Thursday – Oil Inventories Preview + Catalyst Watch

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Market Sentiment Watch: Red Open, then Cautiously optimistic

  • Jobless Claims: 502K vs 510 K expected ... everyone wanted to see a 4 handle.
  • HPQ buys 3Coms - techies happy with mid week merger
  • WMT - slightly ahead of EPS estimates and guidance, forecast revised up but outlook on sales is wide and so far disappointing to the Street, says its taking share in the U.S., and yesterday said it expects a tough holiday season.

In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Oil Inventory Preview
  4. Stuff We Care About Today -  Catalyst Watch, NFX, ECA
  5. Odds & Ends

Holdings Watch:

  • $10KP II:

    • $22,800
    • 47% Cash
    • The Current Holdings tab has been updated.


  • Yesterday's Trades:
    • BEXP – Sold 20 (all) November $10 Calls (QBJKB) for $1.20, up 19% with the stock at $11.13. I continue to hold the November $12.50s (although they are likely to go out worthless) and the common here.
    • SWN – Added (10) SWN $45 November calls for $1.00 with the stock down 2.4% at $44.40 on a weak day for the group.
    • WLL – Added (10) WLL $65 November calls for $0.90 with the stock at $63. I will likely punt the $60 strikes on the bit of group or stock strength and hold these along with the other $65s I already hold into next week.
    • WLT – Added 3 WLT $70 November calls (WLTKN) for $1.60, will likely punt my $60 strike calls and add to this position if the stock advances back towards this mornings highs with a market rally. Stock continues to be cheapish on 2010 through 2011 earnings ($6.48 and $8.39 respectively).

Commodity Watch:

Crude oil inched up $0.23 to close at $79.28 in volatile trading yesterday. See comments in the Oil Preview section below.  This morning crude is trading off between 50 cents and a buck on a stronger dollar, weaker equity markets and before we get the one day delayed EIA oil inventory report.

Natural gas rose $0.04 to close the day at $4.50 yesterday . We get the EIA's report on inventories tomorrow. This morning gas is trading off about a dime with weaker oil.

  • The Early Read on Natural Gas Storage: Survey says: 16 Bcf Injection.
    • HDDs were 104 last week, the coldest of the season and slightly below normal (110); and well above year ago levels (72) when we saw a 54 Bcf injection for this week of the year.
    • Over the last 10 years, we have seen a range of -48 to +54 Bcf for this week of the year as the injection season draws to a close about now.
    • Imports continue to slip, running 1.2 Bcfgpd below year ago levels.
  • Where am I for tomorrow? 15 to 20 Bcf injection. My sense is that below the 15 number and we get a small bounce, otherwise we have to wait on weather to improve.

Oil Inventory Preview


Crude: We still have the chance of a larger than expected build in the crude inventory number due to imports returning to more normal levels. That will put crude in the penalty box early but imports are less important than demand and product demand should tick up on the diesel side. If product demand is up and crude refinery through put is flat I expect less of a dent in crude.

If imports don’t move back to normal then people really have to ask where all the crude is going. This would mark the sixth week of really poor import levels. With the recent uptick in oil prices to  the high $70s / low $80s region, you would expect volumes stored at sea to move ashore. Doubly so as the forward strip has flattened.

Moreover, with OPEC output having risen steadily for the last several months as prices have risen, with Mexico’s output stabilized (sort of), with Nigeria’s output on the rebound due to an outbreak of peace, and with Russia hitting all time highs and producing more oil now than Saudi Arabia is, you have to ask where all of these barrels are going. Even the U.S. is producing more as is biggest import neighbor Canada.

On the demand side, things from parts of the world we can see are firming at best. Australia is doing well economically but that’s rounding error. Word from Europe and Japan is that demand has firmed but not really improved that much. Third world demand volumes are ticking up but that is harder to gauge. That leaves S. America, which we know to be producing more of its own supply, and China and India. If the numbers come in at the low end again I’ll start birddogging this will a little more vigor.

Stuff We Care About Today

Shelf Player Update - Part III- will be included in the Friday post.


Catalyst Watch:  This list is just starting out but it seemed a worthy addition to the site as a one stop shop for all your catalyst needs. It seemed timely to do it now, at the end of the 3Q reporting period as we enter the "so now what?" time between the quarter end and the holidays. Note that this period contains a number of conferences for companies to present one last time for the year. If you have a potential catalyst in one of our favorite names please send it along to zmanadmin@gmail.com and we'll look into it. Thanks for your help in building this list as we plan to make it a regularly updated feature. This table will be archived for future reference on the Calendar tab at upper left on the site.


NFX Confirming It's Buy of TXCO S. Texas Assets

  • NFX filed an 8K this morning regarding news that's been out for a couple of days now
  • $223 mm for "substantially all of TXCOq's assets

    • Reserves at YE2008: 81.7 Bcfe  ; TXCO puts potential reserves at close to 20 Tcfe.
    • Eagle Ford and Pearsall shales
    • 721 K net acres, 90% undeveloped

      • 628K net acres in the Maverick Basin - Eagle Ford Shale eastern side, almost entirely covered by 3D
    • 4,000 ID'd drilling locations


 ECA Conference Call: Today. 1 pm EST



Odds & Ends

Analyst Watch:

  •  Lazard initiates E&P coverage:
    • WLL at Buy with a $79 target
    • KWK at Buy with a $20 target
    • COG at Buy with a $48 target
    • XEC at Buy with a $59 target
    • CHK at Buy with a $36 target

109 Responses to “Thursday – Oil Inventories Preview + Catalyst Watch”

  1. 1
    zman Says:

    EIA oil numbers come out at 11 am EST today.

