOP – don’t let me stop you posting the drybulk thing.

    I’ll even say nice things about bond and credit … er … stuff … that I barely understand (& that’s putting it mildly).

  107. 107
    VTZ Says:

    BOP – Don’t take offense to anything I say. I’m just calling it like I see it and from the facts from what I read. I’m just a stupid engineer.

  108. 108
    BirdsofpreyRcool Says:

    Dman, just for you…

    Eagle Bulk May Have to Wait for Dry-Bulk Rebound (Correct)
    2009-10-09 17:55:01.729 GMT

    By Todd Zeranski
    Oct. 9 (Bloomberg) — Eagle Bulk Shipping Inc. may have to wait as long as three years and for a rebound in shipping rates to reap the benefit of an expansion of its fleet, Chief Executive Officer Sophocles Zoullas said.
    “We’re in a low cycle,” Zoullas, the 43-year-old founder of the company, said in an interview at his New York office.
    “Charters two or three years out will be better than today.”
    Eagle is nearly doubling its fleet, adding 22 ships through
    2011 at an average price of $35 million each to the 25 vessels already on the water. Dry-bulk rates have fallen 77 percent from the May 2008 high as a worldwide recession cut demand for shipments, especially in Europe, Japan and South Korea.
    “They obviously overextended themselves,” said Jim Glickenhaus, who helps manage $2 billion at Glickenhaus & Co. in New York, and held 2.9 percent of Eagle at the end of June.
    “They faced some issues that caught a lot of people unawares.”
    Eagle suspended its 50-cents-a-share dividend in December and renegotiated a $1.6 billion credit facility with Royal Bank of Scotland Group Plc as the value of its ships fell with declining fleet rates. Eagle has fallen 85 percent from a May 16, 2008, high of $35.69, leaving it with a market value of
    $335.3 million. The company said it had $809.1 million in debt at the end of the second quarter.
    Eagle rose 23 cents, or 4.4 percent, to $5.41 in Nasdaq Stock Market trading yesterday. The shipowner holds construction options on eight additional vessels that may be exercised in the future.
    “I don’t think it’s a $4 stock or a $15 stock,”
    Glickenhaus said. “I think it’s fairly priced in here and will bounce around until we see some direction in the worldwide economy.”

    Supramax Ships

    The company is trying to take a leading position in the market for Supramax-class ships, as other owners, including Genco Shipping & Trading Ltd. and Excel Maritime Carriers Ltd., seek diverse portfolios of vessel classes. Supramaxes typically have capacities of 50,000 to 60,000 deadweight tons and are the workhorses of the market because of their ability to carry diverse goods, from iron ore to grains to sugar, Zoullas said.
    The ships’ shallower draft and onboard cranes allow the vessels to serve ports in less-developed regions, such as India, which use coal to fuel power plants, Zoullas said.
    “You’re able to trade to these regions that bigger ships can’t trade to,” said Zoullas, who owns 2.57 percent of Eagle Bulk. He disposed of 51,450 shares on Oct. 5 by surrendering them to meet a tax liability.

    Dry-Bulk Fleet

    The vessels constitute about one-fifth of the dry-bulk fleet by carrying capacity, according to London-based Drewry Shipping Consultants Ltd.
    Genco, which reported second-quarter net income of $37.6 million, has fallen 73 percent from a May 2008 high. Excel reported second-quarter net income of $78 million. The ship owner’s shares are down 91 percent from an October 2007 high.
    All of Eagle Bulk’s new ships are financed and 19 are under time-charter agreements of as long as 10 years commencing with delivery, Zoullas said. The recession and frozen credit markets made it more difficult for shippers to secure letters of credit, which guarantee payments.
    The company reported second-quarter net income of $13.3 million, down 10 percent from a year earlier. Revenue rose 42 percent to $53 million as the company added five vessels from a year earlier.

    ‘Less Exciting’

    “It’s less exciting right now compared to others,” Urs Dur, an analyst at Lazard Capital Markets in New York, who has a “hold” rating on the shares, said in a telephone interview.
    “They’re in a big build-out program in an uncertain economy.”
    Dur lowered his 2009 per-share earnings estimate to 65 cents from 76 cents, and 2010 to 51 cents from 67 cents due to higher expenses and lower revenue.
    “They should be bottoming out with the fourth-quarter numbers and going up from there,” Dur said. “That U-shaped pattern of earnings is not attracting investors right now.” Dur predicts break-even fourth-quarter earnings.
    Eagle’s highest quarterly profit was $23.2 million in the third quarter of 2008. The company issued about 15 million new shares in the second quarter, raising $100 million.
    Debt-to-shareholder-equity ratio at the end of June was 57 percent, compared with the industry average of 46 percent, according to Natasha Boyden, a New York-based analyst at Cantor Fitzgerald LP who has a “sell” rating on the stock. Eagle’s ratio will rise to 62 percent by year-end, she said.

