13
May

Thursday Morning Oil Review and Natural Gas Preview Plus LC Orange Charts

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Market Sentiment Watch: European debt crisis far from solved but in U.S. market's rear view mirror again at the moment. Stocks again keying off stronger earnings and improving ecodata.  In energy land all eyes should be half glazed as the torrent of earnings gives way to an increasingly small flow of news for the next couple of weeks. I actually learned things watching CSPAN3 and the testimony of BP, RIG, HAL and CAM yesterday. While some of the Representatives were clearly there to grandstand for their anti-oil constituents many did seem to want the facts and many items came to light or at least were less murky regarding what could have happened to the Deepwater Horizon. It seems increasingly clear that the blowout preventer was not "defective" or fraught with "design flaws" but may have had some maintenance issues [1) a weak, not dead battery, a hydraulic leak (which may or may not have been caused by the accident itself), and modifications made by BP and RIG)]. I heard no smoking gun that pointed to HAL's cement job or CAM's BOP as the culprit. At least one sellside firm agreed upgrading HAL and lifting their target this morning (see Odds and Ends below). Time will tell and I'll be out of the trade (especially the higher strike calls) before that happens but both names continue to recover in this new light after being punished apparently unfairly. Also with regard to Energy, I've included the Large Cap E&P Orange Charts, updated for Q1 numbers and guidance. As always, these charts serve as a mere starting point or quick reference.

Ecodata Watch:   Jobless claims came in at 444K vs 440K expected. It's been a quiet week so far on the ecodata front but that changes tomorrow with retail sales, industrial production, and consumer sentiment.

In Today’s Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Natural Gas Preview
  4. EIA Oil Inventory Review
  5. Stuff We Care About Today – The Orange Charts - Large Cap E&P
  6. Odds & Ends

 

Holdings Watch:

ZCAT (Zman Catalyst portfolio):

  • $9,300
  • 80% Cash
  • Yesterday’s Trades:
    • None

ZIM (Zman Inefficient Markets portfolio):

  • $27,300
  • 70% Cash
  • Positions for the ZIM are updated on the ZCAT, ZIM, ZLT page.
  • Yesterday’s Trades:
    • HAL – Added (20) May $30 Calls for $0.495 with the stock at $29. Not hearing anything in today’s Macondo explosion testimony that sounds particularly damning to them. I continue to hold the $31 Calls from yesterday as well and plan on taking profits on those more sensitive calls on the next up turn.

 

Commodity Watch:

Crude oil eased $0.72 to close at $75.65 yesterday on a stronger dollar and despite a bullish looking EIA inventory (see below). Crude looks technical a bit weak and I would not be surprised to see a test of $72 should the equity markets decide to retrench in the near term. This morning crude is of 75 cents.


Natural gas jumped $0.15 to close at $4.28 yesterday. Natural gas appears to be making an effort to put in a bottom but I do not see much chance of a big bounce until later this summer and then only into the $5 to $6 range. This morning gas is trading flat.

  • Natural Gas Vehicle Watch: I have not yet read the section of the new climate bill proposed by Kerry and Lieberman but it does contain some natural gas transportation language.

Natural Gas Preview

  • My number: 95 Bcf
    • Last Week: 83 Bcf Injection
    • Last Year: 94 Bcf  Injection
    • 5 Year Average: 88 Bcf  Injection
    • 10 year Hi: 103 Bcf  Injection
    • 10 year Low: 11 Bcf  Injection
  • Street Consensus: 102 Bcf Withdrawal

EIA Oil Inventory Review


ZComments: Better than expected report on the products fronts, in line for crude. Most interesting to see distillate demand remain aloft for a second week. Still not enough time to say a trend is in the making but it is support of stronger cracks and given how bloated distillate inventories are all I can say is that it's about time. Trucks rolling? Maybe. But it also can be the Latin American demand creeping in due to refining outages in Central and South America at a time when regional demand is recovering. Getting more enthusiastic about the independent refining trade mentioned earlier in the week but I have nothing on the table there now.

Crude:




Gasoline:




Distillates:




 

Stuff We Care About Today

The Orange Charts - Large Cap E& P

  1. Today the large cap group, to which we've added ECA and NBL.  I define large cap E&P as non integrated E&Ps with a minimum total enterprise value of $10B.
  2. Next week I'll post the mids and smalls.
  3. Valuations remain in check.
  4. Debt remains in check and easily serviced.
  5. Note that only EOG is up on the year out of this group. The increasingly liquids weighted portfolio and conservative balance sheet along with strides to be the leader in the Eagle Ford are probably the root causes of that differentiation.
  6. SWN is on the opposite end of the spectrum - cutting guidance and failing to hedge a significant portion of their expected production are to blame there as well although there are mitigating circumstances on the production cut which may actually translate into stronger reserve growth at year end than production growth would suggest.
  7. Looking briefly at expected growth, SWN continues to lead the pack, albeit with 100% gas production. EOG's mid point is 13% with almost all of the growth coming from liquids and that largely oil. Transitions in the profiles are a set of tables I plan to add soon where available. EOG is doing the best job of "getting oily" which has been the key theme for the E&Ps in the season just past.
  8. Field cash and total cash costs are something I look at, especially when commodity prices are weak. The low costs at SWN are part of what give the name a perpetually higher multiple.
  9. Note that these charts have been added to the Large Cap E&P tab along with these notes.

