14
May

Beyond Dumb Friday

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Market Sentiment Watch: Way to go Sarkozy. A report that France threatened to pull out of the euro sent the euro to a 17 month low, the dollar to fresh highs, crude to 3 month lows and sent equity futures in the U.S. tumbling. What's ironic is that President Sarkozy threatened to pull France out of the euro IF other countries refused to help Greece. That action led to the rest of Europe agreeing  to help Greece which in turn sent the markets wildly higher last Monday. So now the market doesn't like the fact that someone played hardball? Sheesh. Personally I find it amusing that France was able to twist Germany's arm.

 

Ecodata Watch:

  • Retail sales: up 0.4% vs -0.2% expected
  • Industrial production: Forecast at 0.8%, we get this at 9:15 am EST
  • Consumer sentiment: Forecast at 73.5, we get this at 10 am EST

In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Natural Gas Storage Review
  4. Stuff We Care About Today - Royalty Trust Comments
  5. Odds & Ends

Holdings Watch

ZCAT (Zman Catalyst portfolio)

  • $8,800
  • 85% Cash

  • Yesterday’s Trades: None

ZIM (Zman Inefficient Markets portfolio)

  • $26,600
  • 69% Cash
  • Yesterday’s Trades:
    • 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.
    • Sold the (25) WLL calls taken earlier for $0.93, up 22%.
    • 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. 

 

Commodity Watch

Crude oil fell $1.25 to close at $74.40 yesterday on a stronger dollar and a weaker equity market. This morning crude is trading weakly but off the morning lows after the retail sales figures.

  • Macondo Watch:
    • BP is close to trying three options to plus the well: they are within a day or two of deploying the Top Hat, they may deploy a narrow pipe into the riser in an attempt to catheterize the well, and finally they about a week away from attempting the junk shot (an attempt to clog the BOP with debris and flash setting cement).
    • There will be a special meeting at the White House regarding the spill; not sure timing is set yet.

Natural gas traded $0.055 higher to close at $4.34 yesterday after the EIA reported a smaller than  expected injection to storage (see below). This morning gas is trading off two pennies.

Natural Gas Storage Review


ZComments: Given the slightly weaker temps week to week it appears that natural gas is increasingly taking share from coal fired generators. This past week's injection was back in line with historic norms for this season and gas prices stay range bound as I suspect they will well into early summer (and coal prices stay aloft) I would expect injections to travel to the lower end of the band in graph D below. It is also likely that industrial production continues to recover. 



 

Stuff We Care About Today

Royalty Trust Brief Comments:

  1. As you know, I'm long WHX
  2. I model WHX quarterly, with 1Q having come in above my estimate ($0.70 vs $0.61).
  3. For the year I forecast they will distribute $2.51 for a current yield of 11.4%
  4. Notice in the table above only two of the nine listed royalty trusts have public estimates available from the normal sources (Yahoo Finance, Thomson first call).
  5. Maybe boredom keeps the analysts at bay here. I however like getting paid to wait
  6. I'm also satisfied with the relative safety of the yield at WHX and note that with it above it's peers it is likely to continue to get "equalized" towards them (either it rises or they fall lifting their yields and I think the former is more likely of the two options).
  7. I will take another look at BPT. Although I find their reporting to be less friendly than at other trusts, the yield still looks interesting.
  8. MVO is now on the hit list as well.
  9. This section along with more data on the RT's including the WHX model will be added to the Yield tab at upper left later today.

 

Other Stuff:

  • Next week I'll have the Mid and Small Cap E&P Orange Charts updated for 1Q stats and guidance.

Odds & Ends

Analyst Watch:

  • APC - JPM raises to Overweight from Neutral
  • SDRL - Jefferies raises to Buy from Hold
  • SB (Safe Bulkers) started at Opco with an Outperform and $10 target 

 

130 Responses to “Beyond Dumb Friday”

  1. 1
    milepost_43 Says:

    XL pipeline change….Cushing to GC first….more takeaway capacity from Cushing…Inventories at Cushing have risen for eight weeks in a row, putting the amount of oil in storage at the hub 29% above year-ago levels.

    TransCanada announced last week that it had revised its plan, choosing to first build Keystone’s southern leg from Cushing to Port Arthur, Texas. The Keystone XL extension project awaits regulatory approval.

    http://www.tulsaworld.com/site/printerfriendlystory.aspx?articleid=20100513_49_E1_Oklaho8
    45662

  2. 2
    VTZ Says:

    It seems that no matter what news comes out of Europe right now it gets spun that it’s a negative for the Euro and the shorts pile further on. Getting quite ridiculous but it goes to show what’s going to happen when the US is in the same situation.

  3. 3
    zman Says:

    Thanks MP

    Agreed V

    I have to miss the open for an appointment, expect to be back by 10:30 am EST.

  4. 4
    zman Says:

    11:50 am EST, President to make oil spill speech from the Rose Garden.