    Crude down a dollar as oil rallies on Geithner jawboning of the dollar.

  2. 2
    nifkin Says:

    Z on the upcoming catalyst’s.. well done

  3. 3
    ram Says:

    How influential is Lazard?

  4. 4
    BirdsofpreyRcool Says:

    z — Love the Catalyst Watch. Really great addition to the site. Thank you.

  5. 5
    BirdsofpreyRcool Says:

    Head Trader and Tech Trader diverge this morning…

    TechTrader = 55/45 SHORT is best odds trade for a day-trade.

    HeadTrader = mentioned yesterday that the Spoos had NEVER seen 9 days in a row of positive closes… the eminis have (in Sept), but not the Big Boys (Spoos). However, HT is going out on a limb and calling for an UP day today. Thinks the Jobless Claims + various M&A, earnings, and statements will propel us to close in the green.

    Either way, TechTraders odds are low, so not a high-conviction short-day on his part.

  6. 6
    BossmanG Says:

    Z – also think catalyst is great addition, thanks again!

  7. 7
    BirdsofpreyRcool Says:

    EXXI debt exchange will (finally) close today. There were more bonds tendered than EXXI needs, so some of the 10% bonds will go back to investors (and not be swapped into the new 16%s). That might cause a bit of selling pressure on the 10s… if investors turn around and sell what they got back.

    I continue to think these bonds are great value, as they are backed by current production (and don’t need the upside of a Davy Jones and/or Blackbeard to make them money-good). The only bad thing is that the EXXI 10s mature in June 2013… so you only get 3.5 yrs of quality time with them. Also, the bonds will turn callable on 6/10 at 105. The bad news is that you could lose them (they get called) if one of EXXI’s high risk/high return wells comes in… the good news is that would mean a 40%+ total return (if the bonds were called).

  8. 8
    zman Says:

    If you have names you’d like me to add please send them in with as long a description about the upcoming event as you’d like to zmanadmin@gmail.com

    Analyst Watch: NFX target price upped at H.W. to $71 from $57. Good firm and a big upgrade.

    Lazard – Ram – I don’t know anymore, used to be just below the smaller tier energy names like a Johnson Rice or a Raymond James.

  9. 9
    bill Says:

    I also like the catylst watch. Comments..

    sd crusader deal will slip to dec.
    A hearing has been scheduled for 12/15

    mmr- what helps them also helps pxp

    Possible additions

    atpg, titan connected and flowing late q1
    mcf- new well nautilis late dec early jan

  10. 10
    BirdsofpreyRcool Says:

    Seems “energy” is not the preferred sector today. All eyes on tech, it seems.

  11. 11
    BirdsofpreyRcool Says:

    That was just an observation… and it comes with a reminder to “buy on down days, sell on up.” So, at the right prices, could be an add-day.

  12. 12
    zman Says:

    Gman goosed the dollar overnight and we have inventories to get through so I’m not surprised.

  13. 13
    bill Says:

    ung near 52 week low
    oil & nG still down


  14. 14
    zman Says:

    Thanks Bill

  15. 15
    zman Says:

    NG – will be volatile until weather sits in. Could care less what UNG does as that is front two months and laden with costs and just a bad deal all around. The strip is higher (about $5.10 right now) with next December trading over $6. Your lower cost guys can do some good hedging in here now and ride out the dips.

    Strip prices:


    Chart of the 12 month strip:


    Its going to take time but that looks like a rounding bowl base to me.

  16. 16
    BirdsofpreyRcool Says:

    What’s moving today —

    3Com, Aegon, Anheuser-Busch InBev, Brocade: U.S. Equity Movers
    2009-11-12 14:52:50.629 GMT

    By Sapna Maheshwari
    Nov. 12 (Bloomberg) — Shares of the following companies are having unusual moves in U.S. trading. Stock symbols are in parentheses and share prices are as of 9:50 a.m. in New York.

    3Com Corp. (COMS US) surged 32 percent to $7.49. Hewlett- Packard Co., the world’s biggest personal-computer maker, said it will buy the networking equipment maker for $2.7 billion, or $7.90 a share in cash.

    Aegon NV (AEG US) lost 4.8 percent to $7.74. The Dutch owner of U.S. insurer Transamerica Corp. reported a decline in third-quarter underlying pretax earnings, which exclude investment swings.

    Alliant Techsystems Inc. (ATK US) gained 1.3 percent to $84.35. The largest supplier of ammunition to the U.S. military said fiscal second-quarter profit increased 18 percent on higher sales of commercial and military ammunition and that full-year profit will be higher than Alliant previously expected.

    Anheuser-Busch InBev NV (BUD US) fell 2.7 percent to $47.32. The world’s largest brewer reported slowing third- quarter profit growth after cost cuts failed to offset declining beer sales in markets from the U.S. to Europe.

    Applied Materials Inc. (AMAT US) lost 1.9 percent to $13.
    The world’s biggest maker of chip equipment reported its first profit in a year during the fiscal fourth quarter after a pickup in orders. The company also made plans to cut as many as 1,500 jobs as it adjusts to a gradual recovery.

    Brocade Communications Systems Inc. (BRCD US) dropped 12 percent to $8.17. The largest maker of networking gear that connects storage computers was cut to “neutral” from “overweight” at Piper Jaffray Cos. and to “hold” from “buy” at ThinkEquity LLC and Lazard Capital Markets Ltd.
    Analysts cited a lost potential partnership with Hewlett-Packard Co., which investors had speculated would buy Brocade after the Wall Street Journal reported last month that the company was shopping itself.

