T.G.I.F.

Posted on by zman

 

 

Market Sentiment Watch: Lazy Friday. Retail sales data and thoughts of intervention in the Greek situation over the coming weekend are driving equity futures higher yet again this morning. We get wholesale inventories at 10 am EST but that should hold little sway over this market which remains caught up in a slow melt higher with only little hiccups and slight correction fears at the moment. Not much in the way of energy news left this week although it has been eventful with BEXP, EOG, and SSN making life interesting.  TAT should continue that trend today as they have signed a deal with the Turkish Petroleum Corporation for exploration and production in Turkey (more details later today but this could lead to accelerated growth from the country). DJIA earnings start next week with AA as usual leading the onslaught starting Monday after the bell. Earnings expectations are already high so top line growth and outlook will be key. Disappointments will be dealt with severely. Energy land earnings come a little later but first we will see a plethora of presentations from IPAA OGIS next week giving small, mid cap, and one or two of the large cap E&Ps a chance to impress us before they release 1Q numbers.


In Today's Post:

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

Holdings Watch

ZCAT (Zman Catalyst portfolio)

  • $17,000
  • 51% Cash
  • Positions are updated on the ZCAT, ZIM, ZLT page.
  • Yesterday’s Trades:

    • Added (5) BEXP May $15 Calls for $3.50.

    • Added (10) BEXP May $20 Calls for $0.70 on the mid, both with the stock at $18.10. The deal was oversubscribed and I think there will be follow on interest. They speak at IPAA next week which should give them an opportunity to layout their accelerated Bakken and Three Forks development plan and they should have 3 more wells to announce in the next 2 to 3 weeks.

    • Sold the last (10) BEXP $17.50 April calls for $1.50, up 618%, with the stock at $18.90. I continue to own the May calls taken earlier today and the common.

ZIM (Zman Inefficient Markets portfolio)

  • $17,900
  • 74% Cash
  • Yesterday’s Trades:
    • EOG – Sold half (20) of the EOG April $110 Calls for $1.15, up 271% since yesterday’s entry, with the stock at $107.10. I plan to sell the other half later today or tomorrow along with the May $105s. I continue to hold the April $100s in the ZCAT.

 

Commodity Watch

Crude oil eased $0.49 to close at $85.39 yesterday on a slightly stronger dollar.  This morning crude is trading up 50 cents.


Natural gas fell $0.11 to close at $3.90 yesterday after the EIA reported an essentially in line storage number (see below). This morning gas is trading up a few pennies.


Natural Gas Storage Review


ZComments: We're in the heart of the shoulder season (not a lot of heating demand left, not a lot of cooling demand yet) and storage is building a little bit quickly to be an help to gas prices. This is typical and while I believe supply is lower than the EIA has recently stated (and so does the EIA) it is still elevated.


 

Stuff We Care About Today

Catalyst Update - As always, new additions are highlighted in yellow.

 

Odds & Ends

Analyst Watch:

  • BEXP - Jefferies ups target from $19 to $23, keeps Buy. This was one the managers of the deal so their opinion at the moment my be taken somewhat with a grain of salt.
  • CLR - Jefferies ups target from $44 to $49, Hold. 

143 thoughts on “T.G.I.F.”

  1. ATLS – does the previewed deal with Reliance. 1.7 bil JV with 40% interest to the folks from India. ATLS marketed up 12 – 15% premarket

  2. Love the catalyst list…

    Yesterday, I mentioned nna warrants.

    Here is the 20-f (similar to 10-k) for your reading pleasure

    http://secfilings.nasdaq.com/filingFrameset.asp?FileName=0000950123-10-006832.txt&FilePath=\20101\29\&CoName=NAVIOS+MARITIME+ACQUISITION+CORP&FormType=20-F&RcvdDate=1%2F29%2F2010&pdf=

    The warrants have a 5 year life and exercisable at 7. 2 years have already passed by so there are 3 years left.

    nna closed at 9.90. There is 100 m set aside for 11.0 m shares for people to exist if they dont agree with plan

    NM owns 19 % and says they will buy up to 60 m dollars of nna before vote and after vote to support price

    With a yes vote, the warrant are in play but nna gets diluted as nm founder shares get vested, cost to them 1 penny a share..so nna should fall..where it falls is anyones guess..my best estimate is around 7, but it could hold in the 9’s

    If it held at 9.50 the warrant would be worth 2.50 intrinisic value + something for time value of the warrant ( 3 years)

    Suppose it falls to warrants exercise price of 7. Intrinsic value is 0 but you in essence have a 3 year option to buy nna at 7. A 3 year option at 8 % interest would mean the warrant would be worth about 2 bucks with the stock at 7.