  5. 5
    zman Says:

    MHR on the tape

    If anyone has any royalty trusts they think should be added to the list in the post please forward, especially ones with high trailing yields.

  6. 6
    zman Says:

    BP trying to catheterize that well this morning:

    http://news.yahoo.com/s/ap/20100514/ap_on_bi_ge/us_gulf_oil_spill

  7. 7
    Nicky Says:

    Totally agree re # 2. When the moment comes watch out below for the dollar. Until then party on….

    SPX has support at 1147/48, 1142,1135. Resistance at 1157,1160,1163.

  8. 8
    zman Says:

    Thanks for the levels Nicky.

    Industrial production up 0.8%, in line with exp, up 5.2% for past year, a help for natural gas.

  9. 9
    zman Says:

    Back in an hour.

  10. 10
    VTZ Says:

    The British Pound is going to be the next currency assaulted by the banks?

  11. 11
    Nicky Says:

    My guess is that they will want to hold this 1146 – 50 level. If we break below then technicals suggest we will test last weeks gap around 1115 – 1120. So it could get wild if 1146 or thereabouts breaks.

  12. 12
    isleworth Says:

    HAL added to TOP PICKs list at Sterne Agee

  13. 13
    isleworth Says:

    Samson Oil & Gas Limited (SSN) is actively pursuing the development of the Upper Cretaceous Niobrara Formation as an oil productive reservoir in Goshen County. Samson is actively in negotiations with several industry partners concerning a possible sale transaction that would reduce its equity in its Goshen County acreage whilst retaining a significant stake in the project..

  14. 14
    BirdsofpreyRcool Says:

    Good morning. Checking in a little late… credit markets pointing to a down 20 on SPX opening. Not sure if the stock market plays along, but that is where credit says it should be right ow.

    IG +4 3/8 bps wider

    HY -15/16 pts lower

    Not saying it can’t bounce, but saying that credit is getting leaned on harder than equities this morning.

  15. 15
    Nicky Says:

    Consumer sentiment at 9.55.

  16. 16
    RMD Says:

    Imitation is the Sincerest Form of Flattery: RAJA starts a weekly report entitled RJ E&P Catalyst Outlook. Also an E&P timing model; I love these, they usually backtest so well, then not-so-well in the future.

  17. 17
    italyinvestor Says:

    Z-currently in a hangar waiting for Pres Karzai to arrive at FT Campbell. I’ll let you know if he talks about opening up any AFG blocks for exploration :I.

  18. 18
    Nicky Says:

    Consumer sentiment comes in at 73.3 close to expectation.

  19. 19
    apbd Says:

    Go Screaming Eagle! I was in the 4th Inf
    Div. many many years ago. Thank you for your service.
    Bless you,
    apbd

  20. 20
    Nicky Says:

    Business inventories in line with expectations.
    Market couldn’t care less.

  21. 21
    BirdsofpreyRcool Says:

    Nicky — you mentioned y’day that we might hit the low in the 1st 3 hrs of trading today. Is that still on course?

  22. 22
    elijahwc Says:

    # 17 ditto on what apbd says. I grew up in Clarksville Tn, son of military who retired @ Ft Campbell.

  23. 23
    Dman Says:

    Here’s a dumb question suitable for Dumb Friday:

    I just closed a small RAME position that I opened as a spec. It held up well, so I was reluctant to close it but decided I’d rather not wait for small green to turn into big red.

    And also (here’s the dumb part): I don’t know much about RAME. Can anyone tell me where they fit into our universe? The stock has been strong, so I figure it might be worth watching.

  24. 24
    Nicky Says:

    BOP there is a minor cycle that has rolled over to the downside with this early weakness. That said we should see a bounce in this timeframe (by that I mean now…). Let’s see how far it takes us….

  25. 25
    Nicky Says:

    Gold knocked back at 1250. CNBC saying earlier that along with the banks the miners were being sold heavily in London.

  26. 26
    Nicky Says:

    Food for thought:

    Fib retrace off 1066 low
    38% 1132.40
    50% 1119.68

    the latter (50%) just also happens to be the gap from last Friday….

  27. 27
    Dman Says:

    Worth mentioning dept: on May 10 Marc Faber sent out a rare interim report, with a fairly simple message: “sell rallies”. Since then there was a rally & it has been sold. Marc doesn’t usually send out anything between monthly reports, so I guess his conviction level was high.

  28. 28
    Popeye Says:

    HK puts up yesterday FWIW.

  29. 29
    VTZ Says:

    RE 25 – Consolidation above the breakout level would be constructive. There is no way that upon breakout it only rallies up another ~$20 then fails again.

  30. 30
    VTZ Says:

    Jim Sinclair’s comments today on the Euro/Dollar relationship if the Euro no longer existed:

    “The USDX would be around, but no longer reactive to the euro. The euro would be replaced with the original currencies of member states in various percentages as a synthetic euro, but the demise of the euro in the USDX would be complete. Further shorting would not be met with the same reward.

