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

Posted on by zman

 

 

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 thoughts on “Thursday Morning Oil Review and Natural Gas Preview Plus LC Orange Charts”

  1. 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. 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.

  4. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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…

  16. 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. 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. 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.

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

  23. 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.

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

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

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

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

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

  33. 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

  34. 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.

  40. 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. 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.

  43. 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

  44. 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.

  45. 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.

  46. #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. 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

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

  50. 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

  51. 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.

  52. 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. 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.

  55. 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.

  56. 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.

  57. 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.

  58. 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.

  59. 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. 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.

  66. #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…..

  71. 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.

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

  73. #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.

  74. 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.

  75. 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?

  78. 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.

  85. 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?

  86. 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

  89. 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.

  90. 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.

  91. 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.

  92. #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

  93. 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. 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. 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.

  98. 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?

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

  100. 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. 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.

  103. 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.

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

  109. 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.

  110. 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.

  111. 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.

  112. 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.

  115. 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.

  116. 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.

  117. 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. 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……

  120. 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.

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

  127. 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.

  128. 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.

  129. 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.

  130. 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.

  131. 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.

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

  133. 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.

  134. 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. 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. #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…

  139. 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”.

  140. 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. 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.

  143. 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.)

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

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

  152. 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.

  153. 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.

  154. 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.

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