Fed Up Wednesday – Oil Inventory Preview Plus Lots More Earnings

193 thoughts on “Fed Up Wednesday – Oil Inventory Preview Plus Lots More Earnings”

1. sgy indicating up 10%

   atpg reporting tomorrow
   Released news of covenant relaxation for an additional cost of 275 basis poiints

   i think they will have a bad qtr and they will spend 1 second on it. Discussion will be the FUTURE

2. Good morning Z- Although not active. Looking for the market to be much lower in the next 6 months. I really do appreciate all the work that you and everybody else on the board provides. What a gift to be able to come to a site that you know that you can get all the info. you need on the sector to make profitable decisions.

   Many Mahalo’s

   Enjoy the moments, they are precious.

3. from the wsj

   http://online.wsj.com/article_email/SB10001424052748703294004574513713926109106-lMyQjAxMDA5MDAwNDEwNDQyWj.html

4. Bill – The SGY quarter showed lots of promise and a big beat (see details above). Very cheap name.

   Thanks ElD, thanks much.

5. Re 3 – Wolf doesn’t get it. A small uptick in drilling now won’t forestall the coming decline in supplies.

6. Good morning…

   TechTrader is 55/45 LONG for the best day trade.

   HeadTrader wants to know the impact of the IEA lowering world energy demand…

   Credit markets up with futures. HY up over a full point. Lots of $$ still pouring into corporate bonds… that will push M&A activity higher. Always does.

7. For anyone looking for energy-related corporate bonds, the EXXI 10% due 6/13 are trading at a 16% yield to maturity. Given the uptick in EXXI’s production profile, the bonds should be well covered.

8. Re IEA – It’s another mixed signal from the Paris based group. Tell the market you need to investment more one minute, and that prices are not high enough to spark such investment and then comment that prices are too high and OPEC should produce more. On the short term forecast for 2010, they have been raising numbers for the last several times, this is their longer term numbers…good luck coming in near them when the global economy is back on track.

9. In other words BOP, it matters as much as the square root of bupkiss.

10. According to the Bloomberg survey, analysts believe that crude oil inventories had a build of 1500K during the week ending Oct 30 (last year crude saw a build of 54K); expectations range from a build of 300K barrels to a build of 2600K (16 out of 16 analysts expect a build); prior 4 week avg is a build of 579K… Analysts believe gasoline inventories had a build of 400K (last year gas saw a build of 1123K); expectations range from a draw of 2800K to a build of 2000K (9 out of 17 analysts expect a draw; 2 analysts remain at unchanged); prior 4 week avg is a draw of 722K… Analysts believe distillate fuel inventories had a draw of 1000K (last year distillates saw a build of 1206K); expectations range from a draw of 2900K to a build of 2000K; (14 out of 16 analysts expect a draw); prior 4 week avg is a draw of 439K.

11. z — You made HT laugh… and say “Thx.”

12. WRES Results Brief: Upside surprises…surprising.

    EPS of $0.04 vs $0.00 expected
    Production was up 1% sequentially … workovers.

    Revenue up 8% seq. , production + better prices.

    Costs falling, LOE , production taxes (much lower revenues), G&A (cost cutting) all down large

    …more in a bit …

13. for you non hipster types

    http://stevebunkoff.blogspot.com/2007/10/what-is-bupkiss_04.html

14. bop

    i think you have a winner with exxi

    production will be 40 % higher next qtr

15. WRES cont.

    Now have plans to resume drilling in California (oil) and Wyoming (gas) in 1Q10. I think the California new drill wells will be their onshore, drilled from a production cellar, undulating horizontals.

    $114 drawn of $120 available line. Still high but they have come off completely drawn status. They are in line with all covenants.

16. #2…what elduque said…..

17. Dollar down 0.4%, looking to cross back below 76 on the dollar index.

    PXD – weakening on their quarter, looking to add there, honestly would like to see it pull off a couple of bucks first, may not happen, Q4 looking like the production trough.

    SGY – impressed by the quarter and the activity, not the old Stone I remember, making excuses and lacking capital discipline. Up big now, not chasing, ma take some on a pull back later today or tomorrow.

18. bill — reef knows EXXI much better. I’ve been using his help and insights there. But thanks!

19. Is this move ADP or Corzine, lol?

    Thanks MP.

    Group and market trading off highs pretty quick. Oil inventories, then FOMC to get through, then Friday’s jobs number looming large.

    Watching my APC recover. That really was a solid quarter.

    WLT almost back to the pre 3Q release price, also a very strong quarter, just came at the wrong time. Still holding my $60 strikes. And still not adding. Broad market is main concern there and everywhere.

    WRES – up a nickle. Glad to see them getting busier.

    Crude up 25 cents now, from over a buck just before the open, all green trading moot before EIA.

20. It’s Corzine… Futures were up pre-ADP.

21. BOP – I thought was from Europe being up, LOL.

    Gold on fire again, going for $1,100

22. S&P hovering just above that 1050 level that’s been trouble some for the past 2 weeks.

23. Maybe Europe was up b/c of Corzine too…

24. bop – welcome back do u have cusip # on EXXI bonds. will try and buy some. any comments on KOG? thks

25. Ohhhhh. Tricky.

    FST getting a little follow through.

    Someone wake up the Barclay’s E&P analyst team. Keeping most things on equal weight and raising price targets on the quarterly reports to the current price level is a job for one of my dogs, not an analyst.

26. #7-BOP-do you have a CUSIP?

    Thanks!

27. Jat, any thoughts on BHI, I saw nothing in the quarter to make me a believer.

28. PXD and WRES in 3 minutes. Will listen to PXD as the stock is coming off and there may be some gems on their call worth knowing in a timely fashion. Will listen to WRES later.

29. EXXI (ticker EGYLN) 10% due 6/15/13 CUSIP 29276KAC5. I see trace trade around $83.5. Would love to hear what a broker would quote.

30. ISM Non-manufacturing 50.6 vs 51.5% expected.

31. PXD call starting.

    Market more than shrugging off that ISM data. Interesting.