    The attack of the US dollar would commence immediately.”

  31. 31
    choices Says:

    Anyone have a copy of the JPM report on APC thst they can share?-same for Oppenheimer report of yesterday?

    Thanks.

  32. 32
    RMD Says:

    Some holders met with LINE; co. would not discuss 1st G Wash well which had TDed, but they had that pleased cat-which-swallowed-the-mouse grin.

  33. 33
    zman Says:

    Thanks Isle for 12

    SSN acting well on that news, in fact, aside from the dollar its the only bit of green on my screen.

    WLL off big again, look for another fast trade there today.

  34. 34
    RMD Says:

    choices sent JPM to Z.

  35. 35
    Nicky Says:

    Overall view:

    Until 1133.22 is taken out on the downside then we can still be in a wave iv (currently in c of iv) and the count can still resolve bullishly.

  36. 36
    zman Says:

    WILDZTRADE – ZIM – WLL

    Added (20) WLL $85 calls for $1.05 with the stock off $3.77 (4.4%) on the day in a weak tape for equities and oil. This will be another fast one, though not likely as fast as yesterday.

  37. 37
    zman Says:

    By the way, on SSN, the average price of the Goshen county lease sale is said to have been $2,000 (range of $500 to $3,050/acre).

    If you take SSN’s 40,420 net acres at $2,000 that’s $80.8 mm for the Niobrara

    That’s before you count Bakken and other efforts.

    Stock is trading at $58 mm total enterprise value at $0.70. Feels like a bargain or at least an option without expiry. I continue to hold SSN in the ZLT.

  38. 38
    choices Says:

    Z, RMD-Thanks!

  39. 39
    elijahwc Says:

    Z – A re-read of the release by SSN implies (almost shouts)that they have a Niobrara partner in pocket and are now down to dickering price and terms. Gotta love the Aussie’s putting another Catalyst point in your possession.

    Also, price action essentially insures a very successful rights offering next week.

  40. 40
    Gmlgdc Says:

    From Raymond James:

    Troubling data points on BP’s oil flow rate; expect more weakness today. Analysis of the oil leakage by at least three separate independent experts indicates that the rate of oil flow may be much higher than the 5,000 bpd figure used by the company and the federal NOAA agency for the past two weeks. All three data points were reported late yesterday, and therefore will likely pressure BP shares today. According to Steve Wereley, mechanical engineering professor at Purdue, flow is 70,000 bpd (based on velocimetric image analysis of oil flow video released by BP). According to Eugene Chiang, astronomy and earth science professor at UC-Berkeley, flow is 20,000-100,000 bpd (also based on analysis of the video). According to Ian McDonald, oceanographer at Florida State, flow is 20,000-25,000 bpd (based on satellite imagery of oil on the surface). It is important to point out that all these estimates must be taken with a grain of salt given the inherent lack of precision in estimating underwater oil flow. This is demonstrated, for one thing, by the fact that these new estimates differ as much from each other as from the original number. However, nonetheless, the “headline risk” is clearly negative for BP shares.

  41. 41
    zman Says:

    Crude down $2.40, testing $72. $70 obviously on trader’s minds. Any move of length below $70 should be met with OPEC commentary.

    Re 39. Yes, I plan to hold a round table meeting at the Town Pump about that issue this weekend.

  42. 42
    zman Says:

    Those upper rates would seem to contrast with most single penetration deepwater producers (unless they put the well at the best takepoint on structure) and also with what’s being seen onshore which frankly isn’t that much so far. The Coast Guard just said the spill has broken into smaller parts and that while it is potentially catastrophic it may “pose less of a threat of massive landfall”

  43. 43
    guru Says:

    Z:

    Any thoughts on the reasons behind the free fall in crude oil prices? Is this trend supported by the supply/demand fundamentals? Or is this totally linked to the free fall in the Euro v/s Dollar?

  44. 44
    Nicky Says:

    Gold working on wave c of iv by the looks of things. v up still to come….

  45. 45
    zman Says:

    43 – Dollar to fresh highs and a weak equity market. You don’t need any more reason than that. Crude is in whole dollar support mode so you break $73 or $72 and the next dollar down is your next chance at holding. I’d bet $71 falls but at $70 there is a better chance of a defense. As far as supply goes, we have plenty. But that is nothing new. Demand is picking up both seasonally and apparently from increased global economic activity. It had been mostly a China and Middle East story on the demand side but the U.S. has added a 1 mm bopd of demand in the last 2 months and Latin America is kicking up demand for distillates, both due to refinery outages in places like Chile and due to increased demand for crude from other parts of the continent.

  46. 46
    Nicky Says:

    If 70 (69.50 to be exact) you are looking at 66 next. This goes on as long as the assault of the euro continues…..