    BT Group Plc (BT US) added 5.5 percent to $24.73. The U.K.’s largest fixed-line phone company raised its full-year cash flow target after cutting jobs. The company also plans to raise its full-year dividend by about 5 percent.

    Buckle Inc. (BKE US) fell 4.3 percent to $28.99. The U.S.
    casual-clothing retailer with 401 stores got a “sell” rating as analysts at Goldman Sachs Group Inc. started coverage.

    China GrenTech Corp. (GRRF US) added 3.3 percent to $5.07.
    The wireless products and services company said it earned 12 cents a share in the third quarter as sales surged 86 percent from a year earlier.

    Ctrip.com International Ltd. (CTRP US) jumped 13 percent to $72.37. China’s biggest online-ticketing agent reported third- quarter profit excluding some items of 44 cents a share, exceeding the average analyst estimate by 18 percent.

    EnCana Corp. (ECA US) lost 1.6 percent to $57.11. Canada’s largest natural-gas producer, said third-quarter profit plunged as prices for the home-heating and industrial fuel fell.

    Green Mountain Coffee Roasters Inc. (GMCR US) fell 10 percent to $67.95. The Waterbury, Vermont-based roaster said it will probably earn 15 cents a share at most in the first quarter. That’s less than the 23-cent average of three analysts’
    estimates compiled by Bloomberg.

    James River Coal Company (JRCC US) dropped 8.2 percent to $20.13. The Richmond, Virginia-based company said it plans to sell $125 million convertible senior notes due 2015, some of which will be used to repay debt and end its credit facility.

    JDS Uniphase Corp. (JDSU US) rose 10 percent to $7.93. The maker of telecommunications test equipment was picked by CNBC’s “Mad Money” television show host Jim Cramer on product demand.
    Cramer said the company’s test-equipment and optical- communications businesses are doing well, and that the company is a “real innovator in the market.”

    Mobile TeleSystems (MBT US) added 2.4 percent to $51.19.
    UBS AG raised Russia’s largest mobile-phone company to “buy”
    from “neutral,” citing its “bullish” stance on Russian economic growth in 2010, the strength of the ruble and “further declines” in Russian bond yields.

    Youbet.com Inc. (UBET US) jumped 12 percent to $2.69.
    Churchill Downs Inc. (CHDN US) agreed to acquire the online- betting site for horse racing in a transaction valued at about $126.8 million.

  17. 17
    zman Says:

    Indexes all going green now after the President assured us he’s on the case. LOL.

    Guy on CNBC making my point about earnings potential for 2010 being higher than analysts will see.

  18. 18
    zman Says:

    S&P back over 1100

  19. 19
    zman Says:

    ECA results not exactly thrilling people, call this afternoon.

    Getting a few more catalyst thoughts in email, keep em coming.

    Stocks just drifting with the market. Oil inventories in 50 minutes, NG inventories tomorrow.

  20. 20
    Dman Says:

    Z – ya can’t have too many catalysts, that’s fer sure. So Catalyst Watch = XLent. The mystery for me is how you find the time to put all the info in the daily post. I have to assume that all the interns are in harness.

  21. 21
    zman Says:

    Dman – I’m pro child labor; just doing my part to get the employment numbers up.

  22. 22
    zman Says:

    WLT taking a hit along with the other coals which I assume are down due to NG falling again. I may add a little more of the $70s after the oil numbers come out.

  23. 23
    Patipati Says:

    From a superb chartist — Chart Addict:

    http://chart.ly/f3addw $BEXP – Rising wedge. Apex still not fully developed. Give few days for decisive move

  24. 24
    zman Says:

    Thanks Pati, I appreciate the input.

  25. 25
    Nicky Says:

    Morning all. Somethings gotta give. Dollar flying, oil tanking, imo indices should be down too.

  26. 26
    zman Says:

    Morning Nicky, how’s the wave count on the S&P500?

  27. 27
    bloodystupidjohnson Says:

    Risks in owning MCF:

    1. Reinvestment risk – can they find enough new production to replace the production from their two fields. This is the biggest risk in owning the stock.

    2. Geology risk – since they get all of their current production from two fields, it would be a problem if for some reason the geology of the field would change. This is a very minor risk, but then again the probablity of it happening is not zero.

  28. 28
    Nicky Says:

    We are in a wave iv consolidation. I ‘expect’ to see market down to around 1088. Either that or iv is done and up we go yet again.
    Cycles are very choppy over the next few days. We need to see a cycle low around 17th and then another high after the 18th and then down into the end of November.

  29. 29
    zman Says:

    Thanks Nicky, support and resistance levels?

  30. 30
    Nicky Says:

    support at 1095,1092,1088. Resistance 1101,1103,1108.

  31. 31
    zman Says:

    Muchas gracias

  32. 32
    BirdsofpreyRcool Says:

    z and Nicky — it might be useful to have a chart, showing Nicky’s current thinking on support and resistance… just to keep around as reference.

    EXXI doing what I thought it would do today, on news of the debt exchange closing… moving up.

  33. 33
    BirdsofpreyRcool Says:

    EXXI = reduced balance sheet and cash flow risk… leaves oily production (leveraged by debt) to support current stock price (around $2.20) + upside from participation in both Blackbeard and Davy Jones wells.

    But, this is a high-beta stock to oil prices… if oil falls 10%, EXXI will fall 20%. EXXI stock is not for the faint of heart.