32. weaker ISM = interest rates not going up any time soon….

33. Can we all agree that if the Fed comes out dovish we are going to rally and if they are hawkish then we fall?

    Also, if they are dovish and we don’t rally rally then that’s a good indicator that we are heading down?

34. PXD

    Aggressive Spraberry drilling program
    Add 1,000 wells through 2012 – see rig add schedule in the post.
    Drilling costs are down 30% from year ago.

    Getting tubulars, rigs in a row for this. Plan to double Spraberry oil production by 2012 or 2013 (couldn’t hear which), that’s bigger growth than I thought, this is now just under 1/3 of total company volumes.

    …

35. BOP – exactly so.

36. #29…Etrade says 79–85…

37. because the U.S. is more of a service economy than the Administration thinks it is or wants it to be … I still need to see if I can get a job spraying insulation or screwing solar panels to peoples roofs.

    PXD – 90 to 100% oil focused moving forward. They are thinking of the Eagle Ford as an oil play. They’re saying the right stuff here.

38. BOP-Interactive has bid 81, ask 85.5-I just bought a few at 85.5-TD Amer, which does not do much of anything below IG has a quote of 86.5-did say it was callable at 105 in Jun 2010.

39. PXD rig counts:

    Now: Spraberry 3, 1 in Alaska, 1 in Eagle Ford.

    By January: 14 in Spra, 1 each in AL, EFS, Tunisia.

    By end of 2010: 24 in Spra and 1 each in the 3 above.

40. PXD

    Spraberry (W. Tex) – 425 wells next year, most will be deepened into the Wolfcamp.

    Average costs with be $1 mm apiece. So there’s the big chunk of your 2010 capex, well within cash flow to cover the other programs.

    Sprayberry Production:
    q309 30 MBOEpd
    q409 29

    2010: average 32
    2011: avg 41
    2012: avg 51
    2013: avg 63 MBOEpd

    That’s strong work.

41. PXD EFS Update:

    Second well (11.3 MMcfepd) was only 2,600 foot lateral, 9 stage frac.

    Third well is not too far to the south in Live Oak county, longer lateral 16 stage frac.

    Plan now to drill through 2010, up from the earlier mentioned five well program, looking for a JV.

42. Thanks for the mrkt info on the EXXI bonds.

    Choices — at 85.5, the yield to worst is 15.38%. The “worst” is maturity on 6/15/13. If you get called any time prior to maturity, your yield is higher. I think it is a good buy. And I am impressed that TDA had the bonds… you’re right, they are far below IG (currently rated Ca/C-), but that is b/c the debt exchange has not occurred yet. That will close by Nov12th, delevering EXXI’s Balance Sheet and improving their cash position. Then all the Nov – Feb production coming on line will greatly improve EXXI’s cash flow… total interest coverage will be over 3x.

43. PXD Slide 13 – good slide

    11.3 MMcfgpd dry gas well = $57,000 per day revenue.

    but its got liquids so breaking it out on gas, condensate and NGLs gives you the reality of $96,000 per day.

    So its the same as if they had drilled an IP well of 19 MMcfgpd if it were dry gas.

44. EIA in 10 minutes

45. PXD – Tunisia – 3 well program starts in January. New 3D based targets.

    Going over financials now. I have to say, pretty simple story, good to see them stepping up to the plate now that oil prices are higher. Capital discipline here appears to be better than in the past. Cost cutting efforts have borne fruit. I could care less about the quarterly numbers other than they may give me a good entry point for calls; stock has been falling during the call and I imagine some of that is just weak hands getting out of a name that didn’t beat.

46. EIA Oil Inventory Report

    Crude just before report: up 56 cents at $80.15

    Crude down 4 mm barrels
    Gasoline down 0.3 mm barrels
    Distillates down 0.4 mm barrels

    Crude Imports : 8.1 mm bopd – very very very low.

    Gasoline demand: increased to 9.015 mm bpd – hey, hey, see comment in post.
    Distillate demand: ticked back slightly.

    Good numbers. Imports make the crude case a bit over stated.

    Oil up $1.30 now.

    …

47. More EIA

    Cushing stocks remained flat near the low of the year.

    Utilization: fell back to 80.6%. Refiners continue to take bigger maintenance turns than is normal. Can’t blame them.

48. BOP-thanks for feedback-TD does not have the bonds, they need to deal with 3d party broker, higher price than with Interactive but still decent yield.

49. choices — for any one who is skittish about the stock market (and who isn’t??), I think energy-backed corporate bonds are a great place to park some cash and get better than a money market return. Of course, the risk is a lot higher than money markets, but I am not a fan of bond funds (and I used to help run one). They have a funny way of locking in losses at precisely the wrong time.. but a private investor can chose to hold his/her bonds through a volatile period, continue to clip the coupon, and (unless there is a BK), receive their principal back.

    Glad to be of any help.

50. PXD call over, went well, stock down $1.10 now. Watching.

    SGY and LINE calls at the top of the hour. Will listen to SGY as I have heard the LINE story enough and I own it and I’m not planning to sell any time soon.

51. Bakkens firming nicely with crude.

52. Out of pretty much all the stock I picked up during the selloff … HK, WRES, KOG, BEXP, SD ….

53. z – u like PXD call enuff to consider buying? i thought it was pretty good. any thoughts on their new mlp PSE selling around 21-22 w/ .50 initial dividend?

54. Z:

    Signing in for the first time in 2009.

    Do you have any opinion on XTO? They reported a very decent quarter. Thanks.

55. Nice work Packman.

    Kyle – I’m watching it, yes. PSE – have not seen it.

56. SGY call starting now.

57. English language rant: what happen to the use of the word increase? Was it blackballed or something? Now it is ramp this or ramp that. Heck, I even heard some guy say ramp down instead of decrease.

    Then what about the use of guidance by companies. Wouldn’t it be better if the companies just said, “this is out GUESS of earnings for this quarter”.

58. Guru – come by more often, not a big fan of XTO, I think they overpaid in a number of plays they were late in entering.