 

 

 

Odds & Ends

Analyst Watch:

  • HAL - raised to Outperform, target raised from $35 to $44 at FBR.
  • BPZ - cut $2 to $8 at Wunderlich, rating stays Buy

Interesting Reading Watch:

 

159 Responses to “Thursday Morning Oil Review and Natural Gas Preview Plus LC Orange Charts”

  1. 1
    zman Says:

    Crude trading fast and technically this morning, having given up the $75 level again overnight and is now looking to whole number support at $74.

  2. 2
    Gtinvest Says:

    z Ng info in bill begins on page 850 and there is also a reference in the electrical generation section to carbon taxes. Ng 50% of coal . and about 30% less than oil as I recall.

  3. 3
    zman Says:

    Thanks GT.

    Video of the Macondo well on the sea floor.

    http://www.marketwatch.com/story/bp-releases-subsea-video-as-costs-reach-450-mln-2010-05-13

    BOP pointing out to me that I failed to back capitalized interest out of the TIE ratio calculation. It’s a good point and is what is skewing CHK to look more covered than it is. It was late and I was lazy, will amend that chart later today.

  4. 4
    West Says:

    JB, Thanks for the CXO. Looks like a pull back to bottom line would be good enter point. ….Does anyone know when AEZ will announce 1st qtr? Thx

  5. 5
    BirdsofpreyRcool Says:

    HAL bumping up against $30 pre-mrkt. z… you’re not the only guy who liked what he heard y’day. But you are the only guy I knew who publicly pulled the trigger. Thanks!

  6. 6
    zman Says:

    TPH using same “lack of smoking gun” for CAM and HAL in their daily piece as I am.

    BOP, thanks for pointing out the error on the TIE ratio, have to stay on big toes with you around.

  7. 7
    Nicky Says:

    Good morning. My view is that if you look at oil and currencies you are seeing where the market ‘should’ be. A feeble bounce after last Thursday’s drop and both crude and the euro are now trading back at last Thursday’s level. Neither have bought into the scenario that all is now right with the world. Indices, however, are behaving abnormally, trading on an unlimited supply of zero interest dollars printed by the Fed. Three times now the overnight futures have tried to sell off since last Thursday and on all occasions they have been pumped back up.
    Under any of the counts I am looking at both bullish and bearish we are approaching a top and we need to go back and retest some levels below. Looking at the cycles we have a bearish cycle that is due to make its low in early June, plus or minus a few days. Short term we have a cycle high that should be in no later than 17th May but could come as early as the 13th May (today). This would all jive better with my more bullish count which calls for a wave i high imminently and could stretch as high as the 1190 area and then what should be a very good retrace for wave ii and take us into the end of the month. Ideally the market would go back and visit the 1080 area but I don’t really see that right now. The best we can maybe hope for is that we fill the gap left last Friday around 1120.

  8. 8
    zman Says:

    West – RE AEZ, would have to be this week if they are going to file on time. Stock was slow to move off that second well but did eventually. They have a shelf filed but am not up on what their plans are for a drilling program but don’t think they really need to hit the capital markets just yet unless they accelerate. Good wells (all 2 of them) so far.

    RMD – what kind of car was that? I want one.

  9. 9
    zman Says:

    Nicky, thanks much. Did you see the market discombobulation investigation now centers on a single emini trader. He was selling hard for clients as is his right and obligation as their agent, 10 minutes before the markets got crushed.

  10. 10
    BirdsofpreyRcool Says:

    TPH out with a trading desk note… saying they would be buyers of APC today as they think the mrkt cap hit relative to the ultimate liability is too wide.

  11. 11
    zman Says:

    Re 5. Hey thanks, with the ZIM I try to call it like I see it. Glad to see that FBR and at least TPH but probably others see the same thing. BP pushed ahead after a not so great negative pressure text, indicating cement job may not have been good but that’s BP responsibility.

  12. 12
    Nicky Says:

    My thoughts on metals are that sometime very soon we are going to see a parabolic move – one of those days when gold moves 100 points and silver 250. Its just a feeling and the charts are in the right place for it to occur. There is an inverse head and shoulders target for gold at 1325.

  13. 13
    zman Says:

    What is APC’s insurance cap here? Saw BP has spent $450 mm in 3 weeks. I understand APC get’s a quarter of that tab.

  14. 14
    Nicky Says:

    Z – re 9 – no I hadn’t seen that. Somewhat shocking that a single trader could cause that drop…
    interestingly though I have heard several technicians say the writing was on the wall earlier that day if you looked at the yen…

  15. 15
    West Says:

    Thx Z

  16. 16
    zman Says:

    HAL trading fast and loose. I’ll be looking to punt the $31 calls today, and maybe the $30s if it really runs but either way, will wait for it to settle down.