    New Contracts

    Zoullas said he wants to charter ships coming off lease agreements in 2009 to new one-year contracts, at levels likely lower than the previous rates. Two charters are up for renewal by the end of the year.
    “There will be a little bit of a drop-off,” he said. New ship deliveries will more than make up the difference, he said.
    Three ships are set for delivery this year, and 19 more through
    2011 with 19 ships total already on time-charter contracts valued at $700 million in revenue. Seventeen of the 19 chartered ships have profit-sharing agreements that allow a shipowner to receive a percentage of the differential if spot, or one-voyage, rates exceed the time-charter contract amount for a ship lease.
    Four ships are now on index-based charters, which track the Baltic Supramax Index, which has fallen 2.4 percent in the past year to $18,825 per day while more than quadrupling this year as Zoullas seeks to have a “balanced mix” of charter agreements.
    Eagle will generate enough cash through 2011 to be able to pay the remaining $575 million owed for ship purchases if Supramax shipping rates stay above $13,000 per day, Scott Burk, a New York-based analyst at Oppenheimer & Co. who has a “perform” rating, said in an Oct. 8 report.

  109. 109
    BirdsofpreyRcool Says:

    VTZ — if i didn’t value your opinion and comments, i’d just keep quiet.

    “Just a stupid engineer”… right. LOL.

  110. 110
    zman Says:

    Consumer Protection speech starting.

  111. 111
    kyleandy Says:

    bop – what u know about TXCO? i still own it and tried to buy more the other day (strictly because of price action).

  112. 112
    zman Says:

    It sounds like the goal of the Consumer Protection Agency will be to protect U.S. citizens from the fact that they can’t add (the president joked that the rest of us non CPA’s can barely add implying that we can’t defend ourselves from the evil banking minions). That’s a tough ticket to sell. 7 other agencies failed at it so lets make an eighth. It is one way to boost the jobs numbers I guess.

  113. 113
    BirdsofpreyRcool Says:

    kyleandy — reef is the expert on that one. I will defer to his opinion there… but, it’s worth asking him about it.

  114. 114
    Dman Says:

    Z – you’re still long the SD 14’s, correct?

  115. 115
    zman Says:

    Dman – yes, bidding Novembers now as a matter of fact.

  116. 116
    zman Says:

    S&P hit HOD

  117. 117
    ram Says:

    14’s?

  118. 118
    zman Says:

    S&P half a point shy of 2009 closing high.

  119. 119
    zman Says:

    15s but its already passed me by and I’m not feeling like chasing.

  120. 120
    ram Says:

    O.K. fine.

  121. 121
    zman Says:

    I’m sitting at 45 cents on those Ram

  122. 122
    ram Says:

    Oh, do you mind if I sit along side you?

  123. 123
    zman Says:

    So data light early next week,

    CHK analyst day mid week – holding SWN to see if CHK talks about their very long lateral, biggest IP to date in the play Fayetteville well (and as play on stabilizing gas of course)

    I’ll that what I expect to see from who out early mid next week.

    BEXP may have news if they can get unstuck on that hole

    We may get some more asset rationalization on Monday but that’s pure spec.

    we get HAL on Friday

  124. 124
    zman Says:

    Free country, they’ll either hit us or they won’t.

  125. 125
    zman Says:

    Intrigued by the S&P here. Nicky, Jerome, any thoughts, seems strong but my sense is we’re trading up into a bored, low volume action.

  126. 126
    zman Says:

    Ram – only way we’re going to own it that price is if the broad market takes a breather. I’m in no rush as they won’t talk about KRU deal until sometime in first 10 days of November. I think the market will front run that conference call.

  127. 127
    zman Says:

    SD is a boring little trader so it may just drift for another couple weeks before that front run effect kicks in.

  128. 128
    ram Says:

    Apparently I can’t say thanks twice, so, Gracias.

  129. 129
    BirdsofpreyRcool Says:

    HeadTrader was right, about the slow gind up into the close. Too bad the rally in energy was yesterday… not doing a whole heck of a lot today. Still, yesterday was pretty exciting.

  130. 130
    Alhambra Says:

    Looking to next week here are some of the companies to report:
    Mon – _
    Tues – CSX, INTL, JNJ
    Wed – JPM PKX ABT
    Thurs – C, GS, GOOG, NOK, SFY, LUV
    Fri – BAC, GE, HAL

    Thanks to Z and all, and have a good weekend

  131. 131
    zman Says:

    S&P closing at HOD.

    Beerthirty. Have a good weekend.

  132. 132
    TEXWS6 Says:

    Wyoming,

    Did you really have to post it? Our CTU is paying for that one!

  133. 133
    kyleandy Says:

    for KOG – int discussion of decline rate for one of their wells http://groups.google.com/group/bakken-shale-discussion/browse_thread/thread/ef0d4b63ac8b5cd4/7b7ea26384e45c22?lnk=raot#7b7ea26384e45c22

  134. 134
    Jay Says:

    OT:

    Just in from the Oklahoma Marginal Well Producers Trade Show… Mugs? Hah! We got T-Shirts that said “Save Our Strippers!” Now that’s a piece of apparel that can be worn anywhere.

    Our booth was pretty packed being as how we had the only booth with someone (moi) saying, “I’m a producer and we all play a losing game spending more kilowatts each year to make less oil. To survive in the game you have to CHANGE THE GAME!”

    That was a little different from the usual, just folks in booths selling band aids for the usual maladies, no one curing the disease : )

    We have been selected as one of 6 technologies to be highlighted in Lafayette in two weeks at the big show there.. will post link to our new video when I finally get the $%^!@# uploaded on the umpteenth try…

    Saw a LOT more trucks on the road than I’ve seen in the past few months.

    JR

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