  47. 47
    dij Says:

    EOG and WLL both at May 6 and 7th (last crash)resistence levels, (as support).

  48. 48
    zman Says:

    47 – yeah I noticed, last time WLL sliced the 50 day like this it reverse back out the following day. Nothing about the story there to not like, especially on pull backs. May add more stock next week.

  49. 49
    guru Says:

    45- Thanks. How much crude demand is subtracted due to the contraction in Eurozone economies? From a GDP perspective, Eurozone is also a $14T economy, same as US and a big net importer of crude. Do those numbers counteract the increase in China and US demand? The devaluation of Euro is telling a different story unless it is merely a playground for currency speculators to make some quick money?

  50. 50
    BirdsofpreyRcool Says:

    From XAC Strategist #1 about 20 mins ago…

    The relative sell-off in Credit and equities appears to be
    following the same script we read last Thursday. Do not be
    fooled…their are material similarities…however the level of credit market volatility going into today’s trading session is materially higher than it was last Thursday…. this indicates
    that a 10pt widening in the CDX IG index is unlikey to equate
    into a 40pt drop in the SPX. This comparative relationship is
    important, in our opinion.
    The ability and determination of European govts to their
    sovereign debt also makes it VERY risky to short sovereign
    bonds or sovereign CDS this afternoon…cause the EU could
    simply announce a list of bonds they intend to buy next
    week and you will have essentially locked in some large losses.

  51. 51
    BirdsofpreyRcool Says:

    IG +9 3/8 bps… at wide for the day now

  52. 52
    Nicky Says:

    62% fib is at 1107. 200 dma is at 1100.
    It can no longer be wave iv but a wave ii correction is still possible.

  53. 53
    zman Says:

    Guru – don’t have a quick answer for 49, will work up some sort of out of date numbers there. There hasn’t been a marked reduction in crude demand according to anecdotal evidence from the refiners. It certainly has not been enough to offset the ramp in China and the more recent one (seasonal and stronger than last year) in the U.S. If you look at OPEC’s demand forecast for the globe of up 950,000 bopd from 2009 levels and IEA’s which is considerably stronger (both of which were out this past week with revisions) you get a sense that at least so far, Euro demand should not be killing crude prices.

  54. 54
    tomdavis12 Says:

    BOP: Where is your TED spread today? Thanks

  55. 55
    Nicky Says:

    BOP – thanks for #50 – very interesting.

  56. 56
    BirdsofpreyRcool Says:

    tomdavis — just looking at TED, as you typed. TED is wider today, reflecting both a flight to safety (lower US treasury yields) and a tightening of corporate credit (higher LIBOR setting). It’s not yet at last Thursday’s wide of around 31 bps, but it’s moving that way.

    TED +29.5 bps right now.

  57. 57
    guru Says:

    Z:

    Thanks, I look forward to yor updated crude demand numbers. I am an investor in common only and so I find the Orange charts very helpful, especially the info about debt levels, % oil of total production, TEV/EBIDA etc for mid caps (and small caps which not widely followed by other analysts). Keep up the good research info.

  58. 58
    cargocult Says:

    WRES seems to be taking a beating today. Any specific reason for this?

  59. 59
    BirdsofpreyRcool Says:

    XACStrategist1 is saying that people are looking for another downdraft like last thursday. He doesn’t think it will happen [altho, i see KOG is back at 3.50-ish, like last thurs] b/c he doesn’t see the momentum to the downside, like we did last week. Also, reiterating that the EU is now authorized to buy bonds… another reason why today is different than last thurs.

  60. 60
    BirdsofpreyRcool Says:

    MIDDAY OVERVIEW

    Market Update – risk shunned as another European bailout plan is called into question – stocks appear to be heading out the week 180 degrees away from how they started – equities around the world surged on Mon following this Sun’s announcement out of Europe although since then investors are having second thoughts about the efficacy of the plan. The ECB bond buy plan is having holes poked in it, w/reports suggesting the purchases haven’t been all that substantial past Mon (although the ECB is denying this to Reuters) and investors are worried about the sterilization measures due to come next week. Meanwhile, there is persistent speculation/fear that the eurozone could wind up breaking apart – the France threat headline from this morning (about how Sarkozy threatened to drop the euro), although since denied, remains one of the top stories of the day. Merkel’s remarks about Europe being in a “very, very serious” situation aren’t helping either. While sov debt CDS spreads have been relatively behaved (they are wider today but remain much tighter since last week), there is still chatter about ratings (Fitch was forced to deny speculation that a downgrade of France was coming while Moody’s today said there was an 80% chance that Greece was going to be downgraded in the next few months). In response to all these headlines/worries, the euro continues to sink, taking out two critical levels today alone (first 1.25 overnight and then 1.24 this morning). Meanwhile, the very strong Q1 reporting season from mid-Apr is being called into doubt following a handful of disappointing earnings reports this week (CSCO, NVDA, CA, KSS, URBN, JWN, etc). Finally, the news out of Washington has been a negative for the tape, w/stocks getting hit as each amendment is added to the Dodd bill (the big one today is the Durbin debt card provision). The SEC is due to hand down new circuit breaker regs this Mon or Tues and there is a lot of worry that the updated rules could be disruptive to HFTs and hurt overall market liquidity. Technically, people are watching 1120 on the sp500 as the next big level and then 1100 (which was last Fri’s close). The break in gold from its highs is somewhat encouraging, but keep in mind that the yellow metal remains very strong and right at fresh nominal highs while the other big risk gauge, the EUR-YEN cross, is up 2% today and is breaking to fresh highs (also 2yr TSY yields are off 5bp on the day to 0.77% and hitting multi-week lows). The G7 apparently held a conf call this morning to discuss the situation in Greece although it doesn’t appear as if any major action was taken.