  17. 17
    Nicky Says:

    We could be looking at a wave iv today. Consolidation – most downside I would look for is a move back to 1155 but market is so strong we may not even see that.

  18. 18
    zman Says:

    Jat – nothing to watch on CSPAN 1-3 today? Sad that I find that better viewing than CNBC.

    CLNE has been beaten back of late, but up 6% today I guess on follow through on the Kerry bill.

  19. 19
    zman Says:

    Nicky – where do you put support for crude?

  20. 20
    Gtinvest Says:

    wprt trying to break out at this moment!

  21. 21
    Nicky Says:

    Crude has very good support at the 70 level and then further support at 65 – 66.

  22. 22
    zman Says:

    Thanks GT, somehow that keeps falling off my radar, putting beside CLNE now.

  23. 23
    zman Says:

    Thanks Nicky, I think OPEC may loudly condemn cheating if we break $70 for more than a week. No emergency meeting expected, just an attempt to jawbone crude back up.

  24. 24
    tomdavis12 Says:

    Z: CLNE CEO also on with Cramer last night. More love fest.

  25. 25
    Gtinvest Says:

    The tertiary trade is fsys the ng conversion king , very volatile and huge short interest.

  26. 26
    baylor3217 Says:

    I’m showing volume of 6 on the HAL may 31’s on ameritrade. that doesn’t sound right. after last thursday, I really need to consider punting them.

    What are some trading platform recmomendations?

  27. 27
    Nicky Says:

    If we start to move above yesterday’s highs then look for 1177,1181/82 to provide resistance.

  28. 28
    DrLink Says:

    22- I would add FSYS to that list also for those that like CLNE and WPRT

  29. 29
    andy Says:

    baylor – vol 56 on scottrade

  30. 30
    1520sbroad Says:

    Interesting deal between PennWest and China announced today. JV to develop Peace River. Amazing the number of locations the Chinese are involved in.

  31. 31
    baylor3217 Says:

    Do y’all use AON (all or nothing) trades when you’re selling your options?

  32. 32
    zman Says:

    re 31. No.

  33. 33
    Gtinvest Says:

    Z or anyone familiar with HUSA, went on a tear came back hard , chart look very promising at the moment ?

  34. 34
    baylor3217 Says:

    Re 31 – on ameritrade, I sold about 100 options of something this morning and it executed the trade in 4 groupings and charged me $9.99 each time and .75 per contract.

    Is that similar for other platforms? They’ve told me on the phone that it won’t charge me but once for the $9.99 trade

  35. 35
    zman Says:

    GT – sorry not me.

    Re trading platform. People like think or swim and interactive brokers. I usually like SSP by Schwab but it has some limits I don’t care for. I use it side by side with a Thomson box which has a much better looking market watch. SSP trades are very good.

    RIG trying to make a move.

  36. 36
    zman Says:

    Baylor – should be just the one trade fee plus the contract fees.

  37. 37
    baylor3217 Says:

    Thoughts on EOG here and getting back to pre announcement levels?

  38. 38
    RMD Says:

    1959 Bugeye Sprite (Austin Healey): check the gas, fill up the oil.

  39. 39
    zman Says:

    re 38. That’s a pretty ride.

  40. 40
    tomdavis12 Says:

    Z: VNR secondary @ $23/sh.

  41. 41
    zman Says:

    Thanks Tom – historically the time to buy these has been just after the deals. They spring back like clock work. On VNR, gotta say I was not impressed with the 4Q call. I have not yet listened to the 1Q.

  42. 42
    Gtinvest Says:

    Ng +94

  43. 43
    tomdavis12 Says:

    Z: VNR dividend also payable tomorrow. If you get to the call and have any feeling, I would be interested. I know you are not long. I have been nibbling @ WHX. Ex-div 5/18.

  44. 44
    jat Says:

    With regards to all the crude comments, one needs to remember where WTI is relative to other global benchmarks. Cushing inventories caused the same problems last year, and I think the year before. Right now cushing at $74.00 vs. Brent $80.00. At the low last year, cushing got to 33, brent 39.00.

    Anyone thinking about crude’s breakdown here needs to remember brent vs. cushing.. if brent were in the low seventies and breaking, I’d be a lot more worried about the health of the complex / future international E&P cash flows

  45. 45
    zman Says:

    That article on Top Hat saying it will have hot water and methanol pumped in and is preconnected to a rise and drill pipe. Best guess is we know something late tonight or early tomorrow. Stocks in the CHOBR probably get a pop on success, dip on failure.

  46. 46
    zman Says:

    Jat – agreed. Saw Mars sour was $7 over Nymex last night. I have been saying for weeks in the Thursday post that the rally in Cushing stocks (now at a record) would put the lid on crude (domestically) until it comes off with higher mid-con refining utilization.