    Its in everybody’s interest to have the warrants be exercised as its new money coming in.

    3 or 4 years ago nm had a similar structure and the stock was 5 with the warrant exercise at 6. NM sweetened the deal and lowered the exercise price to cause conversion

    I intend to hold onto half my position and let it ride..

    here is an article written yesterday by street.com

    http://www.thestreet.com/_yahoo/story/10721716/1/navios-spac-strikes-458m-tanker-deal.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

  3. pxp

    Plains Exploration & Production (PXP

    Loading… Loading…

    ) is recently up 50c to $32.36 on renewed takeover chatter. PXP is expected to report Q1 EPS in early May. Crude oil futures are recently down .67% to $86.26. Natural gas futures are recently down .98% to 4.056 according to Bloomberg. April put option implied volatility is at 42, May is at 41, August is at 43; below its 26-week average of 47. Call option volume of 8,768 contracts compares to put volume of 2,393 according to Track Data, suggesting traders taking positions for price movement.

    Read offshore oil in calif might be back in play

    pxp trading at pre davy jones levels

  4. the “loading loading..” was my web browser not my commentary. I currently due not have a position in pxp but thinking of adding..adding lol

  6. Z – commodities are green across the board (energy, metals, ag). I wonder if this is due to the mooted revaluation of the yuan & I was puzzled why we didn’t see it yesterday due to the news items that have been touting this as something that will happen soon (eg next week).

    It seemed to me that the non-reaction meant the market didn’t take these items seriously. But maybe it just needed to percolate.

    I don’t claim to know what the effect of a yuan revaluation would be. But I would think it would focus minds on the vulnerability of the dollar and so put a bit of wind behind the commodities.

  7. An agreement to expand drilling in waters controlled by California was announced Wednesday by Plains Exploration & Production Co. (PXP) and environmental groups.

    The plan, if approved by California and federal officials, would allow PXP to drill the first new offshore wells in 40 years. PXP, which now operates four platforms in California’s offshore waters, also agreed to cease existing production within 14 years. State officials would enforce the pact, which resurfaced late last year
    “This plan sends only one message — and it sends it load and clear: we are willing to go the extra mile to end the drilling along our coast,” said Rep. Lois Capps (D-CA). “This is not a decision that we’ve made lightly. It’s one we looked at closely. But, the bottom line is this: this plan puts an end to existing oil drilling off our coast and it will prevent any future drilling…It’s transparent. It’s accountable. It’s smart.”

    The final agreement for the 2010 Tranquillon Ridge Oil & Gas Project and Land Conservation Agreement was crafted by PXP, the Environmental Defense Center (EDC), Citizens Planning Association of Santa Barbara County and Get Oil Out!

    If the Tranquillon Ridge project is approved, PXP agreed to shut three of its offshore platforms in nine years and to shut the fourth platform in 14 years. The producer also agreed to donate about 4,000 acres of state land. In addition, PXP would be required to forfeit any profits from the project if it fails to shut down the platforms when agreed, according to EDC.

    PXP wants to drill more wells at an angle from one of its existing platforms. The “slant” drilling could allow PXP to reach hydrocarbon deposits underneath the waters, it said. To proceed, the agreement requires approval by the California State Lands Commission, the California Coastal Commission and the U.S. Minerals Management Service. The three-member Lands Commission rejected a similar drilling proposal in early 2009 on a 2-1 vote

    Agreeing to an enforceable pact with PXP could close a gap in coastal protections after President Obama proposed new offshore drilling plans last month. Because PXP already is operating in federal waters off Santa Barbara, the producer would be able to drill indefinitely without an agreement,

    PXP said it would ask the Lands Commission to decide on the revised plan before the end of this year.

  9. Fantastic trade on the NNA warrants yesterday Bill.

    Anyone have news or a broker comment on EOG this morning? I have a news indicator but no headline or story.

    BEXP bid up small, group bid up small.