    Desk color – volumes on the quiet side today; some deep value people are stepping in on certain situations; despite the weakness over the last couple days, we are still up on the week and well off the lows of last week, so its not like these are “new” levels. A lot of balls in the air, which is keeping liquidity on the sidelines. More quicker/trader-types dominating flows.

    Equity sectors: Financials are off around 3.5% on weakness across the board, with insurers taking a big hit due to worries about sovereign debt exposures to their portfolios. Materials are down over 3.25% as a surge in the dollar really weighs on metals. Iron ore and steel names are the hardest hit, with X and CLF both off over 7%. Tech is off close to 3.25% on weakness across the board, although semis are really lagging (SOX is off over 4.5%). Energy is off around 3% on broad based selling due to a ~$3 drop in crude to $71.50. Industrials are off 3% as investors sell higher beta and Euro exposed names to reduce risk. Discretionary is off around 2.25%, but outperforming as outperformance in some retailers offsets weakness in autos and hotels. Healthcare is off around 2% on weakness in a few pharmaceuticals. Staples, utilities, and telecoms are all off around 1% and outperforming as the group acts as a safety bid amid sovereign debt worries.

    Commodities: Crude has sold off this morning, and is trading below $72 down >3.8%. Natural Gas is around the $4.30 level, down ~0.8%. In metals – copper is down ~3%, while Gold is the lone commodity to be positive after the morning, up ~0.4% off its lows.

    FX: USD (DXY) is trading near its highs above $86.10, up >1%. The dollar has rallied vs. the Euro and is up almost 1.2%. The dollar has come off its highs a bit vs. the Pound, though still up ~0.4%. The Dollar has weakened throughout the morning vs. the Yen, and is near its lows down ~0.85%. The Euro is also around its lows vs. the Yen, down >2%.

    Corp. Credit: Corp Credit is mixed today – IG 14 are underperforming (out 8 7/8 bps) while HY have posted a more modest loss (down 1 7/16 pt) than stocks.

    Treasuries: Treasuries are trading near their highs with the pull back in stocks. The 2s are yielding 77bps (roughly a 5 bps gain from yesterday) while the 10s are yielding 342bps (roughly a 9bp gain). The 2-10 year spread has flattened to 265 bps.

    Europe: Europe is underperforming the S&P500 (Euro Stoxx 50 down ~4.7% vs. S&P down ~2.6%), with the Euro declining to its lowest levels since Nov. 08. Also, Spain’s inflation data revealed prices to have turned lower for the first time in ~25 yrs; Spain is has posted the biggest decline – down >6.5%. The weakest performing stocks in the IBEX include Abengoa, Banco Santander, Banco Popular. The German DAX has outperformed the Euro Stoxx; Axel Weber spoke in Brazil about how the dangers in the financial system should not be overlooked. [Reuters]

  61. 61
    zman Says:

    POTUS on the Oil Spill Watch Nutshell:

    Nothing new from his Rose Garden speech. Oil spill needs to be stopped. BP needs to pay for clean up. Oil companies have had a cozy relationship with the MMS who granted permits too easily and that ends now.

    Nevermind that:
    1) the industry pays multi-million dollar license fees for those permits
    2)”oil companies” then put risk capital and lives at risk to bear on finding hyrdrocarbons
    3) “oil companies” then pay royalties and income taxes to the feds.
    4) “oil companies” have been one of the most solid pillars of the job market
    5) the feds review the drilling plans and emergency plans all the wells drilled
    6) Obama was promoting increased drilling just a few weeks ago
    7) nothing on the planet is done without risk.
    8) Cars burn gasoline made from oil and the government owns one of the biggest car companies on the planet

    Outcomes:
    1) U.S. Gomex becomes a less desirable place to drill.
    2) pressures to increase royalty rates almost assured to go up.
    3) next Gomex Lease Sale activity will take a big dive.
    4) international deepwater drilling accelerates.
    5) crude imports to the U.S. begin to turn back up.
    6) prospects for natural gas to be considered as a viable transportation fuel tick up.