  47. 47
    choices Says:

    #13-Z, this is what they said in earnings release on 3 May regarding the explosion an its insur coverage-looks like their estimate is low:

    The company maintains insurance policies designed to provide financial protection for such events, for its share of gross covered costs up to an aggregate level of approximately $710 million, less deductibles. Based on its 25-percent non-operated interest, the company estimates its net insurance coverage will likely total approximately $177.5 million, less deductibles of $15 million.

  48. 48
    Popeye Says:

    It has been a while since I have seen HK move like this.

  49. 49
    zman Says:

    FST at $28. Many catalysts coming there but it had what I’d call an exceptional quarter operational, trumped by Greece. I bought $30 calls and they are worthless at the moment but can easily reawaken with another day or two of this kind of action. Glad to see it starting to move.

    ZIM Comment. ZIM is a faster trading vehicle than the ZCAT, to be sure, not a day trading one. Sometimes it takes the market several days to realize that I am right, lol, ;). It is the portfolio that trades after the event whereas the ZCAT tries to get in front of news.

    For you new people there is a bios tab at upper left so you can see where some of the main commentors here are coming from in terms of their backgrounds. If you want to be included on the list please email yours to zmanadmin@gmail.com

  50. 50
    tomdavis12 Says:

    Z: Thinking of any wildZ stuff with anyone other than HAL in the CHOBR crew?

  51. 51
    1520sbroad Says:

    re #31 – no. re #34 – i have seen trading platforms do that and then revise the commissions later in the day. I would argue with them on that one if they try to charge 9.99 per lot

  52. 52
    zman Says:

    47 – Thanks. That’s simply not going to do it. Maybe the stock has been beat down enough. Dunno. I do know they have more leverage and less deep pockets than BP. I also know their name was mentioned as a co-conspirator, ahem, I mean working interest owner in the well. I will listen to the APC replay today as I’d like to hear how Hackett addressed this.

  53. 53
    zman Says:

    Tom – re 50. Just the higher strike (and currently worthless) CAM calls I own. The lower strike CAM’s are nearing a double and I plan to be quick there.

  54. 54
    zman Says:

    re 51. Agreed, per lot pricing would be uncivilized.

  55. 55
    choices Says:

    Z, APC, you do not think the $710 will be enough?-I guess one factor is whether they CAN put a capper on the flow today or tomorrow.

  56. 56
    zman Says:

    GT – Thanks for the 94 Bcf injection report. Was busy with technical issues and completely spaced on the injection.

    I was at 95 BCF, Street was 102 BCF, my modeling keeps coming in below Street, and reality so not much vindication in getting this one number pretty right but at least I’m not totally broken.

    Gas inching higher, don’t think it will have much in the way of legs, maybe, $4.50 by tomorrow or next week but not much more. Still, that helps with group confidence.

  57. 57
    RMD Says:

    VNR I quizzed mgt after the call about the seemingly high price paid for the acq. They said op costs for the acq. are very low (~$5/boe) so deal was still in the 5.0 -5.5X Eda range. Do play in a $5mm Bone Springs well.

  58. 58
    zman Says:

    Choices. Yes, a lot depends on that. Also depends on if they are going to pay 1/4 of all economic burden expenses. BP has paid out over 1,000 fisherman claims so far and that’s just going to get bigger and bigger and last quite awhile. Then there’s the clean up, the capping including redrilling 2 more wells, and the lawsuits. I could see estimates in excess of $10 B gross.

  59. 59
    tomdavis12 Says:

    Z: Do you think the 24th can be a $2 – $3 tradeable event for HK or does that feel like light years away just yet? Maybe 20th or 21st you might have an interest.

  60. 60
    zman Says:

    RMD – weren’t they the ones that couldn’t answer or didn’t sufficiently answer a question on capex vs cash flow last call?

  61. 61
    zman Says:

    59 – yes I do.

  62. 62
    baylor3217 Says:

    finance.yahoo.com says gold trading at $1210

    Bloomberg says $1238

    btw, anyone notice the new front end they put on bloomberg? I am not a fan.

  63. 63
    zman Says:

    Has anyone seen a new or old drybulk index or ETF? SEA is no longer functioning.

  64. 64
    zman Says:

    Thomson shows gold at 1238.3, down 4.7

  65. 65
    VTZ Says:

    1238 is right.

  66. 66
    Gtinvest Says:

    dryfreight update:http://www.dryships.com/pages/report.asp

  67. 67
    milepost_43 Says:

    #20…can’t believe I have watched WPRT go from 12 to 20…AHHH….AND missed the recent buying opp…double AHHHH….did pick up a few today so it doesn’t fall off the screen…AGAIN…..

  68. 68
    choices Says:

    http://www.msnbc.msn.com/id/37125549/ns/world_news-americas/?GT1=43001

    nat gas rig sinks-Venezuela

  69. 69
    zman Says:

    How you know a top is in the metals market. Looking for a metals ETF or fund for my dad.