  34. 34
    zman Says:

    IEA Watch:

    In its monthly Oil Market Report, the IEA forecast global oil demand to average 84.8 mm bopd in 2009, up 1.7% year on year and 210,000 bopd higher than in its last report.

    In 2010 demand is expected to rise to 86.2 mm bopd, up 1.6% compared to 2009 and and 140,000 bopd higher than previously expected.

    IEA sited rising demand from China and Saudi Arabia and other non-OEDC country growth.

  35. 35
    zman Says:

    re 33. Call option w/o expiration unless they end up BK which is less likely now.

  36. 36
    bloodystupidjohnson Says:

    Z, do you have any views on the Cardium oil play in Canada? Companies are using the Bakkan horizontal drilling techniques in rejuvenating this oil trend.

  37. 37
    zman Says:

    BSJ – sorry no.

    Oil #s in 1 minute.

  38. 38
    BirdsofpreyRcool Says:

    EXXI equity is what I call a “no tears” trade. It has the potential to go up… quite a bit. But if it doesn’t… or if it falls, just keep in mind “there’s no crying in baseball…”

  39. 39
    zman Says:

    EIA Oil Inventory Report:

    Oil at $77.25 pre report, down $2

    Crude: UP 1.8 mm barrels
    Gasoline: UP 2.5 mm barrels
    Distillates: Up 0.3 mm barrels

    Crude imports: 8.7 mm bopd, still low
    Utilization was low, left throughput at new low level, causing the slightly higher than expected build.

    Gasoline: 8.8 mm bpd, backed off from last week, not terrible for this time of year
    Distillates: 3.5 mm bpd, flat with last week, hugging the seasonal lows.

    Nutshell: more bearish than bullish in the short term, distillates continue to improve relative to year ago levels. Gasoline is waffling. Crude imports remain very low so when refiners do crank back up stocks will fall.

  40. 40
    zman Says:

    Adding to 39, the bigger than expected number is still due to an imports increase as they went from very very low in the last report to just very low in this one. Pretty blah report other than the fact that imports are stuck in low gear.

  41. 41
    zman Says:

    BSJ – who are the players there in #36?

  42. 42
    zman Says:

    Oil is taking a hard look at the recent trading range lows. This kind of action should seal the deal on an OPEC thoughts of officially raising production. U.S. consumption of crude for refineries is at record low levels for this time of year baring hurricane outages. Just no reason to bump it up and while OPEC says they like the 70 to 75 range for now, they won’t do anything to jeopardize a move back down into the $50s which, with continued weak demand, an output hike could cause.

  43. 43
    VTZ Says:

    BOP – Do you believe we’ve made a low in the USDX?

  44. 44
    bloodystupidjohnson Says:

    Almost all Canadian companies and alot of the trusts that are going to have to become regular corps in the next few years.

    A list includes Arc Energy, Penn West Energy, Berens Energy, Bonterra Oil and Gas, Midway Energy, Nexstar Energy, True Engergy, Enerplus Resources Fund and Nal Oil and Gas are some of the names that are active or hold acerage in the area.

  45. 45
    zman Says:

    BSJ – thanks, I don’t track any of those names so I’m afraid I won’t be much help.

  46. 46
    bloodystupidjohnson Says:

    Many people in the industry, Papa, Aubrey, etc… say that using the some of the info gathered from first drilling gas in the Barnett now oil in the Bakkans, are starting to open up some of the tigher rock formations such as the Cardium.

  47. 47
    bill Says:


    i see the largest risk as

    1. ng prices and
    2. a string of dry holes

    if they hit 1 out of 4 they replace their production

    every 1 dollar move in ng pushes up pv10 by 150 to 200 m or 10 to 13 per share

    quarterly volumes lost (produced) is only 50 cents a share

  48. 48
    VTZ Says:

    and Peyto BSJ, but they’ve only been exploiting gas in that area to date.

  49. 49
    RMD Says:

    bill, thanks for headsup last night re: different pricing on MCF’s PV-10. 9/30 strip (eyeballing #15 above) looks like $5.90, up 51% from the $3.89 used 6/30; this would account for the 55% increase from $.9B to $1.4B.
    I’ll read more carefully!

  50. 50
    VTZ Says:

    Cardium is one of the tight gas mainstays in Alberta. It’s one of the mature gas developments in Alberta.

    I’m assuming that people are expecting to use their existing drill holes for cheaper completions.

  51. 51
    BirdsofpreyRcool Says:

    VTZ — #43… depends on where the US deficit is headed. Geithner’s comments about paying down debt with TARP money is only a drop in the swimming pool. But it means that the OPR (Obama/Pelosi/Reid) Triumvirent is not immune to the Balooning Elephant in the Room. That is my optimistic read on it, anyway.

  52. 52
    bloodystupidjohnson Says:

    MCF is simple to value:

    Current reserves by some number + 70 leases bought for 35 mill that becuase of seismic data some people think are worth 100 mill + cotton valley properties + cash on the balance sheet.

    That it, no stock options, no debt, no hidden fees, etc.

  53. 53
    BirdsofpreyRcool Says:

    let the M&A continue… PLA + ICON?

  54. 54
    bloodystupidjohnson Says:

    Currently in the Cardium they are finding light oil. IP rates of 250 BOE/d and sustained rates of over 100 BOE/d for 6 to 12 months. Some of the above firms say they see a IRR of over 50% at 65 BBl WTI.

  55. 55
    kiaora Says:

    Hi all, Is anyone adding to the Mar 10 ATPG calls? Or is it a little too soon?