    BSJ – I like to use the work ramp and will use it and other misspelling of it as I see fit. Apologies but you’ll just have to deal with it. As to guidance, some is better than others. Guidance for a manufacturing operation like a shale play is a lot easier than guidance for a shelf player who has lots of wells and depends on exploration for upside.

59. Can’t get on the SGY call.

60. kyleandy — #24… sorry… forgot to address your KOG question. I continue to think KOG is a wonderful, pure-play way to own the Bakken. Upside will come from 3FS test well (1H10), XTO partnership contributing volumes, hooking up to a pipeline, higher oil prices, and any contribution from their DVN partnership in the Vermillion. Other than oil prices, the biggest downside was the anticipation of an equity offering. I thought they would wait until after well#9 was completed, but I guess Lynn saw the window of opportunity and went for it. Also, I think that very-prelinimary results from #9 indicate that it will be an “average” well, at best. Won’t know for sure, until it is completed in December.

    I’ve heard that KeyBanc is placing a $4 NAV on KOG as of what they think the reserve base will be, come 12/31/09… with a $6 NAV projected for the end of 2010. But, KeyBanc is also (most probably) involved in marketing KOG to potential acquirers… so, have to take the valuation with the lump of salt it deserves.

    KOG = no debt, expanding reserve base, close to 100% oil production, good partners (DVN and XTO), equity-offering done, upside from DVN and hooking into pipeline infrastructure sometime in 2H10.

61. I’m raising cash in this rally.

62. BOP, Do you have a feel on whether KOG will make a profit for 3rd qtr?

63. SGY call just started working midstream.

    Guess I’ll read the transcript on the front half and listen to the Q&A.

64. Thoughts on WLL for the November 60 calls? Do we think this rally is sustainable? Or were we given a gift today to unload for small profits 🙂

    Many calls are back from the dead.

65. West – Model I saw the other day, can’t recall whose it was, showed a penny loss. Street is at $0.00. Coin toss if they make money, not sure most people are going to care about that.

66. Re 64 – I’m holding, it’s one of the cheapest names in the group, had a very strongest quarters in the group, announced the largest well in the Bakken and has more in the area on the way. I think it also benefits from positive results at other names in the region (BEXP) and (CLR) come to mind. CLR I don’t have a good feel for at this time but if the question had been about them I’d be taking profits prior to earnings just because its pricey and doesn’t often drill the high profile wells that people want to see right now. I own the common there but not options.

67. FST acting well for a second day on good well results yesterday, and despite a miss on the quarter.

    BEXP reports Friday. I don’t think they have new well results to talk about as they just spilled the beans on their BCD Farms well. Expecting a decent quarter and talk about their plans post deal.

68. z – LINE call over short and sweet!! missed the questions cause was on phone.
    bop – tried to buy bonds EXXI at boa and fidel no luck either place.

69. West — I don’t have an income model built for KOG, but Raymond James does. It looks pretty conservative (which is good). Can’t see how KOG could be EPS positive for 3 or 4Q09. But, there is a chance they will see positive cash flow from operations and EBITDA for 3Q, ramping up nicely from there (with apologies to BSJ). That, in itself, would be a huge positive, vs results from the last 2 1/2 yrs.

70. Thanks Kyle, will go back and read transcript later.

71. Continued good calling of the dollar VTZ.

72. #68-kyle-still available at Interactive, TD Amer thru 3d party.

73. kyleandy — those are two good places to check… surprised that choices could buy thru TDA, but that is a good part of what makes individuals buying individual bonds so tough. You can try leaving an order with BoA to call, if they see the bonds… see if that works. And thanks for the update.

74. The thing about buying individual bonds… you often have to tell your broker what to do… and make him/her do it. It takes more effort, as a broker, than just striking a key on your computer and considering it “done.” But, if there are EXXI 10% bonds out there, offered in the Street, you should be able to get them. Just tell your broker what you will pay, and tell him to get to work and get them!

75. ZTRADE:

    FST – Sold the (10) November $20 Calls I picked up before earnings for $1.70, up 59%. This was a “getting to know the name” trade and I’m still in that process. I liked what I heard on the conference call and will probably be more frequently trafficking in the name.

76. DVN
    Sees improving economics in the North American natural gas business. Costs have come down considerably from the peaks of last year, and based on internal forecast as well as the future strip, key development gas projects all deliver attractive rates of return that are well above cost to capital. With the improving outlook for natural gas prices with the impact of the sale-down of lower tertiary and with lower overall industry cost structure, this should allow DVN to step up activity next year. With acreage positions in many of the best shale plays, have no shortage of opportunities; have currently adding drilling rigs in major shale development plays, and will continue to do so in 2010. The step-up in activity for the remainder of the year will move co outside the range of previous 2009 EMP capital guidance. For 2010, currently working through the budgeting process and expect to finalize the 2010 budget by year end. Based on better than expected third quarter production and higher than expected activity levels in fourth quarter, are increasing our full-year 2009 production forecast by 3 million barrels, to a range of 247 to 249 million BOE… Crude Oil- based on strong year to date results and outlook for the fourth quarter, are once again increasing 2009 production outlook; now expect full-year production to be between 247 and 249 million barrels. This revised forecast provides a fourth quarter production range of 58 to 60 million barrels, which is up about 2 million barrels from previous guidance for Q4.

77. Damn, I was trying to buy some UNP puts, but of course it ran away from my order.

78. RE 71 – Thank you, kind sir.

    Today is going to be tough to call depending on what happens with the Fed but I think that some amount of Fed hawkishness is priced in and if the Fed does nothing and continues to be dovish the dollar could move to put in a short term low depending on how fast it falls. If it does not move substantially at the announcement then I think a longer sustained down move is possible.

    If the Fed is dovish and the dollar rallies for no reason then I expect that the down move will also continue.

    I’m expecting a minor top in gold between 1125 and 1150 and a minor low in the dollar somewhere just above 74 if they both spike up and down respectively, otherwise the move could be sustainable.