  10. I see that GimmeCredit, CreditSights, and SeekingAlpha have stories filed under EOG today.

  11. From TPH this am —

    How great/hot/frenzied is oil? So great companies are selling new stock to drill it up faster (BEXP, finalized yesterday, NAV accretive) and so great folks are selling new stock to just buy leases (CRZO, announced yesterday, NAV dilutive for now). What’s next – selling new stock to hire people to think about buying leases? Watch CRZO deal to gauge if we’ve hit breaking point in Wall Street money faucet. If spigot keeps flowing, deals will keep coming.

  12. EOG – CHK Oppenhiemer discusses FCF under different oil and gas price scenarios (24.11 )

    Oppenhiemer notes that while most cos in the group could be profitable at $50/b oil and $3/mcf natural gas, only Anadarko Petroleum (APC) and Chesapeake Energy (CHK) could generate free cash flow at these low prices, mainly because of hedging and matching capital spending with operating cash flow. Most other cos require average prices above $70/b for oil and $6/mcf for gas to fund CAPEX and dividend from operating cash flow. Noble Energy’s (NBL) capital spending is expected to exceed operating cash flow for the next two years, even at $100/b oil and $8/mcf gas. EOG Resources (EOG) also needs prices of more than $85/b for oil and $6/mcf for gas to generate free cash flow this year.

  13. BOP, Eli, thanks. I think the FCF argument is pretty moot just now. EOG has plenty of room on the balance sheet and just upped their capex for 2010. The 2010,11,12 growth and change of mix is going to be the story.

  14. z — do you think there is any “seasonality” to the way energy trades going into summer? The last few years have been so screwed up, that we lost all trends. Trying to recall if there was ever a meaningful one. Other than hurricane-watching, that is.

  15. By the way… filled up the tank at Cosco yesterday. Saw premium gasoline for over $4. Also, Blackstone and Tom O’Malley are at it again… picking off individual refineries (Petroplus bought a small Delaware refinery from VLO y’day). O’Malley’s sense of timing has been pretty good in the past… as has Blackstone’s. The refinery biz has become even more complicated by global supply and local regs in the last coupla yrs. But the macro-trend of a recovering economy combined with some shuttered domestic production could pinch prices (and drive up margins) at some point.

    Just worth keeping on the radad screen.

  17. Valero to Sell Delaware Refinery for $220 Million (Update3)

    By Jessica Resnick-Ault
    April 8 (Bloomberg) — A closely held partnership controlled by refining investor Thomas O’Malley agreed to buy Valero Energy Corp.’s Delaware City, Delaware, refinery for $220 million as fuel-makers struggle with high costs and falling demand for their fuel.
    Valero said in a statement it will sell the plant to O’Malley’s PBF Energy Partners LP, a venture created for the purchase.
    The sale marks a return to the U.S. and to the Delaware City plant for O’Malley, the chairman of European refiner Petroplus Holdings AG. The former Salomon Brothers trader previously ran two U.S. refining companies, Tosco Corp. and Premcor Inc. He said last month he was interested in buying U.S.
    fuel-making assets, taking advantage of cheap prices.
    O’Malley said PBF was able to pick and choose from among many refineries that are currently for sale, and selected the Delaware City plant in part due to contributions made by the state. Delaware will be helping O’Malley finance a new gas-oil hydrotreating unit, and has asked the company to make certain environmental concessions.
    The deal will help Valero endure a period of narrow profit margins for refiners, said Philip Weiss, an analyst with Argus Research Corp. in New York.
    “It’s big for Valero, because it provides some additional cash,” Weiss said. Weiss has a “buy” rating on the refiner with a target price of $35 a share and doesn’t own any shares.
    O’Malley said on the conference call that he aims to restart production at the refinery in April 2011.

    Excess Supply

    Bringing the plant back into service will increase excess fuel supply, leading to lower prices at the pump for drivers and smaller profits for refiners, Weiss said.
    Valero shut the Delaware City refinery in November, citing losses of as much as $1 million a day. Refining profit margins were squeezed as the recession cut demand for gasoline, diesel and other fuels.
    O’Malley owned the 182,200 barrel-a-day Delaware City refinery when it was part of Premcor. He plans to spend about
    $125 million to $150 million to improve the plant. PBF has scheduled maintenance to begin this summer to refurbish the refinery fully before it restarts.
    O’Malley also has said he plans to bid on Valero’s Paulsboro, New Jersey, refinery and that his acquisition plans aren’t limited to the East Coast.
    Most of the stored fuel produced by the refinery was previously sold, and Valero will retain the remaining inventories.
    O’Malley’s PBF Investments LLC, based in Greenwich, Connecticut, is backed by Petroplus, Blackstone Group LP and First Reserve Corp.