  62. 62
    zman Says:

    Will know if Top Hat works by end of today:

    http://www.upstreamonline.com/live/article215078.ece

  63. 63
    zman Says:

    Can’t seem to locate a CXPO replay, anyone got a link?

    Re WRES, nothing that I see, just group and market.

  64. 64
    BirdsofpreyRcool Says:

    XACStrategist1 —

    http://www.capmarkets.com/ViewFile.asp?ID1=136957&ID2=416322177&ssid=1&directory=6571&bm=0&filename=05.14.10_Being_Hit_with_a_Hammer.pdf

  65. 65
    zman Says:

    ZTRADES – ZIM – HAL

    Added (20) HAL $28 calls for $0.60 with the stock at 28.32.

    Also added (80) HAL $30 calls for $0.28.

  66. 66
    jat Says:

    Dunno if you saw, but goldman also echoing HAL today.

  67. 67
    zman Says:

    Italy – just remembered I saw your comment while I was away from the shop. Keep your head on swivel when you redeploy. Thanks much for everything.

  68. 68
    mattlee Says:

    Did you mean $29 calls for $0.60?

  69. 69
    choices Says:

    Chasing yield saga: after getting totally hammered last week with the dump of MLP’s et al, I’m still looking at yields-PSEC sold off today, to yield >15% but the issue as I see it is that distributions in general would be taxed as ordinary income, ie at the individual’s marginal rate.

  70. 70
    tomdavis12 Says:

    Z: Do you have a gut feel for weather the Top Hat works or not?

  71. 71
    Gtinvest Says:

    Rig counts Us +15, OIL +16, Gas -2, horzontal +12. North america +32.

  72. 72
    zman Says:

    mattlee – Oops. Yes.

    Tom – No. It seems to make sense that it has a better shot at working if they learned from the first test. Wondering why the smaller one wasn’t deployed earlier than the large.

  73. 73
    zman Says:

    Thanks GT, moving ever so slowly in the right direction last 3 weeks for ng count.

  74. 74
    Dman Says:

    #61 – so far it is just a lot of words. Sure this creates uncertainty in the industry … which will only be resolved when we find out how many of the words (cheap, easy, no political price to pay) get translated into action (expensive, difficult and a political price is attached).

    I’m sure there will be a rejigging of the MMS etc, but from Obama’s point of view, it doesn’t matter whether there’s any “there” there. As long as they can point to “something” they’ve “done”, this will achieve their political goal (avoiding being blamed for ditching their pre-election drilling policy) without incurring the cost (being blamed for higher oil prices/imports at the next election).

    Admittedly, my thesis does depend on just how cataclysmic the spill ends up being. If it keeps getting worse, the political cost/benefit will shift.

  75. 75
    milepost_43 Says:

    #61….IF this permit hiatus continues past May 28 doubt this halt/new recommendations priced in OIH etc….

    http://www.chron.com/disp/story.mpl/business/deepwaterhorizon/7004356.htmlThe indefinite ban on new offshore drilling that Interior Secretary Ken Salazar announced in Houston last week could cost 7,500 to 10,000 rig jobs by the end of June and force smaller companies to default on loans and miss payroll, the International Association of Drilling Contractors said

    The policy will remain in effect until at least May 28, when a review of industry practices is completed and new safety recommendations are submitted to President Barack Obama.

  76. 76
    zman Says:

    Was asked if there was a catalyst for the HAL trade. Not really, just thinking just averaging down. I continue to think this move is overdone for HAL and CAM. Market moves today are all about Europe and nothing about the spill. If the spill is capped or partially capped over the weekend the spill group will likely get a lift. If not they are likely to trade with the market except for BP which will see further pressure.

  77. 77
    choices Says:

    just in time for today: fat finger theory-heh

    http://www.cnbc.com/id/37151476

  78. 78
    Gtinvest Says:

    z I do not understand why E&P companies do not renegotiate terms of leases in times of severe decline in prices. The landowner is certainly aware of whats going on out there. Options and land deals are ofter renegotiated in the construction industry when conditons change. No one benefits from drilling uneconomic gas. I assume that many of the lease holders are looking for sustained income over a long period of time so why waste the peak output of a shale well on temporarily depressed prices? Or at least but every well on very restricted choke. Youre thoughts please.

  79. 79
    zman Says:

    GT – Lots of land owners to deal with, so renegotiation would be hard. Low prices are part of the reason why you are seeing the restricted choke option coming up in so many plays now though, that and EUR maximization.

  80. 80
    Paul in Kansas City Says:

    does anyone have a feel for Total? Other than the euro paini n general I don’t see the reason for the decline.

  81. 81
    West Says:

    ROSE, positive article in this week’s RMOJ on NFX’s Alberta Sand play. Article mentions that ROSE has two 400 bbl tanks on location and that field reports indicate that well has been fraced but has not been hooked up to pump yet. This is a 3Forks well and NFX is drilling an offset at the present time.