    The bond vigilantes are in hiding because they didn’t want to run into the Fed purchase program, but the gold vigilantes are running wild.

79. ZTRADE

    HK – Added (10) HK $25 November calls (HKKE) for $1 (on the mid and easily) with the stock at 24.36.

    WILDZTRADE

    HK – Added (10) HK $26 November calls (HKKP) for $0.65 (also easily on the mid).

    Earnings tonight for their call tomorrow. See post for thoughts on the quarter. I already own $28 and $30 strike calls here and the name has been lagging.

80. May I also add a yeehaw to 78.

81. Isle – thanks for the DVN comment. They announced a “big” Haynesville well a couple of days back. If you listened to the CHK call Aubrey mentioned when he talked about some folks issuing IPs based on larger choke sizes than what many of the leaders have been doing.

82. Z or BOP is either KOG model available for viewing anywhere ? THX

83. West – will look about for it.

84. BOP – tried to leave order w/ boa – no deal- also said my 30 bond order was too small. pissed me off, but since commissions on stk trades are zero, cant change. called a fixed income guy next time will call stock trader.

    CHOICES thks just hate to go to trouble of opening new acct, shifting money, etc. told the boa guy ameritrade could do it thru third party, he didnt really care.

85. z – nobody’s commented on td#11 lurking in the carribean http://crownweather.com/?page_id=1184

86. Kyle – thanks, had not seen, could go anywhere.

    http://media.myfoxtampabay.com/myfoxhurricane/

87. And there is still plenty of hot water in the way were it to target the Gomex.

    https://www.fnmoc.navy.mil/ncoda_web/dynamic/ncoda_1440x721_global_sst.gif

88. kyleandy — buying individual bonds sometimes means having to drop the “nice” and be tough… ask to speak to your guy’s supervisor. “Too small” is unacceptable (and tell him that). Keep pushing… you can make it happen. Also, keep FIRM to the price you will pay. Don’t pay more than choices did… and tell your broker that. KEEP PUSHING. That is the only way these lazy brokers will do anything. They laugh at the public behind our backs (i know)… do NOT let them get away with telling YOU what to do. They work for you. They clearly need to be reminded of that.

89. Official track has it looking towards Gulf

    http://tropics.hamweather.com/2009/atlantic/eleven/trackmap_zoom1.html

90. 3,600 calls traded in those HK $25 calls today.

91. Is that good or bad?

92. BSJ – just sort of interesting. School of thought from guys at places like Monster.com is that options traders are clued in to key events, that they “know” something. I generally don’t buy it and haven’t seen any studies to say that it means more than there is a rumor out there the stock is going to do well. It could also be people playing broker pre call notes on it and that would suggest the brokers are looking for a strong quarter and for once, no secondary.

93. kyleandy — and another thing… those EXXI bonds are $2,000 face value… and your broker said your 30-bond order was “too small”??? I would jump down his throat and go for a heart/lung extraction. He is an @ss and should be treated as such. Bond Desks abound with BSD’s… do NOT let them get away with it. They work for YOU. (hint: this is why profanity was born on Bond Desks… every seat is occupied by an @sshole).

    Do not let him get away with treating you that way. You want those bonds, they are available in the Street, if he can’t get them for you at the recently-traded price, ask for someone who will.

    This stuff really chaps my butt. Sorry, but it’s just unacceptable behavior, on the part of Fido and BofA, and it gives individual bond buying a bad name.

94. My point was that for every option buyer there is an option seller. Can’t those sellers just be as clued in as the buyers?

95. #84-kyleandy-OptionXpress showing 44 at 86 agency best effort min 25K order

96. It comes out of brokerage inventory. If you watch level II you can seem them move the bid and offer size with the fluctuations in the stock price. So no single guy needs to decide today is the day to sell me a bunch of calls, if I take the offer, a brokerage or several fill it. They’re making a market, that’s all, not like the other side of the trade is anything more than math.

97. BOP-you sure about $2000 face value-I believe it to be $1,000.

    Respectfully,

98. Kyle re: PSE did an acq. in the Spraberry (according to Citi downgrade of 9/9/09). Given PXD’s enthusiasm about the Spraberry, I want to listen to PSE’s replay as I don’t know PSE.

99. choices — LOL.

    Bloomberg shows $2k as the “minimum piece/increment”… but Bloomberg isn’t always right. But even if it’s “only” $30k of bonds… that is SIGNIFICANT. And I would never allow a Bond Desk to treat me that way. Come out swinging and don’t take “no” for an answer!

100. Midday Overview

     · SP500 up ~1% as of 12:15 (to 1055 on cash) heading into the FOMC decision @ 2:15pm. No single great reason being cited for the strength (China eco growth revised up, elections on Tues, etc), although the weaker dollar prob. helping stocks the most. Pretty tentative move higher this morning without a whole lot of real money sponsorship. People waiting for Fed and CSCO (and jobs on Fri).

     · Equity sectors – Strength pretty broad-based today although ominous patterns in regional banks and transports. “Defensive” sectors like HC, utilities, and telcos some of the strongest in the market. HC stocks up ~1.7% on back of Tues’ elections (people saying reduces chances of reform passing). HMO index is up ~5%. Tech, utilities, energy, materials, and telecom services are up ~1%. Financials are a relative laggard today (up just 0.4% as regional banks come for sale and insurance makes just small move higher). The transports are dropping 1% on the day (although this comes after a huge ~5% ramp during the Tues session). Semis are staging a nice bounce today (up 1.5%) w/some real money participation.

     · Corp credit – Pacing along w/stocks today for the most part. IG is ~2bp tighter while HY rallies a bit north of ½.

     · Dollar dips; the DXY is off 0.65% as of noon. Expectation increasingly that FOMC will leave statement relatively unchanged (something that is weighing on the buck a bit). Euro and GBP among strongest currencies against the dollar.