    Shuttered Refineries

    O’Malley has said he expects the outlook for U.S. refineries to improve with lower crude prices and as more refineries around the world shut down or reduce production. O’Malley expects crude oil supply to outpace demand growth, which would increase oil inventories and reduce prices, according to his comments at a Deutsche Bank conference for investors in January, reported in a note to clients by Paul Sankey, a Deutsche Bank analyst.
    In addition to the Delaware City refinery, Valero has shuttered its refinery in Aruba. Philadelphia-based Sunoco Inc.
    has shuttered its Eagle Point plant in Westville, N.J., and Western Refining Inc. has closed a refinery in Bloomfield, New Mexico.
    O’Malley was quoted by Sankey as saying he expects more refinery shutdowns globally, including 1 million barrels a day of capacity in Japan, and more than 2 million barrels a day elsewhere, decreasing product supply.
    Valero fell 8 cents to $20.03 at 3:50 p.m. in composite trading on the New York Stock Exchange.

  18. RRC bid up $4 on the Atlas Marcellus news, seems excessive.

    BOP – re seasonality, not sure we will able to tell this year either.

  19. TAT – still can’t get details on what it is that they signed with the Turkish national oil co for.

  20. From Simmons…
    EOG Resources (EOG, Overweight, $106.96) – Analyst Day Recap – EOG’s transformation into a more liquids weighted company is well under way and the liquids growth the company is projecting over the next three years is quite staggering. Overall, EOG remains a company intently focused on generating strong ROCE & debt-adjusted per share production growth, while maintaining low debt and operating costs, and it appears the company is positioned to deliver on all fronts. Overall, EOG’s Analyst Day was very comprehensive but a few key themes came to the forefront – 1) EOG drastically improved the visibility on their liquids growth, primarily from their announcement of their Eagle Ford oil position, along with improving results in the Barnett Combo & Bakken. 2) EOG’s impressive growth estimates of 19% and 21% for 2011 and 2012, respectively, will require healthy rig increases, but will more than double the company’s cash flow in just two years (SCI est). 3) EOG is the industry leader in horizontal oil drilling and appears to have successfully mitigated the hurdles previously thought to inhibit horizontal oil production from shale/hybrid reservoirs. From the new information provided from EOG’s Analyst Day, our all-sources NAV is increasing by $29/shr (or 30%), up to $127/shr. Overall, EOG is keeping shareholder returns as their main priority and has the portfolio of assets and team in place to deliver on their production & ROCE goals in today’s price environment. Given our current preference for oil over gas, and EOG’s rapidly increasing exposure to liquids over the next few years, it’s hard to ignore EOG at this juncture. See full Analyst Day recap out this morning for more information

  21. Analyst Watch – OII

    Prticard cut to Neutral. Waiting in the weeds on this one to come off a bit more.

  24. I’m having a hard time coming up for a reason for XCO to be having such a good day? Can anyone help? And thanks Z for the catalyst list.

  25. ZTRADE – ZIM – EOG

    Sold the second half of my April $110 Calls for $0.75, up 142%, with the stock at $106.50.

  29. ZTRADE – ZCAT – EOG

    Sold the remaining (5) EOG April $100 Calls taken before the analyst day for $6.31, up 302%. I continue to hold the May $105s in the ZIM but not for long. I may reload the ZCAT with May calls shortly.

  30. #27 – thanks Z for playing the role of my brain this morning. Silly me, thinking these things get priced in ahead of time.

  31. TPH thinks oil sector is frenzied. Hmmm, I hope they have a list of adjectives handy for when crude gets to $100.

  32. Quick exercise….
    AUSTIN, TX–(Marketwire – 04/09/10) – Brigham Exploration Company (NASDAQ:BEXP – News) today announced Credit Suisse Securities (USA) and Jefferies & Company, Inc. exercised in full its over-allotment option to purchase an additional 2,100,000 shares of the Company’s common stock at a public offering price of $18 per share.