  82. 82
    zman Says:

    West – thanks for the color. That would be a frac of the vertical only as I understand it.

  83. 83
    West Says:

    #82, Z, tight hole , but article is showing that it is a horizontal. If anyone wants to subscribe here is web address. http://www.rmoj.com

  84. 84
    West Says:

    # 81…playing the July 25s at 1.75 give it a chance to get some public notice. Big spreads on options so buyer be ware.

  85. 85
    zman Says:

    Odd list of green stuff today:
    WHX, SSN, TISDZ, KWK trying.

    AEZ getting dropped hard again, back to below announcement of the second big Bakken well.

  86. 86
    bill Says:

    61>. good post

    its amazing we have any business left in the usa

  87. 87
    bill Says:

    >indefinite ban on new offshore drilling that Interior Secretary Ken Salazar announced in Houston last week could cost 7,500 to 10,000 rig jobs by the end of June and force smaller companies to default on loans and miss payroll, the International Association of Drilling Contractors said

    do you really think barry gives a hoot about texas , oklahoma and alaska

  88. 88
    zman Says:

    Hope for natural gas. Goldman just bought NXY’s natural gas trading arm for an undisclosed price.

  89. 89
    RMD Says:

    choices: PSEC and NGPC (and other BDCs)tend to have high expense ratios; somehow that is a high hurdle to overcome.

  90. 90
    Dman Says:

    #88 interesting ….

  91. 91
    Dman Says:

    bill, the only reason there’s any drilling in the GOM is because it was found infeasible to move the GOM to China and have them drill it there. Same with any other industrial activity… it’s basically only still around if it was too heavy to move to China.

  92. 92
    choices Says:

    thanks, RMD-I’m staying away for a number of reasons, tax treatment, your cmt re: expense ratios-do not need flashy yields, just steady, reasonsble yields as in steady energy producers-if the goberment keeps wacking the energy sector, however, ….

    #61 summarizes very well.

  93. 93
    baylor3217 Says:

    LOL…gold on yahoo still says $1210 which it has said for a week

  94. 94
    zman Says:

    1232.7, up 3.50 now

  95. 95
    elduque Says:

    Bill what are your current thoughts on nna.w

    Please and thankyou

  96. 96
    baylor3217 Says:

    Well today may be a great buying opportunity across the board. Based on the research I’ve done it seems:

    1) estimates for a worst case in Europe is they move to -1% GDP this year when we were expecting 1%

    2) a move to -1% would still have a minimal overall affect on growth for american international companies

    3)we’ve been in buy the dips mode forever. Maybe this is the time it stops, but there seems to be no way Europe and the global financial community will allow this thing to fall apart. Pumping in liquidity would likely have the same affect on the European economy that it had over hear

    4) will this be a death nell for socialism / communism and will the american voter finally waken up and realize they can have it much much better if the government gets out of the way and they are willing to work? unlikely, but we may have put off a double dip for a while at least

  97. 97
    Nicky Says:

    Wow this is one difficult call into the close. Anyway who went into last weekend short got their head handed to them on a plate on Monday.
    Oil managing a small bounce into the close. Indices may do the same as people just want to get flat.
    Should we tank into the close then I would view early Monday weakness as a buying opportunity. For me one of those levels – 1119,1107,1100 should hold this.

  98. 98
    Dman Says:

    DO at 12 month low.

  99. 99
    baylor3217 Says:

    E21 down almost 10%. Has anyone been averaging down / up?

  100. 100
    zman Says:

    re 97. Agreed.

  101. 101
    baylor3217 Says:

    British lawmaker stabbed at meeting with constituents…developing

  102. 102
    BirdsofpreyRcool Says:

    R&R put out a note this morning, saying they were worried that E21’s drilling program would be slowed down by MMS permitting delays. This may (or may not) be true for the shallow water guys… but, I guess it is a risk, given what is going on in Washington these days.

    Good think E21’s production is shallower decline than most GoM producers. It would hit other guys far worse than E21.

    I bought my last shares at $17.03 at the beginning of last week. Wished I’d waited, of course.

  103. 103
    RMD Says:

    choices: a friend’s comments on PSEC: in last 12 mo. made 1 acq and raised equity $ 3 times, each time below book. Cash flow less than distribution (hence high yield).

  104. 104
    zman Says:

    Nicky – “feels” like a good chance we get a the run into the last half hour.

  105. 105
    Dman Says:

    BOP – #99 reminds me – I’ve been a bit distracted from the board for the last week, so I’m not sure I’ve kept up with your EXXI thoughts. Nutshell?

  106. 106
    jat Says:

    re 88, that’s hilarious. That division had screwed up NXY since forever, I have no doubt they were eager to sell at a good value for GS.

  107. 107
    Dman Says:

    Oops, BOP you got there already.