  56. 56
    VTZ Says:

    BOP – 51

    Don’t we all know which way the deficit is headed? 1 trillion + for 10 years?

    You can’t seriously tell me you think the deficit is going to be any better than that (?).

    You also can’t seriously tell me that the USD is stronger than pre-crisis, pre-“flight to safety” nonsense (?).

    It’s all just jokes. Geithner deserves to get laughed at every time he opens his mouth, the students in China are right. I almost guarantee they use the TARP money for TARP2/TALF2/stimulus 2/3/4…

    There is:
    -no reduction in deficits coming
    -no raising rates
    -no serious attempts reductions in spending
    -no way they can stop QE
    -no job creation
    -no improving default rates
    -no improving consumer

    No way out but to print. Good luck going long against the world shorting the dollar as the carry trade currency of choice.

  57. 57
    zman Says:

    Crude down $2.40 at 76.90… the 76.55 level is the bottom of the recent range. Weakness coming on a day when the dollar is bouncing and the inventories report had nothing in it for bulls may mean we break that level and go back to trading mid 70s. Fine for the companies as business goes but it may put the can on the November calls into next week. Would like to see oil hold the bottom of this recent range. Also note that it will be difficult for the S&P to forge ahead without the energy complex acting better. We get trade balance and consumer sentiment tomorrow.

  58. 58
    BirdsofpreyRcool Says:

    VTZ — #56… if you assume that i believe what Geithner and OPR say, you have made the wrong assumption. Just pointing out what I think it would take to stop the USD slide.

    Do i think those 3 Stooges will do that? [no printable response…]

  59. 59
    zman Says:

    56 = well said.

  60. 60
    PackMan Says:

    Dollar is higher; market is holding up better than the dollar move would indicate. Given the size of the dollar move, I would expect the market to be down more.

    REITs, Tech, Financials relatively strong.

    UUP at 22.75 (recall our discussion yesterday).

  61. 61
    BirdsofpreyRcool Says:

    American Association of Individual Investors’ Sentiment Survey
    2009-11-12 17:00:00.536 GMT

    American Association of Individual Investors’ Sentiment Survey

    Nov. 12 (Bloomberg) — The following table provides the results from the American Association of Individual Investors’
    weekly survey of stock-market sentiment. The survey asks members for their opinion about the market’s direction during the next six months.

    This Week Last Week

    Bullish 38.62% 22.22%

    Neutral 22.76% 22.22%

    Bearish 38.62% 55.56%

  62. 62
    zman Says:

    Oil down $2, just where it was prior to the EIA report. The dollar continues to soar. After all the G20 talk last weekend about stimulus until the sun winks out, it is somewhat amazing Geithner can inspire such a rally.

  63. 63
    zman Says:

    I’ve got UUP up 1.5% now. I’m with V, give me a reason that’s not technical or Timmy for the rally?

  64. 64
    zman Says:

    Guess I should have seen the dollar strength coming. President heading to China tonight, Timmy already in Asia. President’s desire to appease the Chinese who hold dollar denominated debt and want to sell the U.S. dry bulk loads of GI Joe’s with kung fu grip. With a stronger dollar it makes selling those easier and that debt worth more. So the comments are all orchestrated in advance of the President’s meeting, just like not meeting with the D-Lama was. And when you ask the Chinese to float the yuan get ready for the big, uncomfortable silence in the room.

  65. 65
    Dman Says:

    BOP – your Ballooning Elephant made me imagine a scene where there’s an inflatable elephant in the WH that just keeps getting bigger and Geithner is being pressed against the window by the elephant while trying to have a conversation with Mr Obama, who is ignoring the expanding elephant … as one does in those sort of “expanding elephant in the room” situations.

  66. 66
    bloodystupidjohnson Says:

    A friend of my who follows and invests in bankrupcies via bonds and such, thinks that NFX got a hell of a deal with the TXCO eagle ford properties. He says that NFX got below market value for these assets.

  67. 67
    zman Says:

    BSJ – on a proved reserves basis they paid a goodly sum. When you look at the potential reserves its almost free. The NFX guys are good buyers, EEX deal a few years back was one of their bigger home runs. Very smart kids there.

  68. 68
    bloodystupidjohnson Says:

    He says they bought this for about 550/acre where Swift just entered into a JV with HK for about 3000 per acre.

  69. 69
    zman Says:

    Not sure which number he’s using for acreage as there is the Maverick and Marfa basins in the deal. Also, the acres are going to be pretty varied as shown by well results to date so you can’t say the two deals are comparable, just not that simple. I think NFX got a good deal. I don’t know if HK got as good a deal, I don’t think so but it was much smaller anyway and they have said they are only targeting areas where they see higher potential based on offset results and other data vs the greater Eagle Ford Shale play which is quite large. If HK is right, then paying up for the better acreage, will mean better IRRs if that means their EURs tend towards the upper end of the range. Note that in the TXCO presentation, they have not been seeing the bigger end of the IP spectrum that HK and PXD have reported.

  70. 70
    bloodystupidjohnson Says:

    That was the same arguement I was using to him that he can’t lump all acreage together, it is like trying to lump class a with class b properties together.

  71. 71
    zman Says:

    Re 70. Right, still looks like a good deal, lots to pick and chose from on all that acreage, could be full of sweet spots as well. I’d like to see them break out where they think its oilier and go there first.

    Dollar all over the place now, very bouncy.