  35. EOG now a game of chicken.

    Plenty want in, but hoping for a bit of a selloff. I really doubt the gap gets filled near-term, unless China implodes next week.

    Oops, I blinked and the selloff in BEXP went away.

  36. Alternatively, you could rely on CNBC’s answer for why some names are up like RRC which they said was up on big volume but no news. Sheesh.

    COG, UPL, RRC, XCO, CHK all up on the Marcellus deal.

    Many other gassy names getting a little lift today.

    DJ Triad trying to move up.

  37. Re: TPH’s oil/gas macro strategist still has crude averaging $65 for Q2 and Q3 of 2010, and so that what the equity analysts are forced to use in their model. Purcell is a great asset, but his price decks have been less than perfect in recent memory.

  38. Hawkcam spots recent banker/lawyer activity, would expect a transaction announcement anytime. No details.

  39. Re ATH – should have listed it in the States too. Those guys will buy anything, lol.

    Dman re last part of 35, see 32.

  44. TAT flowing gas into the Turkish national gas grid as of today. This had been delayed by weather but was expected soon.

  45. Fitch cuts Greek bond ratings to BBB-, outlook negative. Stock market sells off. HeadTrader yawns. Says “who the hell didn’t know it was crap.” [sorry… but that’s the way they talk on trading desks]

  50. BOP, ” Says “who the hell didn’t know it was crap.” [sorry… but that’s the way they talk on trading desks]” , that is the lightest comments from a trading desk I have ever heard! LOL, should have been a few more expletives deleted in my experience! Ah, Friday’s.

  51. bondbuddha — most of the stuff off the trading desk can’t be posted verbatim… z’s grandmother reads the site. Gotta keep it (somewhat) in bounds. But you are SO RIGHT. 😉

  52. I #$@%*g hate f#%@@ing hay $%$@@!!! fever.

    Watching the profit taking in EOG, possible re entry in the ZCAT with Mays later in the day.

  53. File Under “Blinding Statement of the OBVIOUS” headline —

    “Fannie MaeWas Felled by Flawed Business Model, Former U.S. Regulators Say”

  54. bop – sorry, but bill has replaced u as my favorite. but, i feel strongly u will regain your spot soon!!!!
    anything new on PAYD. it woke up a little the last couple of days.

  56. bill has some awesome insights that — more importantly — make $$. Don’t blame ya.

    PAYD is supposed to do something life-changing next week. And announce it. If they haven’t, hit the “eject” button. That is what is driving the stock.

  57. Morning all. Looking at a couple of different potential wave counts. The first says that the move off yesterday’s low is i of v up. In which case we would now be looking for a wave ii back to the 1181 -83 area before launching higher. Alternatively wave v is further advanced and we head straight to the 1200 – 1208 level.
    More bearish count says this move up is a b wave with a c wave down still needed before v up.
    I can say cycles look weaker later today and Monday is also bearish whilst Tuesday, Wednesday and Thursday of next week look stronger.
    We are working on some sort of top in this area so caution is advised. The daily indicators are also reason for concern. The momentum indicator has been overbought for some time and is now developing negative divergence, while the breadth indicator is far worse.
    Fitch cut Greece’s ratings to BBB minus from BBB plus and says the outlook is negative.

  58. Gold breaking out above 1160 significantly will mean its going to retest 1224 for sure, although I already am confident that it will and probably will move beyond.

  59. 54 lol ty, crowd here is what have you done for me lately 🙂

    I’m not in same league as BOP..and others

    NNA wts was something i an very familar with and knew good news when i saw it

    Im glad that it worked out, ive had many other moves that havent panned out

  60. CRZO – Apparently their acreage in the Niobrara play in the DJ basin, includes 47K acres near EOG’s recent “Jake” monster discovery (acreage as close as 4 miles away).

  62. Nicky – thanks much re 57.

    Good color Eli.

    BEXP acting like a Rockstar. Expecting new guidance next week and maybe another set of wells although that may be 1 more week away. Given the rally we’ve had here and the rally I have in Mays taken yesterday, I’m tempted to punt and buy back on the new #s if I like them. Am a bit unclear on how they managed to add so much to capex next year without adding nearly as much as that to the well count.

  63. bill — when you go out of your way to pound the table on something you know well, THAT is what makes this board so great. You pick your points, and I apreciate that! thank you.