     · Treasuries – Weaker across the board today ahead of the 2:15pm FOMC decision (10yr yields are up 4bp). The Treasury announced its Nov quarterly refunding earlier this morning (will be selling $81B in coupons next week). Also – TSY said that to potentially improve liquidity in the TIPS program, it will extend the average maturity of the portfolio to better capture the premium associated with inflation protection, Treasury will replace its 20-year TIPS offering with 30-year TIPS.

     · Gold and the US$; gold up another 0.6% (after Tues’ ~3% ramp) – some color from JPMorgan’s M Jansen – Gold has continued to roof, both in USDs and in local currency terms and it seems that the RBI’s decision to buy IMF gold has set in train a new thought process about central bank appetite for USDs in reserve accounts. We look at this in some detail in the report, but suffice it to say, we don’t believe that central bankers are actively cutting their USD holdings for the relative safety of gold. Overall we see the RBI’s decision to purchase gold largely as an opportunistic purchase of a large bloc of gold at a non-disruptive market price. One other reason that central banks are likely interested in holding more gold – especially if such gold can be accumulated domestically – is via the liquidity that holding gold can provide. Overall China is logically the buyer of the remaining IMF gold if the reason is to actively diversify current USD holdings in favour of non-USDs but we have seen little evidence of China wishing to walk down that path.

101. CSCO earnings after the bell should be interesting.

102. http://webcastingplayer.corporate-ir.net/player/playerHOST.aspx?c=136094&EventId=2494620&StreamId=1381545&TIK={c193f7e6-bd60-4bc1-aa9b-5318e95680ce}&RGS=3&IndexId=…..XEC 3rd qtr cc for those with an interest. They will have a 3rd big Yegua well hooked up next week. Liquids rich production from these and other plays: Granite Wash & Cana-Woodford. Permian Basin oil plays gearing back up. Gearing back up with low debt.

103. And you think **I’m** bullish?? Ha. Look at what GS is saying…
     ======================================

     Buy Gap, Macy’s Calls Before Sales Reports, Goldman Sachs Says
     2009-11-04 15:09:53.528 GMT

     By Jeff Kearns
     Nov. 4 (Bloomberg) — Investors should buy bullish options on Gap Inc. and Macy’s Inc. because the retailers may advance after reporting greater-than-estimated sales tomorrow, Goldman Sachs Group Inc. said.
     Gap, operator of Old Navy and Banana Republic stores, may beat projections for revenue at U.S. stores open at least a year and increase its third-quarter profit forecast, New York-based derivatives strategists Stuart Kaiser and Maria Grant wrote.
     Macy’s may rise because of cost cutting and sales that top forecasts due to “cooler weather and pent-up apparel demand,”
     they said.
     Goldman recommended buying San Francisco-based Gap’s November $22 calls, which break even if the shares add 4.3 percent. Those contracts added 15 percent to 75 cents yesterday, while the shares climbed 0.6 percent to $21.94.
     The strategists advised buying the November $19 calls on Macy’s, based in Cincinnati. The second-biggest department-store chain added 0.4 percent to $17.77 yesterday, while the November
     $19 calls dropped 5.7 percent to 50 cents.
     This month’s stock options expire Nov. 20.

104. West — did you get the RJ report on KOG?

105. bop – now trying scottrade

     RMD – I think PSE acquired sprayberry property from PXD. they’re pretty entangled. PXD owns 68% of PSE. just heard the tail end of call
     (another quick one) , only thing i learned was expect a secondary soon. will listen to rest of it later.

106. # 89

     atpg just launched titan a few days ago. They wanted to wait for all storms to pass

     hmm the perfect storm???

     This is unbelievable!

     Atpg told the world it would go out by end of october and with earnings call tomorrow it appears they wanted to meet that schedule weather be damned

107. “We look at this in some detail in the report, but suffice it to say, we don’t believe that central bankers are actively cutting their USD holdings for the relative safety of gold.”

     BS, they have all said they want to do that and China has informed their citizens to save using gold.

     “One other reason that central banks are likely interested in holding more gold – especially if such gold can be accumulated domestically – is via the liquidity that holding gold can provide.”

     None of the gold produced in China is leaving China. Gold in the US is leaving the US. Gold is liquid because it’s a currency. For me as a Canadian to buy a bbl of WTI oil I require one currency exchange, the same as if I held gold.

     “Overall China is logically the buyer of the remaining IMF gold if the reason is to actively diversify current USD holdings in favour of non-USDs but we have seen little evidence of China wishing to walk down that path.”

     This is why gold is 100% going higher. That is complete BS. Little evidence? There is little evidence that China wants nothing more than to diversify away from every single USD it has.

108. Also, India bought the gold as a huge sum because there’s no way they could accumulate that much without driving the price up and they were obviously looking for a way to diversify.

109. Re 107 – yep, yep. Interesting to see the great black hole that is China taking on more and more natural gas and now that they were purportedly through with big crude purchases, U.S. import levels continue to decline to new recent lows. Output from OPEC is on the rise, the crude is going somewhere… my bet is Asia.

110. Kyle; that connects the dots on PSE/PXD.

111. Jerome, you around, looking for a read on PXD.

112. Wait for the hedge funds to start thinking the momo in gold looks nice. Then wait to see JPM get completely obliterated by all their gold shorts once they can’t find any physical to cover deliveries with. This whole situation is such a joke.

113. BOP , I have not seen that yet.

114. Thoughts on ATPG earnings tomorrow?

115. Decent rollover on ATPG mid day

116. Z: Any thoughts re RIG earnings?

117. Tom – Haven’t had a chance to look at them yet, service taking a bit of hit on them and BHI today its seems.

     BOP – can you forward that to West?

118. Just turned on CNBC for the first time today. Gasparino pitching his book, day 2. He must have some dirt on GE executives too.

119. Bill – Apparently no one thinks that TD does much, at least no one trading natural gas. NG down 18 cents.

120. Re: #111, hi ZMAN…I check in as much as I can…PXD is back into a col of o’s like a number of other strong stocks we watch, but remains on a P&F buy signal, it’s been on a rip since breaking out above $32 in Sept…because of the non-stop strength, there are not a lot of good interim technical reference points, there is support here, PXD is trying to hold the 20 day daily moving average on a closing basis, but it looks like, unless we rally it won’t hold…the next area of major support is a confluence at $37…stong support around that number,if a trader buys here, the stop should be below the $37 level

121. Jerome – thanks much, kind of where I was on support. No reason for me to step in front of the fed on a weak name, if the day becomes weak it will suffer all the more.