  70. 70
    choices Says:

    The legal games continue-RIG moves to limit liability:

    http://online.wsj.com/article/SB10001424052748704635204575241852606380696.html?mod=wsj_india_main

  71. 71
    zman Says:

    Re 69, seriously do want suggestions. Thanks.

  72. 72
    VTZ Says:

    Sprott Gold and Precious Metals Fund run by John Embry. Those guys know what they are talking about and my money is where my mouth is.

  73. 73
    VTZ Says:

    And yes I agree that we top out somewhere between 1275 and 1350 for a pullback + consolidation before 1500+.

  74. 74
    choices Says:

    #69-I will certainly defer to VTZ, Nicky on this but late May/June “usually” is an intermediate topping process with Summer months weaker.

    If it is purely metals and not miners, I would watch CEF or PHYS AFTER the premium comes down.

  75. 75
    VTZ Says:

    Have you heard Kudlow this week? He has essentially called gold useless and shunned it as an investment class for a long time and then now all of a sudden he talks about it all day.

  76. 76
    zman Says:

    VTZ – so you prefer the miners and not the metal, looks like their portfolio is mostly equities. Got one that’s not denominated in maple leafs?

  77. 77
    zman Says:

    Bullion at the ATM

    http://www.asylum.com/2010/05/13/abu-dhabi-hotel-installs-gold-dispensing-atm-rest-of-world-st/

  78. 78
    zman Says:

    S&P saying it may cut more ratings due to oil spill (cut BP five days ago).

  79. 79
    VTZ Says:

    Well the miners have underperformed the appreciation in the metals and they have a massive short position in basically all the juniors that is going to get squeezed badly at some point. Also there is a lot more leverage to be had.

    That fund does still have ~10-20% bullion between silver and gold depending on the time. But it is well diversified between juniors and midcaps and includes silver as well.

    I’m not familiar with the mutual fund families in the US, but having some CADs can’t be that bad of a trade given the recent pullback and expected strength of aussies, candos and swissies going forward.

  80. 80
    zman Says:

    Putting SPN on the CHOBRS list as they apparently built the top hat.

  81. 81
    choices Says:

    I hope I’m not clogging up the board but this subject is important to me and maybe what I’m finding may be of interest to others on the board.

    Who pays:

    http://www.nytimes.com/2010/05/13/us/13q-n-a.html?hpw

  82. 82
    zman Says:

    Choice – thanks.

  83. 83
    zman Says:

    Listening to APC replay.

  84. 84
    cargocult Says:

    Interesting article on rise in gold price from Seeking Alpha.

    http://seekingalpha.com/article/204718-reading-into-the-simultaneous-rise-in-gold-and-the-u-s-dollar?source=article_sb_popular

  85. 85
    zman Says:

    TRGL collapsed back to the pre HES deal level. Hmmm.

  86. 86
    AAA Says:

    This may sound like a dumb question, but I’m still learning about how this petro engineering stuff works. I read several statements that they shouldn’t have pulled the mud prior to installing the second cement plug. What I don’t understand is if the hole has been cemented, how do you get the plug down into the well if the riser and casing are filled with mud? Seawater too for that matter. Where does the nud go?

  87. 87
    zman Says:

    APC Notes on Micondo.

    $15 mm in deductible

    Covered up to $710 mm aggregate, less deductible.

    Covered up to $178 mm on their 25% working interest. Not sure if that means they are capped at $178 mm less deductible but it sounds like it, I’m sure they will clarify in the Q&A.

    Interesting to see crude bouncing here, now down $0.60

  88. 88
    zman Says:

    Listening to this APC call, this link may help explain it.

    http://www.rigzone.com/training/insight.asp?insight_id=317&c_id=1

  89. 89
    zman Says:

    Eli – MHR increasing budget by $30 mm

  90. 90
    zman Says:

    Crude down 20 cents now, still down see the reason for the turn, just seems technical. WLL down still down $2.10 on oil off $1.70 just moments ago. That’s odd.

  91. 91
    zman Says:

    WILDZTRADE – ZIM – WLL

    Added (25) May $90 Calls for $0.75, high side of mid with the stock at 86.10, down on a weak day in the crude markets (but less weak than earlier). This should be a pretty quick trip in this cheapest name in among the sizable Bakken players. It trades with oil and has been left behind a rally off the lows in crude today.

  92. 92
    zman Says:

    Crude up a dime.

    Bone Springs sounds better than I thought at APC (Avalon Shale). West, thanks for your comments earlier on it.

    Relistening to the insurance comments on APC for 3rd time. Glad I don’t deal with that stuff on a daily basis.

  93. 93
    elijahwc Says:

    #89 Yup EFS & Cinco Terry stuff(which they owe to AREX(rmd – any thoughts?) I believe. Now need $ to pay for it.

    They got the prior claims out of the way yesterday (for existing warrant holders) so that they can play in any financing .

