25
May

Tuesday Troubles

Print Friendly, PDF & Email

 

Market Sentiment Watch: Are we there yet? Is it the long weekend yet?  Yesterday had to rank right up there with the most boring market days of 2010.  Today promises to be much more volatile as futures fall out of bed and I'm seeing three words repeated more often than any other these days: "Flight to Quality" although "Flight to Cash" or "Flight to the Dollar" may be more likely.


Nicky's Voodoo Watch:

With the futures continuing to slide we may be looking at v down. Possible target area is 1053. If it starts to look really bearish I will give some more levels. If however, the 1053 area looks to hold it would likely set up some positive divergence. Another thing to note is that both VIX and price were down today – often signals a change in direction soon. Selling volume did decrease today. The ‘voodoo’ looks positive for a reversal day tomorrow. If we are down at the open it should not last beyond 10.30am.

In Today’s Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Crack Spread Update - still sitting on hands but fundamentals appear to be improving; thinking evolving here.
  4. Stuff We Care About Today –  HK wrap thoughts, Royalty Trust update, VNR, WHX, PQ
  5. Odds & Ends

Holdings Watch:

  • ZCAT (Zman Catalyst portfolio):

    • $7,500
    • 99% Cash (biding my time until we are a little closer to some of the dates on the Catalyst list)
    • The Holdings Tab Is Updated for the Quick View portion.
    • Yesterday’s Trades:

      • None

 

  • ZIM (Zman Inefficient Markets portfolio)
    • $7,100
    • 72% Cash
    • Yesterday’s Trades:
      • HK - 4 trades added a total of (100) June $21 calls during the analyst meeting for an average cost of $0.29


Commodity Watch

Crude oil inched up $0.17 in directionless trading to close at $70.21 yesterday, despite a much strong dollar. This morning crude is trading down $2+ with the weak equity futures and with another spike in the dollar.

  • OPEC Watch: Libya's oil minister noted that OPEC is worried about the decline in oil prices but said that it may be too early for the Cartel to take action.
  • Yemeni Rebel Watch: Rebels in Yemen blew up an oil pipeline carrying crude to a Red Sea port, no word on size there.
  • Early Read On Oil Inventories: (according to the Reuters Survey)
    • Crude:  DOWN 0.1 mm barrels
    • Gasoline: UNCHANGED
    • Distillates: UP 0.3 mm barrels
       
  • Gulf Of Mexico Oil Stats: (just for point of reference in case someone stops the drilling in the Gulf)

    • Some Stats:

      • Production: 1.57 million Bopd,
      • or about 30% of total in 2009;
      • or an estimated 19% of U.S. total crude reserves
      • Without additional drilling we are looking at steep declines of anywhere from 20 to 33% per year (so very little production in 3 to 5 years)
      • Deepwater production has been helping to grow Gulf production as a percent of total in recent years.


Natural gas fell 2 pennies to close at $4.02 yesterday. This morning gas is trading flat.

  • Imports Watch: Imports were 8.2 Bcfgpd for the week ended May 13. My source for this has changed and I'll have updated numbers for last week later this week before the storage report. I'd note that imports remain subdued, especially LNG which has been average 1.1 to 1.2 Bcfgpd over the past few weeks.

 

Crack Spread Update

Key Thoughts:

  • Last week we saw our 3rd week of (and strongest yet) of a recovery in distillate markets as demand surged past the 4,000 bpd mark, for the first time in over a year departing from the bottom end of the 10 year range.
  • The stocks continue to ignore this, at all three levels I watch:

    • The independent refiners (VLO, SUN, TSO, FTO, HOC, WNR)
    • The mini-majors (MUR, HES)
    • And the domestic majors (XOM, COP, CVX)
  • I am hearing the Majors and the worlds FLIGHT TO QUALITY repeatedly these days and that kind of thinking normally makes less sense than the words FLIGHT TO LIQUIDITY do. But in this case, with relatively strong crude prices and stronger crack spreads and with chemcals sector demand picking up, the Majors may be a better and certainly more liquid play than the independent refiners who though beaten, have proven in the past that they can stay unloved for longer than anyone could believe.  

 

Stuff We Care About Today

HK Analyst Wrap Thoughts:

  • A lot of data on their activities in the Haynesville and Eagle Ford'
  • But no new well results to talk about
  • Production guidance of 30 to 40% for 2011 should be higher than what most analysts are thinking of.
  • 2011 is likely to see another midstream monetization of the same magnitude that we just saw in the Eagle Ford.
  • 2011 and 2012 will see a continued fall off in land acquisitions
  • 2012 remains the target year for going cash flow positive
  • All in all, greater capital discipline seems to have taken root here.