  64. Dman – it’s good given the time of day and just after the deal. Lot of deal participants, like all of them, didn’t get their full allocations so they will be rounding out desired positions today and next week.

  65. saw euro zone bank offering 3 year financing to Greece at 350 bps over bund rate-no details but seems like a fairly high rate in line with the “crap” rating-

  67. Head Trader may take a little more notice when the following is written about the USA instead of Greece as we have the same set up in place:

    ” The downgrade reflects the intensification of fiscal challenges in response to more adverse prospects for economic growth and increased interest costs. It also reflects ongoing uncertainties about the government’s financing strategy in the context of increased capital market volatility. The sharp rise in interest rates faced by the government this year, in combination with a deterioration in the outlook for economic growth, will make it harder for the government to achieve its fiscal targets of reducing the deficit to 8.7% of GDP this year and ensuring that public debt peaks at just over 120% of GDP in 2010 and 2011. Pressures on the banking system underline the adverse spill-over from sovereign risk concerns on the wider economy, while contingent liabilities from the banking sector will increase as the government provides banks with increased guaranteed funding.”

  68. TAT – I think that’s a cup and handle. Anyway, presentation next week at IPAA coincides with when I thought they would provide an ops update.

  69. Nicky — both HeadTrader and I agree with your comment.

    As far as cities filing BK, watch Vallejo, CA. It may be that they will be UNable to modify their Public Union Pension Plans in BK. That is the #1 reason most cities are in trouble… promises and wages/benefits to public employees. If Vallejo can’t get relief in BK court, this would set serious precedence… Bad Stuff, “public unions.” There has been no controlling authority for decades and those pidgeons are coming home to roost.

  70. Range, Exco, Cabot Climb After Reliance Deal in Marcellus
    2010-04-09 15:18:23.214 GMT

    By David Wethe and Jim Polson
    April 9 (Bloomberg) — Range Resources Corp., Exco Resources Inc. and Cabot Oil & Gas Corp. rose after Reliance Industries Ltd. agreed to buy a stake in U.S. Marcellus Shale natural-gas properties from Atlas Energy Inc. for $1.7 billion.
    Range Resources, based in Fort Worth, Texas, advanced $2.04 to $50.37, at 11:06 a.m. in New York Stock Exchange composite trading. Exco, based in Dallas, climbed 77 cents to $20.41 and Houston-based Cabot rose $1.32 to $39.71.
    Reliance, India’s biggest company by market value, will pay $340 million in cash and will cover $1.36 billion of Atlas’s drilling expenses as part of a joint venture, Moon Township, Pennsylvania-based Atlas said today in a statement.
    “People are just reading across the valuation of the Marcellus,” Ben Dell, an analyst at Sanford C. Bernstein & Co.
    in New York, said today in an interview. The Reliance deal with Atlas is pushing up the prices of “all the big core-area Marcellus players,” he said.
    Reliance’s stake will be equivalent to 120,000 acres, Atlas said. That makes the price equivalent to $14,167 an acre.
    Marcellus Shale leases sold for a median price of $4,828 an acre in five sales made public this year, according to research by Scott Hanold, an analyst with RBC Capital Markets in Austin Texas.
    The price range was $4,019 an acre, the average for a January auction of state-owned property in Pennsylvania, to $14,000 an acre paid by Mitsui & Co. to enter a joint venture with Anadarko Petroleum Corp. The median price was $3,250 an acre last year. The data was gathered before today’s deal was announced.
    “This is the most lucrative deal we’ve seen in the Marcellus,” Hanold, who rates Atlas shares a “buy” and owns none, said today in a telephone interview. “It’s a significant chunk of acreage in an area with some of the best well results.”

  71. #66 – For the most part they won’t go Chapter 9 but they will certainly hold it out as possible. Then when the teachers,fire and police want to walk because you can’t raise the tax base or rates any more you simply go to the bondholders and negotiate a cram-down or repudiation of debt. Breakeven’s go down and everyone is happy with the exception of the evil bondholders. It’s the All-American GM model.

  73. $14,167 an acre vs a median price of $4,828 an acre in five sales made public this year. Wow….very Cardiumish.