    S-3 here: ttp://xml.10kwizard.com/filing_raw.php?repo=tenk&ipage=6949745

  94. 94
    Gmlgdc Says:

    Re 86 you run drill pipe to the depth you want to set a plug into the inside of the casing and then you pump the cement down the pipe it goes out the pipe and up the hole and then you pull out above it. The about you pump in should match the amount of mud that comes out and is measured in mud tank that way you can see if well is flowing. One of the problems they might of had is when they displaced the riser with sea water they did not keep track of volume so they did not see a gain in volume indicating flow

  95. 95
    zman Says:

    WILDZTRADE – ZIM – WLL

    Sold the (25) WLL calls taken earlier for $0.93, up 22%. Lunch money.

  96. 96
    milepost_43 Says:

    Ceridian-UCLA: Diesel fuel consumption index declines in April

    http://www.calculatedriskblog.com/2010/05/ceridian-ucla-diesel-fuel-consumption.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+CalculatedRisk+%28Calculated+Risk%29

    This is the new UCLA Anderson Forecast and Ceridian Corporation index using real-time diesel fuel consumption data: Pulse of Commerce IndexTM

    With the release of April’s figures, the Ceridian-UCLA Pulse of Commerce Index™ (PCI) by UCLA Anderson School of Management is showing flat, overall performance during the first four months of 2010. The PCI in April fell 0.3 percent, suggesting the economic recovery may have stalled, although an uptick in consumer spending could continue to drive a slow but steady recovery.

  97. 97
    VTZ Says:

    Will be a nice lunch.

  98. 98
    zman Says:

    APC Notes:

    Their insurance coverage is a gross figure so they are covered for 25% of that or the $178 mm figure, less $15 mm deductible. They also should get some benefit from the offshore trust fund, funds set aside for this kind of thing out of every barrel produced in the Gulf. Don’t know what kind of benefit the later has.

  99. 99
    zman Says:

    V – cold pizza and diet coke actually as I don’t normally day trade and don’t want to think I can spoil myself.

    Did you have a suggestion for a gold ETF. I know your dislike for GLD. Is there another precious metals ETF you do like? Is there a reason why you like miners over metals themselves? Is that the case?

  100. 100
    Gmlgdc Says:

    It will be interesting if BP excedes the 75 Million libility if there working interest owners are that generous.

  101. 101
    zman Says:

    Re 96. My data shows diesel consumption declining seasonally and at the low end of the range through April but popping up the last two weeks.

  102. 102
    choices Says:

    APC-thanks, Z

  103. 103
    TEXWS6 Says:

    BP Comment:

    Technically, you should isolate your formation or kill your well with the first “plug” ran. The second plug is not meant to be a well control or pressure redundant plug. The main purpose of the second plug is to “wipe” the casing/pipe clean, which is why it is commonly referred to as the “wiper” plug.

  104. 104
    VTZ Says:

    CEF/PHYS are ok bullion replacements.

    In short I like the miners over metals because of the huge short positions in the smaller companies, better leverage and recent underperformance relative to the metal.

  105. 105
    zman Says:

    GMLGDC – thanks. Question for you. If they have a positive pressure test that was OK (meaning now fluids were moving out into the formation for you guys like me that may have less of a grasp on this stuff) and then you have a mixed results in the negative pressure test (meaning you could have fluids from the formation coming into what should be a cased and bottom plugged well bore), how do you miss the latter and go ahead and take the mud out which weighs more than the seawater. Seems odd that the HAL guys would not be involved in testing the cement (hanging out around the test at least). Thanks.

  106. 106
    zman Says:

    Re 104. Thanks much, I hear on that, good thought. Any non C$ funds you like?

  107. 107
    zman Says:

    Re 105 – Wyo, Reef, TEXW, feel free to comment on this stuff as well. Not an oil man, just an oil fan.

  108. 108
    zman Says:

    If WLL does that again relative to oil I will rinse and repeat that trade.

  109. 109
    zman Says:

    Analyst Watch:

    ROSE – BMO initiated with a Market Perform rating, target $27.

  110. 110
    TEXWS6 Says:

    re#105:

    There technicaly should be no negative pressure test, if the negative pressure test fails, you have flow and a well control issue. Once you “bump” plugs or engage them in the necessary hardware, you should shut the well in with pressure to keep the plugs in place.

  111. 111
    Gmlgdc Says:

    Re 105 I have been wondering the same thing. If in fact they had a bad negitive test you would never lighten the mud by cleaning the riser. You would be prepareing for a gas influx because you already had flow in the test and you would circulate the mud out and try and figure what is leaking and go fix it. That part makes no sense to me at all.

  112. 112
    VTZ Says:

    Not familiar with the US funds, sorry.

    But what I would look for is a fund that:
    -Has some sort of a position in physical (because people who understand the merits of physical are the people you want investing your money in equities)
    -Has a significant stake in smaller cap equities, not just large and mid caps
    -Is flexible to vary the composition of silver and gold in the portfolio
    -One that WILL try to take advantage of M&A opportunities because the juniors are all going to be potential targets by better funded majors.