Energy Yield Update - Royalty Trusts

I just updated these mid month but thought it was worth doing again as many of them finally succumbed to the market sell down.


WHX Comments:

  • I added to WHX last week and continue to see a yield from current levels of about 15% for this year and our average costs is now $17.18.
  • The trust has roughly 72% of expected oil production and 65% of expected gas production hedged for 2010.
  • To be conservative, I have lowered my oil price assumption for the remained of the year by $10 per quarter which puts me at $75 average ($72.50 in 2Q and $77.50 by 4Q)
  • My forecasts for other variables remains unchanged:

    • LOE of $21 / BOE
    • Oil production continues to slide at 5% per quarter
    • Oil comprises 58% of total production going forward
    • Natural gas averages ($4 for 2Q, $5 for 3Q and $6 for 4Q)

VNR Closes Oily Transaction

  • Before deal:

    • 143 Bcfe
    • 27% oil
  • Deal:

    • Acquired properties in MS, TX, NM
    • 4.7 mm boe (28 Bcfe)
    • 96% oil
    • 39% PUD, doesn't sound like a lot of probable and possible upside.
    • Paid $114.6 mm or  $ / BOE which is $24 / BOE which is OK but not great; management says LOE here is below $5 which is very low and helps with the valuation. 
  • After Deal:

    • 171 Bcfe
    • Roughly 38% oil
  • Nutshell Going Forward:

    • The Good:

      • VNR gets more balanced, with a significant boost to oiliness of their profile
      • The name remains highly hedged for natural gas at 83% hedged through 2011 at $8.07 (Nice).
      • 60% of expected 2010 oil production hedged at $86 (also nice)
      • Operating costs pro forma the acquisition should be lower.
      • Large hedge positions make 1.3x+ (high) distribution coverage easy this year.
      • VNR has proposed an increase in the distribution starting in 2Q. Current yield 11%.
    • The OK:

      • This is not a growth vehicle acquisition. The properties produce approximately 850 boepd, almost all oil.
      • The price is a touch high;  their last oil deal was done for just under $17 / BOE at the end of 2009 and this one may look high if oil prices come off more.
      • Recent deal is already behind you, falling prices may mean more deals are nearing however
    • The Ugly:

      • Nothing I see at the moment.

Other Stuff:

  • PQ announces JV in the Woodford with Nextera acquiring a 50% interest in its programs for $74 mm compensation and payment of a portion of future drilling costs. Allows an acceleration to the Woodford Shale program via the addition of two rigs over time, not a material boost to production this year.

UBS Presentations Today We Care About: (all times EST)

  • NFX - 10:25
  • SM - 12:20

Odds & Ends

Analyst Watch:

  • MUR - upped from Sell to Hold at Benchmark
  • YGE cut to Hold at Ardour
  • SM - Upped to Buy at Suntrust
  • CXO - Initiated at Outperform at Morgan Keegan
  • OII - Initiated at Buy at Deutsche

 

120 Responses to “Tuesday Troubles”

  1. 1
    zman Says:

    Ftures continue to get hammered as we approach the open:

    DJIA dn 209
    SP dn 26.50

    Dollar up 1.2%

  2. 2
    ram Says:

    At least some analysts are peaking out.

  3. 3
    ram Says:

    I was expecting the event that we are in right now to be next year at this time.

  4. 4
    zman Says:

    re 2. Yeah, but it’s in vain against this market. Liquidity rules. Note that gas is not getting hit like crude and everything else.

    MHR in JV with Hunt in the EFS.

  5. 5
    zman Says:

    BP to attempt top kill Wednesday. CEO puts chance of success at 70%. I would expect a sharp but perhaps short lived pop out of the BP spill group in the case of success. Changing that list to exclude OII and include APC so call it CAM, HAL, APC, BP, RIG or CHABR for now.

    RIG to hold conference call Friday to try and clear things up on liability.

  6. 6
    zman Says:

    BP now saying Wednesday is the earliest it could attempt top kill and timing could extend onward.

  7. 7
    Nicky Says:

    Morning all. Support at 1044 (breaking now by the looks of things), then 1038,1029.

  8. 8
    Nicky Says:

    For hours the news has been reporting that North Korea is part of the markets being down so heavily. CNBC reporting north korea armed forces alert status was false….

  9. 9
    ram Says:

    Nicky, were you looking for a more severe correction next March or April?

  10. 10
    zman Says:

    ZTRADE – ZIM – HAL

    HAL – Added (20) HAL June $26 Calls for $1.15 with the stock at 24.85 after another fall in the BP spill group. BP could try for a top kill of the well as early as tomorrow.