  74. elijah — #71 I agree with your statement in principle. But in GM’s case, Obama crammed down the bondholders and illegally stole assets to place in the hands of subordinated claimants. In the case of the Public Unions… where are the assets? GM has operations that can generate cash flow into the sub-claimant’s pockets. Cities might be able to reduce cash flow obligations to senior lenders, in favor of public employees for a while, but the underlying assets (the taxpayer) is a different animal than assets that make and sell cars, solely for the benefit of the stakeholders.

    When public and private wages and benefits are so outta whack, something has to give. It’s just that simple.

  75. also tempted to do a wildz on BEXP. It could get one last leg up to $20 on new guidance and IPAA next week. Mulling.

  76. Watching the profit taking in oil pickup, counter move to the S&P and down dollar which is a little odd. About $1.60 swing on the day and couldn’t hold whole dollar support at $85.

    Meanwhile NG up 13 cents. I think the big Marcellus ups don’t last long. RRC has an inflated valuation and I don’t gas gets much help from data until at least month end.

  80. BOP – you’ve mentioned EXXI has hurricane risk and so a portfolio should have some MMR as well. But don’t they have some GOM ops?

  82. Dman — actually, I was pointing to something like EOG as an oily-onshore-offset (hedge) to EXXI. But z is the EOG expert there, not me.

    You are corrent, MMR would not be an HHH (Helpful Hurricane Hedge) for an EXXI position.

  85. Anybody have news on FRO? (besides superb CNBC reporting: heavy volume on no news…) (Or perhaps the 8+% gain is technical?)

    This doesn’t explain it, but I found this from a couple weeks ago: http://www.businessweek.com/news/2010-03-26/frontline-plans-225-million-convertible-bond-sale-update1-.html

    “sold $225 million of convertible bonds, partly to fund a fleet expansion. The five-year bonds will pay interest of 4.5 percent a year, and can be exchanged for stock when the shares rise to $39,”

    Stock currently at 36

  86. Z, what’s up with SSN? He hasn’t put out a press release since Monday. It must be killing him! 🙂

  88. Ski – I think they are actually subject to ASX rules that require weekly or bi-weekly press releases of anything even close to significant while drilling. This explains some of their pr’s in the past. Should have one out Monday or Tuesday latest. I think that if we see another big flow rate on the completed frac basis that stock takes a leg higher. Could be combined with their IPAA presentation and I plan to punt my ZLT shares into that as the move has been large and their acreage in the play has been small. Unless they make a compelling case at IPAA as to why I should not and it would have to be pretty darn compelling.

  89. 85

    I dont know specific reason but securing 225 m in financing at 4.5 % is a positive

    VLCC tanker rates are up 30 5 on the weak

    the tanker stocks tend to go up with the price of oil ( i dont know why) suggests more demand to move oil if you buy into increase in demand is driving oil

    just my guesses

  90. sticky 5 key..

    rates are up 30 % on the week

    probably will pay a 1.00 divy and with the financing happening thats more secure

  93. thanks bill!
    Given that the bonds are convertible at $39, would it be prudent for bondholders to convert at that price or is there usually a required holding period? Would we see compression at 39 or 40? Not sure on the nature of these items and trying to learn…

  94. Alhambra — bond holders never convert into stock until the stock pays more in tax-adjusted dividends than the tas-adjusted coupon on the bonds. That said, there is usually a forced conversion covenant in the bonds, where the company can force holders to give up their bonds (and interest income) and convert into stock. But convert bondholders usually have several years of “forced conversion protection.”

    Bottom line = no practical reason for bondholders to convert early, unless they get more current income holding the underlying stock.

  95. I believe the bond buyers like the yield and would continue to hold, some hedge their long risk on the bonds by shorting the stock.

  97. ok, does the “tax-adjusted dividends” include any unrealized gains in the stock upon conversion in their PV calculations or is it specifically “dividends”?

  98. specifically dividends. the capital gains in the underlying stock should be reflected in the price of the bond. Once a convert is “in the money,” it will move in lock-step with the conversion ratio of the bond into the stock. (usually around 80% of the move of the underlying stock).

  99. Rig count watch:

    Oil up 3 to 505, vs 204 this time last year

    NG up 10 to 959 vs 790 last year.

    HZ up 14 to 749 vs 410. All time high.