  72. 72
    reefguy Says:

    txco- important note: although second tier eagleford, much of it may be HBP

  73. 73
    zman Says:

    Guy talking about the dollar on CNBC basically said Treasury’s comments about TARP fund repayment by banks and other strong dollar talk is peanuts compared to the ongoing spend rate and to things like the cost of healthcare reform. “billions vs trillions”

  74. 74
    zman Says:

    Reef – hear ya there. Also, have heard several cc comments that E.F.S. expirations are further out than Haynesville, not nearly as big a concern to the companies to drill it up to get it held.

  75. 75
    zman Says:

    Crude touched $76.56, the low for the recent range dating back to the mid October breakout.

  76. 76
    zman Says:

    VLO recommending investors reject a minority interest bid made below the current price by TRC Capital.

  77. 77
    zman Says:

    Volumes in the E&P stocks are picking up today on/near the lows of the day. Hmmm.

  78. 78
    zman Says:

    Cold air:



  79. 79
    BirdsofpreyRcool Says:

    #73… the Ever-Expanding-Elephant… and thank you for the visual, Dman. If I can’t laugh, I just might cry.

  80. 80
    1520sbroad Says:

    #77 – that’s a plus in my book. Back and fill.

  81. 81
    BirdsofpreyRcool Says:

    Comments from an institutional buy-side friend… THIS is what I rave about! This is real and this is what is happening.

    Emerson Electric was founded in 1890. Their current enterprise value is just over $34 billion and they have annual sales in excess of $20 billion. According to their website, the company has “more than 140,000 employees and approximately 255 manufacturing locations worldwide.” Approximately half their sales are outside the US and they are headquartered in St. Louis, MO. Their CEO is a classic, Midwestern, low-key leader… and the following is an excerpt from a presentation he made yesterday:

    o 2010 will be better than 2009 but very challenging.
    o …”what I think Washington is doing right now. Washington is doing everything in their manpower capability to destroy U.S. manufacturers, fundamentally destroy U.S. manufacturers.”
    o “Cap and trade, medical reform, labor rules, whatever they want to do, raise taxes. They’re just going to destroy jobs. We have already reached 7.3 million jobs in this downturn. We’re going to 8. That is a summation of the last four downturns.”
    o “So what do you think the recovery is going to be in jobs. It ain’t going to be very good. I listen to everything Washington is doing – wasting money, raising the deficit to $10,12 trillion – the debt level to $10-12 trillion, going to $23 trillion; raising taxes; putting regulations and requirements on me as a manufacturing company.”
    o “What do you think I’m going to do? I’M NOT GOING TO HIRE ANYONE IN THE UNITED STATES. I’M MOVING. So they’re doing everything possible to destroy jobs, in my opinion. …we employ 125,000 people worldwide. So I do know what the (expletive) I’m talking about.”
    o “…what are these guys doing with our money? They’re wasting trillions of dollars, trillions of dollars”.
    o “So what are they going to do…jobs will go…new medial healthcare…cap and trade, tax me, jobs will go. What they’re doing now ain’t working.”
    o “…mature markets are going to have a very difficult recovery.”…same thing in Japan.”

    Pretty stunning comments from a $30bln+ public company CEO in my opinion.

  82. 82
    zman Says:

    BOP – that sounds like the VLO CEO’s comments as well.

  83. 83
    BirdsofpreyRcool Says:

    z — I think more CEOs need to step up to the plate and make the point that our Emperor has NO CLOTHES.

  84. 84
    zman Says:

    Crude trying to close around $77, about that low. Tomorrow all depends on the dollar unless gas really surprises.

  85. 85
    zman Says:

    XNG off 3x the S&P, OIH off 4x that. Stocks just sliding sideways for the most part with a few exceptions like WLL which are weakening. Ugly. Not going to belabor the point. Doing some reading.

  86. 86
    BirdsofpreyRcool Says:

    y’know… there is “Ugly” and there is “UGLY.” This only qualifies as ugly. I have stocks on my screen that are green. This is just normal back-and-fill. Could last for a few, but don’t see this as the beginning of a return to the Bear Cave. Just MHO, of course… PackMan may disagree with me 😉

  87. 87
    Jerome Blank Says:

    If you’re bullish on HK, this is the spot to watch, now trading at the 200 day daily Moving avg, goes back on a sell signal and breaks major support at $21…if HK is going to find support its here…

  88. 88
    choices Says:

    Watching ATW-getting hammered today, >5%, but may be a tad early.

    NFX>5%, ATPG>4%,

    As BOP says, could last a few….

  89. 89
    choices Says:

    #87, seems that “the” major question is when NG finds a bottom.

  90. 90
    zman Says:

    Choices – I think its more worry over the dollar and broad market than it is NG. NG was down early, bounced a bit and no one noticed, traded off to close down almost as much as crude late. Stock have weakened since then with the broad market. May take awhile to get gas to bottom. Other than the weekly numbers, which should be fairly uneventlful and not really tell people much about what’s going on right now you won’t get much in the way of data points until the month ends. So its up to the weather for now which is getting cooler again but not bitterly cold.

    As to the ugly comment, no I don’t think it is bear cave time either, just comment on the timing of this swoon in relation to the end of the Nov expiration next week. Not kind.

  91. 91
    tomdavis12 Says:

    Z: YOY rail traffic down 15.3% for OCT. Slightly worse than Sept.

  92. 92
    RMD Says:

    on EMR c CEO comment; a Washington watcher tells me climate control is dead in the Senate, passing healthcare is a real problem, tax increases will get proposed but passed in an election yr. is questionable. POTUS is lobbying in public rather than behind closed doors so it looks like more than is actually is. FWIW.