  11. 11
    Nicky Says:

    Ram – yes. The break of the Feb lows as i stated about a week ago would make me switch to a more bearish count however. We broke them this morning. It likely means a 3 wave move down to the 900 area by the Fall of this year. The low on this wave may not come until 970 – 1000, then a rebound, then down again.

  12. 12
    zman Says:

    Thanks Nicky, good to know. I wouldn’t be surprised if that little nutbag went nuts over the UN action that’s on the way though.

  13. 13
    elduque Says:

    Ward of SD on Cramer last night, Positive comments from both.

  14. 14
    zman Says:

    More Senate Gulf spill hearings starting now on CSPAN

  15. 15
    elduque Says:

    re HK do you think the non inclusion of oil findings is why the stock is getting ramped down.

  16. 16
    zman Says:

    ElD – heard that, I know they close the ARD deal in June but have the ARD shareholders approved it yet?

  17. 17
    zman Says:

    Consumer confidence at 63.3, highest level since March 2008. Last read was 57.9. Expectation was 59.0.

  18. 18
    ram Says:

    Which consumers are they talking to?

  19. 19
    zman Says:

    Eld – I think the lack of pop yesterday was no new well news but now this move today I think is simply the market.

  20. 20
    zman Says:

    re 18. I would assume the same sample set they always do. Perhaps more people like me who labor under the illusion that the end of the world is not around the corner.

  21. 21
    zman Says:

    Tom – did the post cover VNR for you, any follow ups?

  22. 22
    bondbuddha Says:

    Z, any thoughts on PNG ?

    Tks,
    BB

  23. 23
    zman Says:

    Bond – sorry not of hand, not my area, afraid I’d be next to useless commenting there without really look into it which I don’t mind doing but it may take a few days.

  24. 24
    john11 Says:

    Z any thoughts re the AEZ well particularly considering it was a short lateral?

  25. 25
    zman Says:

    NFX call at 10:25 EST, not that people are paying attention today, but it beats watching the tape.

  26. 26
    zman Says:

    John – I missed that,

    http://finance.yahoo.com/news/Americans-Dunn-County-iw-1741543459.html?x=0&.v=1

    very nice rate and from the previously announced Ron Viall well for a 7 day rate. They are increasingly looking like the next BEXP. Thanks for the headsup.

  27. 27
    Nicky Says:

    Unless we can get going to the upside its hard to see a bullish short term count. We look like we need a lower low to finish v….That said I don’t like the thought of this rolling over hard again either!

  28. 28
    zman Says:

    ZTRADE – ZLT – ROSE

    Sold half of ROSE for average $19.30, up 65%.

    Swapped into AEZ at $5.37. I increasingly see the AEZ story unfolding as the next “good real estate in the Bakken, Brigham like play (in the sense that they will have catalyst after catalyst as the year progresses) in the making”

  29. 29
    zman Says:

    NFX Gulf comment – got a permit for a sidetrack well despite the limit on permits. This will be their last planned well for the year as there are no permits being granted for exploration or development drilling at this time. Wow. Really talking up the onshore and the international drilling.

  30. 30
    zman Says:

    NFX Q&A

    Southern Alberta basin – potential is very similar to the Williston, drilling 8 wells between now and end of year. Probably no update until year end.

    Eagle Ford – 60% wet gas window, 40% in oil window. Will drill wells across the acreage footprint to get sampling across entirety of the acreage.

    That’s it, nothing really new, not talking about deepwater obviously.

  31. 31
    tomdavis12 Says:

    Z: 21 VNR is not hedged out as far as say LINE and WHX. Is that correct?

  32. 32
    zman Says:

    Not as far or as fully as LINE no. It has slightly superior coverage to WHX this year in terms of % of production covered and prices.

  33. 33
    RMD Says:

    PQ deal with NextEra: I thought most imp’t comment in Simmon”s piece is that NextEra is sub of Fla. P&L. CHK said long ago that deals with utilities are coming to assure supply. SIMM’s NAV est. is $10.50, mostly all Woodford.

  34. 34
    zman Says:

    RMD – that’s their PQ NAV estimate.

  35. 35
    tomdavis12 Says:

    Z: 29 Is your NFX comment mean that the gov’t is not issuing any new permits in GOM only. Is that priced into the offshore drillers. CSFB lowered their numbers for NE ’10 to $5.21 and TP is still $52. Yesterday fleet report came out. There were many extentions with Pemex that should moderate fears. Good luck with that is this market.

  36. 36
    1520sbroad Says:

    #29 – any color from them on when and if?? new permits become available?

  37. 37
    zman Says:

    Tom – yes, that’s what I got from it. We have 1 more well planned. That’s not what the original 2010 capex budget had laid out.

  38. 38
    zman Says:

    1520 – the current date to restart is 5/28 but I very much think that gets extended. There is a lease sale scheduled for the Gulf in August that Salazar has already said may get postponed.