122. Last thoughts on HK before they report tonight. Just on guidance, they released their look for the rest of the year 4 days after SWN cut their Fayetteville shale numbers at the end of July due to Boardwalk. So HK, who gets between 15 and 20% of their production from the Fayetteville had the curtailment thoughts from SWN in their guidance. BWP cam back faster than anyone thought, and helped SWN to beat their quarter. HK was confident enough after just having beaten the snot out of 2Q numbers to go on and establish slightly higher 3Q estimates. Part of my reasoning on why I think they beat. Other part is a suspicion they are hooking up more big Haynesvilles, including some to the south in Texas and bigger than previously announced Eagle Ford wells.

     If they get the release out tonight I’ll have a separate post out before the call.

123. THX, for the KOG . They report tomorrow right?

124. sd /crusdaer buyout

     the equity holders are pissed they get bupkiss for their equity interests in crusader

     see here for latest filing

     http://docs.bmcgroup.com/Crusaderenergygroup/docs/txnb_3-09-bk-31797_867_0.pdf

     at best, the old kru mgt a bunch of boobs , at worse fraud.

     Anyways, on page 10, they mention bexp and useg and the value of crusdaers 37,000 acers in the bahken,

     Also, sd made a bid for the whole company in january 2009

     Seems, like the equity committee is trying to slow this thing down and asking the judge to appoint a special examiner

125. West – I show them Thursday night for a Friday morning call.

     Thanks Bill.

126. Fed funds unchanged.

     Extended period stayed in the statement.

127. BOP; GS / GAP; that’s funny. I was walking buy a well located Gap store over the weekend and observed to myself how subdued / empty the store seemed.

     Anecdotal I know; GS knows all.

     At $100 Million / Day without any losses, all hail GS.

     [sarcasm]

128. sd reports thurs as well

     Interesting comment in the lawsuit re useg/bexp

     they said 990 m in “value” was created based on the results of 1 bexp well

     Time and higher ng prices will cure crusaders “problems”

     Anyways, Sd is getting a helluva a deal here assuming they pull it off.

129. Apparently none of the potential for them raising rates that everyone was talking about was actually priced in.

130. Ken Heebner on CNBC making my exact point from the other day on S&P earnings next year. Saying the market isn’t cheap at 14.5x next year’s numbers but that next year’s numbers are going to surprise to the upside.

131. V – I think the equity markets go higher from here.

132. I agree without the worries from the Fed.

133. HK suddenly all perky… liking it.

134. Everybody had to turn their buy programs computers back on.

135. I think gold can make a run at 1100 today… Dollar getting hit now.

136. HK perky does not matter unless you sell today before earnings BOP. You didn’t tell me you were back long.

137. still seeing a lot of red names… mrkt is going to take a bit to digest where it stands… wants more info from Friday’s Jobs Number, methinks.

138. z — you gonna sell b/f earnings today?

139. bulker day trade

     egle reports tonight

     suprmax rates have held up better than the larger sizes

     Be quick as what market gives it also takes.

     Im hoping/expecting for a 4 % pop or 20 cents 4.80 to 5.00 ish

140. im also in sd, im 6 to 9 months early on the name, but i think things are improving in this sector and they will have huge volume growths when the oxy plant comes online

141. BOP – no, no, I’m a believer.

142. Credit market doesn’t know what to do… so it’s doing nothing. Bond quotes are bouncing around with the stock market, but no one is buying/selling. Funny, people/traders don’t seem to know which direction to pick.

     So, tell me… what is the direction of Max Pain here?

143. Bill – good point, been watching those rates each weekend when I do the wrap, also the Capes have done better of late. I’m not playing for now but 2010 may be the year of the dry bulker.

     Bill – You know I was in SD shortly after the IPO, round tripped that big move. Ugh. My bad. 2010 likely to be better for them on a reserves growth, production growth and pricing basis.

144. z — just checking to be sure. thx.

145. BOP – Gotta say again, good to have you back. You seem to be a good luck charm bringing green markets 😉

146. Wondering if the S&P daily chart is indeed patterning itself like the last two month end sell offs, then rallies from a higher low. Sure starting to look identical.

147. whoa, z! AN EMOTICON. I’m touched. Thx.

148. Well… here’s the thing, this Christmas is going to better than last Christmas. But believe me, won’t take much of a stretch to accomplish that. Anyway, I think we rally for a few weeks more.

     We shall see.

     kyleandy — Scottrade treat you any better? I hope so.

149. Actually I thought I turned those off. Was trying to go oldschool with a semicolon and a paren.

     Dollar getting crushed back by nearly a percent.

150. What to do with a gnome:

     http://www.advertisementave.com/tv/ad.asp?adid=786

151. Credit Market doesn’t know what to do… so, it’s rallying a bit.

     Guess there were a few shorts set up, prior to the announcement.

152. BOP – On Christmas, I dunno, saw a poll saying 65% plan to spend less this year. A lot few probably worried about their jobs as the newly unemployed were in that category last year. Are retail sales supposed to be close to even? I don’t know haven’t kept up with that. It doesn’t mirror the truckers and diesel consumption since retails seems to have drawn their inventories down much lower than usual. So they need to rebuild quite a bit, more trucks roll, even if they will be selling less units.

153. BOP; you know where I stand on holiday sales. Even if they are up 1% YOY; that would basically be disastrous.

154. z — i thought i had read somewhere that temp hiring for Holiday Sales were up vs last year. And then you have GS telling us to buy calls on Macy’s and The Gap… ha! Sounds downright cheery to me.

155. Conference calls tomorrow: (all times EST)

     * IOC – 8:30 am
     * PXP – 9:00 am
     * CLR – 10:00 am
     * HK – 10:30 am
     * GDP – 11:00 am

     anyone else?