  103. Alhambra — in the case of the FRO convert, looks like the price of the convert (currently around 106)should move up about 87c for every $1 in the underlying stock. Plus, you get to clip coupons. And looking at the convenants, it does not appear that FRO can force an early conversion. So, unless the yield on FRO exceeds the yield on holding the convert-ratio-adjusted number of shares, bondholders can be expected to hang around until maturity on 4/14/15.

    Elijah — feel free to correct me if i’m wrong here. Been a while since i’ve deconstructed converts.

  104. Boss – the Wildz, yes. I am still long some May EOGs in the ZIM and I bought two sets of May BEXPs in the ZCAT yesterday. And I still own the BEXP common in the ZLT.

  106. BOP re FRO 4.5 ’15. Correct @ about .85 based on inital 15% premuim at issue ($39 parity on the common last night vs a common that closed at 33.09). The common is up 8% @ 35.85 right now so the premium contracts as the price goes higher, and as you say it goes away as the issue goes “in the money (39.00)”. However as a practical matter the cvt will always have a small premium to parity even when in the money, usually 3 to 5%ish.

    I have not looked at this issue but would direct anyone interested to the offering documents to determine what dividend protection you have (Conversion ratio adjustment) as tanker co’s usually try to grow the divi big time.

  107. elijah — thank you for your helpful info. And keep bringing tasty convert ideas to the board… liking my GDP 5s so far.

  108. Z, does it make sense that max option pain for EOG should be at $95 strike, or are these charts really not meaningful until closer to the expiration date.

  109. Skimo – they are just math based on where the volume of puts and calls are so when stocks make big moves, they no longer reflect, as much, a gravitational point for expiry.

  110. My favourite part of the article #102:

    “During the ceremony Iran also displayed dummy fuel disks made of copper instead of aluminum and uranium. That marked a step toward enriching uranium to a higher level of 20 percent for a medical research reactor in Tehran. Higher levels of enrichment are worrying to the international community because it brings Iran closer to possible production of weapons-grade material.”

    So according to the media, some copper “fuel disks” mark a “step toward enriching uranium to a higher level of 20 percent”

    Wow. I’m so scared of Iran’s copper fuel disks. But I’m even more scared of the media’s retarded powers of reasoning.

    I guess Obama should put all of America’s copper supplies on display. That will have the Iranians quaking in fear.

  114. EOG near LOD, pretty normal looking profit taking to me. Street could decide to bolster and re load next week.

  118. ZTRADE – WILDZ – High, high risk trade

    BEXP – Added $100 BEXP April $20 calls for $0.15 with the stock at $18.56. I expect them to have a new presentation and potentially new higher volume guidance next week (no guarantee the guidance pleases) in conjunction with their IPAA presentation.

  121. MHR $4.00 print simply stunning. Tagging off EOG in EFS and now ATLS in MS. I though deal at $3 plus for parcel already contracted. Wrong thus far but looking over my shoulder.

  123. Also at a loss to explain the last six months in CQP. Z any thoughts as in B, SL, HLD?

  127. Z, lloks like Barons is finally catching up to you with regards to caol producers.
    Dalhman Rose analysts this morning released a report on coal noting that the market for coal used in steel production has been “astonishing” in the past month, with a $200 price tag per metric ton of the stuff, something once unheard of.

  128. Apache in final talks to buy Devon US Gulf assets for $750 mln, sources say – DJ

  132. you know BEXP is a “cult” stock as BOP alluded when my horse racing buddies are all over it….

  133. #132 – but how long have they been all over it?

    Cults can last for a while … 🙂

  134. Wow Someone tossed a $4.03 12,800 shr print up vs shares offered at 4.00 to close MHR. Wanted an above 4 print bad.

    I had advertised a small wall out there at 3.98 to 4 and they went through me like hot butter.

    Stock goes higher.

  135. elijah — you have walked that dog perfectly… judges give you a Standing 10. You’re ready for Westminster!

  136. BOP – Thanks. My rescue pup, Maggie a two year old English Llewellin Setter shows much better than I. And she is completely psychedelic just like our markets! Can I bring her?

  138. “lots of pretty colors” market??

    or

    “doesn’t know which side to get out of bed” market?

    I prefer the psychedilic mrkt…

  139. sorry… just hanging around… waiting for a company to call me back this afternoon. waiting… waiting… polluting the board…

  141. 5 pm… no return call yet.

    Thanks, Elijah! Going to go for that “mind altering state” next.

Comment below here

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

s2Member®