  113. 113
    zman Says:

    re 110 and 111. This is why I am confused as well. Thanks. There was a lot of shoulder shrugging going on when they were asked if you had these anomalous readings, why did you proceed. The HAL guy basically said the test was the operator’s to do, they weren’t involved. The RIG guy said the records went down with the Horizon. It was kind of left hanging out there.

  114. 114
    zman Says:

    OK, thanks much, will look at Sprott.

  115. 115
    zman Says:

    Analyst Watch:

    AXAS – Strong buy from Johnson Rice. Not me my friend.

  116. 116
    Gmlgdc Says:

    re 113 As I understand and I am an onshore guy but, all casing strings at this depth of water are hung like a liner at top and you negitive test the top on liner to check for behind pipe flow so the liner hanger top seal might have failed.

  117. 117
    TEXWS6 Says:

    Re #113: My comment was the same, all pressure recording charts, etc. are on the bottom of the ocean floor. BUT, someone at BP in Houston SHOULD have been watching real time operations via a Passon system (real time drilling data) and this is recorded and stored on a server in Houston.

  118. 118
    zman Says:

    Market liking the treasury auction results, or at least using them as an excuse to rally. Crude up 40 cents now. WLL should go green on the day.

  119. 119
    zman Says:

    Housekeeping Watch:

    Petra is bored. If you have any questions or comments about the site we can address in tomorrow’s post please send to her at zmanadmin@gmail.com Thanks.

  120. 120
    Nicky Says:

    FWIW and maybe to be taken lightly but an astronomer I follow has been saying for some time that gold would top this month and 3 days either side of the 18th……

  121. 121
    zman Says:

    The Orange Charts for the large caps are updated in the post and on the LC E&P tab with the corrected EBITDA / Interest calcs.

  122. 122
    zman Says:

    BP putting off deploying Top Hat until next week.

  123. 123
    zman Says:

    Make that the end of next week. Don’t see a reason given.

  124. 124
    jat Says:

    Re 117 etc, I am sure this is old news to many, but there was a great journal article discussing the testimony yesterday

    http://online.wsj.com/article/SB10001424052748703339304575240210545113710.html?mod=wsj_india_main

    Basically implying that BP ignored the red flags of the pressure test to save the 10-15mln that would be required in taking another week to install more pipe and do more cement.

  125. 125
    zman Says:

    Thanks Jat, I’d note that the NPR and AP stories on it were full of errors regarding the blowout preventer.

  126. 126
    choices Says:

    Z-US gold funds-do not know if this chart will load but here is a comparison chart of the funds I look at (busy, I know-you can delete some and compare a lesser number of funds).

    http://stockcharts.com/charts/performance/perf.html?goldx,midsx,unwpx,pmpix,rypmx,tgldx,usagx,userx

    I personally like the USAA Prec Metal Fund-it is not the flashiest but it is managed by a very rock-solid company.

    http://moneycentral.msn.com/detail/stock_quote?Symbol=USAGX

  127. 127
    zman Says:

    Thanks Choices, will have a look at that too.

  128. 128
    elijahwc Says:

    SSN – It occurs to me that SSN is available @ .64 which is the rights pricing. IMO, offering should be done by mid-month and the march north will commence.

  129. 129
    zman Says:

    SSN starting to wake back up.

    EOG recovering from their lack of commentary on the earnings call and profit taking and the markets.

    FST inching. Feel pretty comfortable trading this one more frequently this year.

  130. 130
    zman Says:

    HAL moving nicely as well, having gotten it’s groove back after the morning swoon with the market. I’ll be looking to take profits in the higher strike calls either today or tomorrow. Lot of data coming out tomorrow.

  131. 131
    occam Says:

    Should OXY be included in the large cap E&Ps? I think the rest of their business is a pretty small percentage of the total.

  132. 132
    Nicky Says:

    Indices look to be in an ending diagonal. Starting to make me feel somewhat nervous – anyone else with the same vibe?

    Gold – wave iii may have topped and we are in a small wave iv pullback. Support at 1220. Wave v may give us our blowoff….I agree with VTZ’s target area of 1275 – 1350 (to repeat there is an inverse head and shoulders target of 1325). If we see a blow off the last leg will be retraced very fast so be warned.

  133. 133
    zman Says:

    Occam – maybe so, not sure how big their chemicals biz is. I left them and HES, MRO, and MIR out on purpose.

  134. 134
    1520sbroad Says:

    Z – looking forward to next week a bit – the HK analyst day is on 5/24. Options expire on 5/22. Do you think the may options will see action from those playing for a “good” analyst day or will that play be in the June options? I see there are some May $24s lurking in the ZCAT. Sadly, I have some of those lurking in my account as well.

  135. 135
    zman Says:

    1520 – I would not hold out any hope on the $24s. I think the market/analysts/investors are very much of a mind to act slowly there, have things proven to them. Frankly I am confounded by the lack of response to the better than expected asset sales and the Bakken like performance of their Black Hawk area wells. Especially given that they are well hedged and have practically sworn in blood not to tap the equity markets in 2010 and 2011.