156. BOP – scottrade called and said they had em for 86.5. i told the broker to tell the bond guy everybody else was buying them for 85.5 and placed an order at 85.5. they came back and said they could do it at 86 so i took it!! sure hope they’re $1000 bonds not 2000.

     oklahoma & choices – thks for helping

157. Reef – anything in particular you want to hear on the IOC call tomorrow?

158. kyleandy — well done. You shaved a half point off the offer. That isn’t pidgeon feed, on 30 bonds!

     Just remember, buying bonds is like buying real estate… don’t let them tell you it’s “not negotiable.” It is.

159. Z what was that address for the heat map? thx

160. CLR acting pretty well going into their earnings. Not going to play this time but they are fairly reliable guiders/reporters, will be on the first half of that call. Positives there could help out on WLL, BEXP, and maybe KOG.

161. http://finviz.com/

     It’s also listed in the links at upper right on the site under finviz

162. thx that is really a good site

163. PackMan — #153… true. Still, even car sales (non-clunker stimulated) were bettern expected yesterday. Some people are buying some stuff. It seems to be The American Way.

164. Yeah; but structurally high unemployed people with less access to credit and trying to both pay down debt and save money is a tough one, even if the consumer is resillient and inclinded to buy stuff.

     I just think its a numbers game …

165. Carly Fiorina announcing she is going head-to-head with Barbara Boxer for a California seat in the Senate.

     “Head to head” might be a overstating the contest a tad, however… as one must have one (a brain), in order to use it.

     [sorry… couldn’t resist…]

166. PackMan — what i don’t understand is… who is buying cars? Who is buying RVs, for that matter?? Honestly, it’s a head-scratcher for me…

167. ZTRADE:

     PXD – Added (5) November $45 Calls (PXDKI) with the stock at $41.60, off about 2%. Reasoning in today’s post and in comments from the call. Going in slowly.

168. BOP – miracle -scottrade called back and said they got em for 85.5. am amazed!!

169. z- your thoughts on SWN and NFX?

170. Oklahoma- Could you be more specific?

171. kyleandy — cool!! Nice buy. Go in armed with what you are willing to pay and negotiate! THAT is the way bonds are purchased. Way to go.

172. thought about averaging down here and looking for a good entry level.

173. Market fell all the way back to 1,050.

174. Okla – They’re acting a bit poorly today, think its just noise, half of the group is now red, leadership is green due to earnings and upgrades. I’m not adding in here just yet, biggest risk is still the market. Also, I have positions in both and don’t feel like they will do much different from the group at this point since they’ve already announced and have no immediate near term catalysts ahead. My thinking is therefore that they move up with the group which should move up at a better pace than the market.

     Market diving.

175. House is pushing forward with their HealthCare Bill… vote could be as early as this weekend. Pelosi is claiming that yesterday’s elections were “victories” for the Democratic Party.

176. Now they’ve got Prechter on CNBC saying market is about to fall significantly. He’s got a new book out too.

177. BOP – file 175 under “if you say something often enough it becomes true”. If the ticker for the Democratic Party was GOP she’d be correct.

178. I don’t care if you’re Dem or Rep… Pelosi just defies logic.

179. victory?? and that’s one of the leaders of our country!!!

180. Ugly close

181. hmmmmm…. strange day.

182. BOP … just saw this on GPS in my Twitter stream … havent read it yet … fyi

     http://davianletter.com/blog/2009/11/4/gap-everybody-same-tired-s-t

183. BOP 166 good question.

     Maybe its GS putting their $100 M per day to work buying stuff to make it look like the economy is functioning 1 Ha !

184. BOP 175 … I wonder then what defeat looks like …

185. gotta run…

186. PackMan — youre funny.

     CSCO on the tape, saying perky things… like they “see economic recovery around the world.”

     I am not making this up.

187. U.S. Stocks Erase Gain as House Votes to Limit Card Rates
     2009-11-04 21:57:04.472 GMT

     By Sapna Maheshwari
     Nov. 4 (Bloomberg) — U.S. stocks erased most of a 156- point rally in the Dow Jones Industrial Average after a House bill to curb credit-card rates spurred concern about bank earnings, outweighing the Federal Reserve’s plan to keep interest rates at a record low.
     Wells Fargo & Co., JPMorgan Chase & Co. and Citigroup Inc.
     led financial shares to the steepest loss among 10 industries as the vote moved up the start date of many rule changes that will make it more difficult for lenders to raise rates on existing credit cards. The Standard & Poor’s 500 Index wiped out most of a 1.5 percent rally triggered when the Fed said it will leave interest rates at “exceptionally low” levels.
     “The credit-card regulation and regulation in general, how much Congress is going to clamp down on financial company activities, is important,” said Giri Cherukuri, who helps manage
     $1.5 billion at Oakbrook Investments in Lisle, Illinois. “To the extent that Congress keeps their hands off of things, that’s better for financial stocks and financial stock prices.”
     The S&P 500 added 0.1 percent to 1,046.5 at 4:19 p.m. in New York. The Dow increased 30.23 points, or 0.3 percent, to 9,802.14. About five stocks fell for every four that rose on the New York Stock Exchange.
     The Fed, at the end of a two-day policy meeting, restated its intention to keep interest rates “exceptionally low” for an extended period and said the U.S. economy is picking up.
     “Businesses are still cutting back on fixed investment and staffing, though at a slower pace,” the Federal Open Market Committee said in a statement. “Activity in the housing sector has increased over recent months.”

     ISM Shows Order Growth

     The S&P 500 rallied in morning trading after the Institute for Supply Management’s report on non-manufacturing businesses showed 1.4 percent growth in new orders and a 2 percent increase in the backlog of bookings. The main index in the report fell to 50.6, below analysts’ estimates while still signaling growth.
     Some traders may have sold shares in anticipation of the Nov. 6 report on the U.S. job market. The unemployment rate increased to 9.9 percent in October, according to the median economist estimate in a Bloomberg survey.
     “It’s such a big number, people would rather wait on stocks,” said Walter Todd, who manages $750 million as co-chief investment officer at Greenwood Capital Associates LLC in Greenwood, South Carolina. “There’s a lot of people taking a wait-and-see approach to Friday’s number.”