  108. 108
    choices Says:

    #103-thanks RMD-not a healthy picture.

  109. 109
    Jerome Blank Says:

    From the stocks I’ve been able to look at this far this afternon, XEC, PETD, MHR appear to be stocks that are holding their bullish technical structures a bit better than most thru all of this volatility…WRES so far is holding the 20 day SMA, most recently testing topside ascending triangle resistance, down today, but big picture, still looks good…notable improving technical structure, UNG and SSN

  110. 110
    BirdsofpreyRcool Says:

    The GoM Shelf is night-and-day from the deepwater stuff. Been drilling there for decades and no major oil spills. The last time we had a major offshore spill in the US was UnionOil Platform A off Santa Barbara in 1969. And that well was cutting edge technology too, at the time. They learned a lot from that blowout… and it’s been 41 yrs until we got the next one. Not to downplay how awful this is… but, with the thousands and thousands of wells drilled offshore since then, it just doesn’t make sense that the Shelf producers would significantly affected. But, with the current state of affairs in Washington DC, it’s a real risk.

  111. 111
    zman Says:

    KWK at even or slightly green all day, big volumes. Hmmmm.

  112. 112
    Nicky Says:

    I hate to say it but it looks like we are in a wave iv consolidation which means one more push lower.
    I am looking for a 21 hour cycle to make its low somewhere in this time frame. Any push above 1137 spx will say the low is in for that cycle.

  113. 113
    RMD Says:

    CHK has sold $1.7 B in 2 series of cvt pfd.

  114. 114
    Jerome Blank Says:

    Re: 111, KWK, really holding the line at $12, the performance has been great today, but overall not so much…if something’s stirring, KWK could make a try at major resistance $13.50-$14.00, but the burden is now on the bulls, KWK broke long-term trendline support and is currently on a P&F sell signal…the 30 min right now looks promising…

    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3724280

  115. 115
    zman Says:

    Thanks JB, not in at the moment but I guess the suspicion is it could be the merger Monday target.

  116. 116
    zman Says:

    U.S. approves widespread use of underwater dispersants. Wow, it only took them 3 weeks.

  117. 117
    andy Says:

    baylor and anybody else if u want live gold quotes on your computer at the bottom with all your icons, go to kimco.com and then go search for k-cast. have had it for a year -works great. looks like there is an i-phone app too.

  118. 118
    milepost_43 Says:

    KOG stink bid in @ 3.27……..

  119. 119
    Jerome Blank Says:

    KOG holding the lower daily channel line and 50 day SMA support…

  120. 120
    zman Says:

    Beerthirty.

  121. 121
    jat Says:

    absinthe thirty

  122. 122
    Jerome Blank Says:

    Nice 30 min close for SSN…

    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3724280

  123. 123
    BirdsofpreyRcool Says:

    jat — hear hear! But i wish they still put the GOOD STUFF in absinthe… oh for a nice Green Fog to wrap oneself up in, after the last two weeks.

  124. 124
    West Says:

    Z, #82 do u have a reference on that Rosetta well being only the vertical? Was that in recent CC ? THX

  125. 125
    ram Says:

    BOP – Does the recent ruling on CIGX have any impact?

  126. 126
    BirdsofpreyRcool Says:

    ram — according to the company, it’s a procedural issue. PTO says there was a problem with an application filed at their office recently; CIGX’s lawyers disagree and can prove they provided everything in a timely and complete manner. (This is a “problem” which, as I’ve been told, no patent atty has ever come across before… so, kinda weird… and just a little bit fishy, on the part of the PTO…) Anyway, it is not a ruling that the patents aren’t valid (although it read that way).

    That said, CIGX is no longer about their dispute with RJR on the tobacco curing process (and the patent for that process)… it’s about the various applications of the nutraceutical derived from tobacco leaves (for smoking cessation and some other benefits). Winning the lawsuit with RJR (who used to pay CIGX royalties, by the way) would just be a nice payday at this point. But is not the core investment thesis.

    Thank you for asking.

  127. 127
    elijahwc Says:

    RMD is this the answer to your querry? “The remaining $7.0 mm
    of the $55 mm (will be spent on ongoing exploration and development in the non-operated Cinco Terry field in West
    Texas) and for the drilling of two new wells in the company operated East Chalkley oil field in South Louisiana.

  128. 128
    Jerome Blank Says:

    Stocks that held on to their respective P&F buy signals and are still in X’s…

    WRES, AEZ, FST, MCF, MHR, PETD

    Stocks that held on to their P&F buy signals, but are currently in O’s…

    XEC, CXO, EOG, KOG…

    Stocks that are on P&F sell signals, but triggered “bear traps” and are now in X’s…

    VLO, ECA, ROSE

  129. 129
    ram Says:

    BOP – Very kind of you to respond and clarify.

  130. 130
    buy counterfeit euro bills online Says:

    buy counterfeit euro bills online

    blog topic

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