  136. 136
    zman Says:

    Oil capitulating into the close of NYMEX, off $1.11

  137. 137
    jat Says:

    re 133, for 2009 chem was about 7% of pre-corporate earnings.

    I like to include OXY in large cap E&Ps, though coverage amongst the sell-siders varies between integrated analysts and E&P analysts, really just depends.

    they track oil, have no refining, chemicals / midstream is small, and spit out tons of free cash while growing high single digits and still trading at a low ebitda multiple, what’s not to love?

  138. 138
    zman Says:

    CLNE/WPRT/FSYS all off the morning highs. Lot of mo-mo there.

  139. 139
    1520sbroad Says:

    #135 – agreed. I very rarely go long options and my thesis for this foray onto the long side includes all of what you highlighted – I figured the analyst day would provide another potential opportunity for HK to tell their new story of “discipline”. Hmmm…

  140. 140
    AAA Says:

    GMLDC, TEX,Z,

    Thanks for the insight on the engineering side. It’s interesting to me that there seem to be ambiguities over exactly whose responsibility it was to make these decisions. I understand that RIG and HAL want to lay everything on BP, but doesn’t the drilling contractor run the drilling rig and hand the well over when it is plugged? Why would BP be deciding when to pull mud, etc? Isn’t that the drilling contractor’s responsibility?

    On another front, I think BP is falling down on the PR front. They need to be giving the impression that their entire company has dropped everything and is focusing 100% of their resources on this. I know that is unrealistic, but perceptions matter when we are talking Washington and potential lawsuits. The impression I am getting from them is business as usual, ie “we have a problem and we are looking at it”.

  141. 141
    zman Says:

    I’m here but working through the mid cap orange chart updates, expect them in the Monday post. Smalls after that. Shout if you have a question.

  142. 142
    elijahwc Says:

    Effort to raise oil-spill damages limit blocked?

  143. 143
    Gmlgdc Says:

    re 140 the rig is just a day rate rental they do what the operator says. You can have a turn key well where you pay a fixed rate and they drill you a well, but this was day rate.

  144. 144
    RMD Says:

    LGCY: I forget who posted thought LGCY gets acquired, just checked and LINE was ruled out by a big owner. Do yo have further thoughts about whether 2 of the upstream MLPs combine, or a midstream wants to vertically integrate? (Given valuations I don’t think an E&P would buy them, even to get oily.)

  145. 145
    West Says:

    Previous high for XEC back in 2008 was 73.32 we will see what happens. Lower volume today also. I think that we continue higher and added today . Options seem expensive but continue higher. Maybe we get a pullback, if so I will load the wagon.

  146. 146
    zman Says:

    Re 132. Well that was fast.

  147. 147
    zman Says:

    BP now saying they will deploy Top Hat in next couple of days, revised from “next week” comment made earlier.

  148. 148
    TEXWS6 Says:

    As an Operator (BP) you have complete and total control over that rig as long as your commands/directives don’t violate safety violations or rules from the contractor (TransOean). The Operator is 100% liable for anything that happens when it pertains to DOWNHOLE conditions, which this should qualify as one.

    I had a blowout and eventually the rig melted/burned down and the drilling contractor covered 100% of the costs because the issue was on the surface and was not a cause of downhole well conditions.

  149. 149
    Gtinvest Says:

    This could be the reason Bp changed its mind:
    http://www.fox8live.com/news/local/story/BP-to-try-smaller-pipe-to-stem-Gulf-oil-gusher/YEO358sJvEK9A676Js3mXA.cspx
    .

  150. 150
    RMD Says:

    I’m sensing the VNR offering was not oversubscribed; never traded at the deal price.

  151. 151
    Dman Says:

    Z – have you figured out whether CLNE likes high or low NG prices?

  152. 152
    zman Says:

    re 151. Lower would make more sense than higher.

  153. 153
    zman Says:

    Not willing to dip any further into cash piles at the moment, iffy looking market. Tempted to double up on a couple of things but will wait out retail sales tomorrow and probably industrial production and sentiment.

  154. 154
    zman Says:

    WILDZTRADE – ZIM – CAM

    CAM – Added (20) May $40 calls for $0.55 with the stock at $38.05, off about 3.5% today on a pullback in the BP oil spill group and a weak market.

  155. 155
    Nicky Says:

    Almost made it to the 1155 level. 1147/50 would look better. Short term cycles should bottom late today or in the first three hours of trading tomorrow.

  156. 156
    zman Says:

    Thanks Nicky, spot on today, this week, etc…

  157. 157
    zman Says:

    beerthirty

  158. 158
    Nicky Says:

    Bomb explodes outside of a prison near Athens, Greece

  159. 159
    john11 Says:

    GPOR Niobrara and Permian acquisitions and subsequent offering.

    http://finance.yahoo.com/news/Gulfport-Energy-Corporation-pz-2374094610.html?x=0&.v=1

    http://finance.yahoo.com/news/Gulfport-Energy-Corporation-pz-208613185.html?x=0&.v=1

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