     Financials Slump

     The S&P 500 Financials Index slumped 1.5 percent, the most among 10 industries, after the House vote and as analyst Meredith Whitney said the biggest U.S. banks may face declining values on home-loan bonds with government backing as the Fed prepares to end its $1.25 trillion purchase program.
     Bank of America Corp., JPMorgan Chase, Citigroup and Wells Fargo increased holdings of so-called agency mortgage-backed securities by 44 percent from the third quarter of 2008 to the second quarter of 2009, Whitney said in a note yesterday to investors. Those increases came as the Fed began buying securities backed by Fannie Mae, Freddie Mac and Ginnie Mae in an attempt to keep mortgage rates low and spur housing demand, she wrote.
     JPMorgan fell 1.2 percent to $42.21, while Wells Fargo slid
     3.1 percent to $26.82 and Citigroup lost 1.7 percent to $3.97.
     Hartford Financial Services Group Inc. erased earlier gains and fell 5.3 percent to $24.44. The insurer, whose new chief executive officer is conducting a review of businesses, said it will halt sales of some of its life products sold to companies.
     Baker Hughes Inc. slipped 5.9 percent to $40.89. The oilfield-services provider that agreed in August to buy BJ Services Co. said third-quarter profit plunged 87 percent after energy prices tumbled.

     Health Insurers Gain

     Health insurers led the market higher earlier on speculation that opposition to Democrats’ health-care reform will be bolstered by Republican victories in governor races in New Jersey and Virginia. Democratic leaders signaled they’re ready for the House to begin debating the legislation and vote on its passage and yesterday’s elections won’t affect how the House proceeds.
     Aetna Inc., the third-largest U.S. health insurer, jumped
     5.2 percent to $28.01. Cigna Corp. climbed 5.2 percent to $29.78. A group of health-care equipment and service companies jumped 1.2 percent, after earlier rising as much as 3 percent for its biggest intraday gain since June.
     An index of raw-material producers erased earlier gains and fell 0.1 percent. Freeport-McMoRan Copper & Gold Inc. climbed
     1.2 percent to $77.70 as gold advanced to a record of $1,096.50 an ounce, while copper led industrial metals higher.

     Dollar, Treasuries

     The Dollar Index, a six-currency gauge of the greenback’s strength, fell 0.8, erasing yesterday’s gain. The Reuters/Jefferies CRB Index of 19 raw materials climbed for a third straight day, rising 0.2 percent.
     Treasuries fell for a third day. The 10-year note yield rose five basis points, or 0.05 percentage point, to 3.52 percent.
     Ambac Financial Group Inc. surged 35 percent to $1.50. The world’s second-largest bond insurer reported third-quarter net income of $2.19 billion, reversing a year-earlier loss, after unrealized mark-to-market gains in its credit derivatives portfolio. MBIA Inc., the biggest bond insurer, advanced 7.5 percent to $4.42 for the biggest gain in the S&P 500.
     Of the 382 companies in the S&P 500 that have published quarterly earnings since Oct. 7, 84 percent exceeded estimates, according to data compiled by Bloomberg. That would mark the highest full-quarter proportion in data going back to 1993.

     Disney, Merck

     Walt Disney Co. rallied 1.5 percent to $28.03. The company received Chinese government approval to build a theme park in Shanghai, its first resort investment on the mainland, to tap rising incomes in the fastest-growing major economy.
     Merck & Co. jumped the most in the Dow, rising 6.4 percent to $32.64. The drugmaker said that following the acquisition of Schering-Plough Corp., earnings for the combined company, excluding some costs, will increase at a “high single-digit”
     percentage rate each year through 2013. The company expects cost savings of at lease $3.5 billion annually after 2011 to come from all areas across the company.
     Pulte Homes Inc. rose 3.5 percent to $9.55. The U.S.
     builder that bought competitor Centex Corp. in August boosted its estimated cost savings from the deal by 25 percent and said it reduced debt by $1.7 billion in the third quarter. Lennar Corp. and DR Horton Inc. gained more than 3 percent.
     The VIX, a measure of stock-market volatility known as Wall Street’s fear gauge, fell for a third day, dropping 3.8 percent.
     The index trimmed its retreat after earlier falling as much as
     7.6 percent.

188. BOP #165 : Calif. politicians always define the Law of Unintended Consequences. Brains? I doubt it.

189. 155

     dont forget about atpg at noon

     the egle trade wont work

     they beat by 3 cents— 6 vs 1 not enough to mean anything , and the absolute numbers are down from last year and qtr to qtr.

     the ceo is accruing 3.5 m per qtr for himself (bonus) which happens to be a majority of the profits.

     ga is close to 8 m per qtr, to put that in perspective, it only cost 11 m to operate the 25 ships with its 10 man crews

     ARRRGGG, z never ever let me buy a bulker stock again

190. Bill – that’s just frustrating. When does DSX report.

     Trying to stay awake through the GDP report. Boooorrrinnnnggg. May not really review it, nothing stands out. Won’t be on their call.

     IOC up next.

     HK still not reporting, a Reuters story did hit earlier saying everyone expects good thing, had about 5 positive broker quotes. Sets the bar higher than I like but I still think they make people happy with their numbers.

191. HK coming across high to 3Q guidance,

     upping 4Q09 guidance.
     upping 2010 guidance.

     Will have a stand alone piece out late tonight.

192. I wonder….
     If a hurricane is a “heat engine”, a great mixing machine that feeds on the difference between water and air temps, then the potential storm energy could be quite great even if waters are a bit cooler assuming that atmospheric temps are proportionately lower still.

     I’m no hurricane expert, aside from the historical late season storms, does this line of thinking have any creedence?

     JR

193. HK Pre Call Note is up.

     Tropical Storm Ida has formed.

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