  93. 93
    zman Says:

    RMD – please send me that shale piece again, thanks.

  94. 94
    ram Says:

    It seems that E&P’s didn’t participate as well on the last thrust up but are leading the way down. Could this be a hint that money is moving out of the sector?

  95. 95
    zman Says:

    Ram – It may be.

    Beerthirty come early.

  96. 96
    jiveyjr Says:

    HK kissing the 200 simple moving avg.

  97. 97
    john11 Says:

    16:09 ET 11/12/09 SD SandRidge Energy abandons planned acquisition of Crusader Energy ($9.50)

    The company announced that it is no longer pursuing the acquisition of Crusader Energy Group Inc. As contemplated by the bid procedures approved by the Bankruptcy Court, additional bidders have submitted proposals to acquire Crusader. The company does not intend to participate in the auction triggered by those proposals. The company expects to receive payment of the agreed upon break-up fee of $7M. All other guidance for 2009 and 2010 issued on November 5, 2009 remains unchanged.

  98. 98
    zman Says:

    SD bid up on that. It’s a shame they could not pull it off.

  99. 99
    Jerome Blank Says:

    Technically speaking, SD is trading on the injured list, SD closed below its 200 day SMA today and is currently on a P&F sell signal from the break below $11.50…SD fans, we need a strong rally back thru the 200 day SMA tomorrow, SD three box reverses from here on a print of $11 which would be encouraging, but there is now difficult resistance at the $11.50 thru $12.50 zone…

  100. 100
    bill Says:

    It was too good to be true

    they kept guidance for production at 120 bcf for 2010 without crusader 10 bcf so in essense they increased 2010 guidance by 10

    tudor slammed them for lower production with crusder in the numbers

  101. 101
    zman Says:

    SD is probably dead money for a time. Good hedges, good assets, production constrained for a time will bore the analyst crowd.

  102. 102
    BirdsofpreyRcool Says:

    RMD — thanks for #92… I can only “hope.”

  103. 103
    BirdsofpreyRcool Says:

    AAAAAAAAAAAAAAARRRRRRRRGH… This didn’t help the mrkt today.

    Orszag Says Health Bill May Have Capital Gains Tax (Update1)
    2009-11-12 22:34:54.825 GMT

    By Ryan J. Donmoyer and Kristin Jensen
    Nov. 12 (Bloomberg) — White House Budget Director Peter Orszag said he expects legislation to overhaul the U.S. health- care system to be completed this year, possibly with a new tax on capital gains to help fund it.
    “We think we’re going to get this done before the end of the year,” Orszag said today at the Bloomberg Washington Summit. “That’s the goal, and I think we will get there.”
    Lawmakers are trying to craft a measure to cover tens of millions of uninsured Americans while curbing medical costs.
    They’re wrestling with whether to create a government-run insurance program, whether to require employers to cover workers and how to pay for plans that top $800 billion over 10 years.
    One new idea that’s “in play” is to apply Medicare taxes to capital gains earned by wealthy Americans, Orszag said. That would allow lawmakers to make up some of the money lost by scaling back a proposed levy on high-end insurance plans.
    Aides to Senate Majority Leader Harry Reid have sought input on the idea from staffers for senators such as Budget Committee Chairman Kent Conrad, a North Dakota Democrat, and Olympia Snowe of Maine, the only Republican senator to vote for the legislation, according to two congressional aides who spoke on condition of anonymity.

    Details of Proposal

    Reid’s proposal would apply Medicare taxes to non-wage income earned from capital gains, dividends, interest, royalties and partnerships for U.S. couples earning more than $250,000, the aides said. He’s also considering an alternative that would simply increase the 1.45 percent Medicare tax on salaries of couples who earn more than $250,000, one of the aides said.
    Medicare, a government-operated insurance program for the elderly, is funded by a 2.9 percent hospital insurance payroll tax. Half is paid by the worker, half by the employer. There is no cap on wages subject to the levy.
    Dividends and capital gains are now taxed at 15 percent, which is scheduled to increase to 20 percent in 2011. Subjecting them to the Medicare tax would increase the levy to 21.45 percent after 2011. The top two income tax brackets are scheduled to be 36 percent and 39.6 percent after 2011.
    Lawmakers are seeking new sources of funding as they prepare to make the biggest changes to U.S. health care since the creation of Medicare in 1965. Their proposals, backed by President Barack Obama, call for all Americans to get insurance, with new purchasing exchanges and subsidies to help.
    The House passed its version of the bill 220-215 on Nov. 7 and included a 5.4 percent income surtax on individuals earning more than $500,000 and couples making more than $1 million. That “millionaire’s tax” has drawn fire in the Senate.

    Cadillac Plans

    Yet the Senate’s idea for a 40 percent excise tax on high- end, Cadillac health benefits hasn’t found consensus, either.
    Critics say the tax would hurt rank-and-file workers and violate Obama’s pledge not to raise taxes on couples earning less than $250,000. A Senate Finance Committee plan would generally apply the tax to family benefits worth more than $21,000.
    An increased Medicare tax would also address demands by some senators including Snowe and Senate Finance Committee Chairman Max Baucus that the bill raise taxes only in health- related areas.
    “This would mean a significant shift on the part of Senate leadership,” said Alan Charney, program director for USAction, a Washington-based advocacy group whose board includes labor union officials. “It would move the Senate leadership closer to the House” and ask the wealthiest Americans “to pay their fair share” after years of tax cuts, Charney said.

    $461 Billion

    The House income-surtax plan would raise about $461 billion through 2019 to help fund health care, according to an official estimate by the nonpartisan congressional Joint Committee on Taxation. The proposed Senate tax on Cadillac plans would generate $201 billion over the same period.
    The proposal to apply Medicare taxes to non-wage income is modeled after a plan proposed in July by the Washington research group Citizens for Tax Justice and considered by the Senate Finance Committee.
    Jim Manley, a spokesman for Reid, said “no decisions have been made” and wouldn’t comment on the Medicare tax proposal.
    Conrad spokesman Steve Posner and Snowe spokeswoman Julia Wanzco didn’t immediately answer questions.
    House lawmakers briefly weighed increasing or expanding the Medicare tax, a House staffer said. The idea was rejected because lawmakers concluded they may need to increase the payroll tax in the future to pay Medicare benefits that are projected to outpace revenue, the aide said.

    Business Roundtable

    As Congress works to find consensus on legislation, the Business Roundtable today urged adoption of an overhaul that meets its goals. The group, which says its member companies provide health coverage to more than 35 million Americans, released a report showing that “effective reforms” could slow health-care costs by as much as $3,000 per employee by 2019.
    Still, the report raised concerns about aspects of the pending bills, including the government-run insurance program, or public option. The report also concluded that any bill must have a strong requirement that all Americans get insurance.
    “Reform done wrong won’t work and could make a bad situation much worse, in which case Business Roundtable could not support the bill,” Eastman Kodak Co. Chief Executive Officer Antonio Perez, chairman of the Washington-based group’s consumer health and retirement initiative, said in a statement.
    The group said it would work with Congress and the White House to improve the legislation.
    The report “makes clear the steep price that American businesses stand to pay if we fail to act,” Obama said in a statement. “The potential benefit for America’s businesses is just another reason why we can’t afford delay or political games as this process moves forward.”

  104. 104
    PackMan Says:

    BOP – 83 – good stuff. The problem w/ CEOs is that too many are self interested like that big fat failure Jeff Immelt. If CEO and his company wants in w/ Obama; wants in on BS green economy; wants in on gov’t largesse; and is a donor / supporter; wants to be on some high falutin White House Advisory Board, they will keep their big mouths shut or they will hype all the Washington BS nonsense going on.

    That’s what Immelt does.
    Hell, even Buffett does it.

  105. 105
    PackMan Says:

    86 – hey BOP, what do I know ? I’m still wondering what the DOW is doing up at 10,200 and SPX at 1087.

    For now; dollar dollar dollar.

  106. 106
    PackMan Says:

    I cannot wait for these tax happy idiots to get bounced out of Washington !

  107. 107
    BirdsofpreyRcool Says:

    From the new (to me) Bedtime Market Muser… (you’ll have to tell me if you like his stuff) —

    The Lost Generation

    One of the fears expressed during the past year was that we would lose a generation of investors. When 2009 commenced, few players in the market believed the S&P 500 had the potential to achieve the levels of today. As fears of equity sugar highs and bubbles percolate in the current environment, we have been taking inventory to see if we are missing the bubble. Usually, we are among the cynics. Last week, we mentioned the pessimism of the AAII Sentiment report. Another important pulse point is mutual fund flows. The Investment Company Institute (ICI) publishes the trend of long term investment flows into Equity funds, Bond Funds and Hybrid Funds. ICI also publishes the money market data that is commonly used to judge cash on the sidelines. Money Market Assets began ramping up from the $2.5 Trillion level in the summer of 2007 as the credit crunch became apparent. They peaked at $3.9 Trillion in January of this year. Subsequently, they have dropped to $3.33 Trillion. With all of that cash coming out, one would think that some of it may have found its way to the equity funds but it has not.

    Perhaps that generation is lost because, despite the 65% rally in this market off its March low and the very real possibility that it was a generational low, investors continue to sell this market. Equity funds have experienced net outflows of $18 Billion for the year (refer to table), which followed 2008’s $233 Billion in outflows. That $18 Billion in outflows includes $25 Billion in inflow into Foreign Equity funds, which means that Domestic Equity funds have experienced $40 Billion in outflows this year. For domestic Equity funds, 2007 was also a negative flow year, as selling picked up in August as the credit crisis unfolded. So we must ask, where have the flows gone? It is probably not a surprise that Bond funds have become the mutual fund of choice with year to date inflows of $373 Billion. Between the lack of issuance in 2008 and the first half of 2009 and those types of inflows, it is no wonder that credit has rallied across the board.

    In an attempt to depict how these flows have developed during the credit crunch, recession, bear market, and early recovery, we have plotted cumulative tallies from the start of 2007 (see charts). Again, we hardly see the need for the bubble talk. Time and history will determine whether March was a generational low, but a 65% rally does give credence to the fact that it was some type of important and even historic low. It is interesting that despite the market establishing such an important low, the year is on pace to be another net outflow year for Equity funds, especially domestic ones. It also helps to serve the point that even if investors are lost, the market can still rally. What are the implications if the investors are actually found? Maybe the bubble talk will gain some real credence but that seems a long way off.

  108. 108
    BirdsofpreyRcool Says:

    PackMan — #104… exactly! And Washington knows that. They want all of us to come begging for party favors. It’s called Power and Control. Pelosi is just giddy with it.

    (I know I’m not supposed to talk politics… but it permiates everything we do and are these days. You can’t just sweep it under the rug and pretend to be polite. The Elephant in the Room has gotten too big.)

  109. 109
    ciri ciri terkena sipilis Says:

    Ciri Ciri Sipilis Mulai Sembuh


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