  39. 39
    zman Says:

    Not a lot to say given the market, doing some reading, sitting on hands.

  40. 40
    tomdavis12 Says:

    Z: BV for NE is $27.5/$28/sh. I am not sure if this metric has proven to be a step up and buy in the past. Any metrics in your space that scream out buy to you. I remember in ’08 CHK blew through all value metrics because of the margin calls.

  41. 41
    zman Says:

    Tom – P/CF is getting pretty cheap as cycles go for many names (can’t recall the last time BEXP was this cheap (which is still pricey to other names but with good reason)) but oil prices will need to stabilize before people believe that the denominator is not simply set to decline.

  42. 42
    zman Says:

    Also have CSPAN on in the background. Some of these people must have shoe-tie specialists on their staffs.

  43. 43
    1520sbroad Says:

    SWN greenish?

  44. 44
    zman Says:

    SWN – makes some sense, basically unhedged, nat gas up 2 pennies and the market half off its lows. HK making a comeback as well and even HAL moving up.

  45. 45
    zman Says:

    N. Korea severs all ties with S. Korea

    http://news.yahoo.com/s/ap/20100525/ap_on_re_as/as_skorea_ship_sinks

  46. 46
    RMD Says:

    MCF: the good news is the stock is back in corp. repurchase price range. (Now, why didn’t I sell it up there and buy it back down here…..?)

  47. 47
    zman Says:

    RMD – MCF should have news on the 3rd exploration well in the very near future.

  48. 48
    Nicky Says:

    Resistance around 1065. If this wave higher is going to fail (and I am not saying it is) a good spot may be around 1062. If we get above 1078 things start to look a lot more bullish short term…

  49. 49
    zman Says:

    Thanks much Nicky, was just going to ask.

  50. 50
    zman Says:

    Getting on the SM call now

  51. 51
    zman Says:

    SM late getting started. Whsipering from executives talking about “sneaking well results in there”

  52. 52
    zman Says:

    Comments from speaker indicate room is not full.

  53. 53
    zman Says:

    SM – presentation shows Niobrara well completion in progress. If he spills the beans during the presentation I’ll be looking at the June $40s.

  54. 54
    zman Says:

    SM – presentation also shows their 1st Granite Wash well is flowing back.

    So they could have results today on either or both of these wells as this presentations was likely updated last night or it could be in the next few days.

  55. 55
    zman Says:

    SM –

    Niobrara well is flowing back now.

    Granite Wash wells – will announce on 2Q call.

  56. 56
    zman Says:

    Animation of the top kill:

    http://www.youtube.com/user/DeepwaterHorizonJIC#p/a/u/2/v4YG7J-Ws6k

  57. 57
    zman Says:

    SM call – no reason to jump in today, story remains very strong, as per the 1Q comments. Low debt (nothing on the revolver), strong growth in the right plays (Eagle Ford, Haynesville with coming Niobrara and GW), 50% liquids (Oil 34%, NGLs 16%).

  58. 58
    zman Says:

    SM saying they are producing all Eagle Ford wells on a restricted choke so far, still experimenting. This is more encouraging news for gas prices if more people take this attitude.

  59. 59
    elijahwc Says:

    FYI – Table pounding seqment on CNBC on EXXI by the analyst (Grubner?) folks here like that moved to Susquehanna

  60. 60
    RMD Says:

    Well so much for the Fat Thumb excuse for the 5/6/10 selloff. Increasingly prices are “legitimizing” those 5/6 prints, which makes me hopeful of a double bottom but suspicious that Something Bad is happening. Meanwhile TAT is beginning to get my attention, but not $ yet.

  61. 61
    1520sbroad Says:

    I would like to see us rally off of this S&P level of 1050-1052 where we have been stuck so far today. In my mind we have retested the lows from Feb and have had a healthy correction. Let’s move on.

  62. 62
    zman Says:

    Crude climbing off lows into the close of NYMEX, down about $1.50 on the day.

    Stocks again drifting.

    AEZ green on the day but not reflective of their program, especially after the recent drop.

    President headed to Gulf Coast on Friday. Look for more hand ringing and boot on neck talk as the week progresses.

  63. 63
    zman Says:

    and 1520 – I of course concur with 61.

  64. 64
    AAA Says:

    Here is a post form Business Insider about the top kill. http://www.businessinsider.com/what-is-a-top-kill-2010-5

    Plus, an interesting comment:

    Brute on May 25, 12:58 PM said: The leak could have been stopped the day after it started using a method sucessfully employed by the Russians on at least 4 occasions: Lower explosives deep into the well and blow the thing up. The earth collapes and seals the leak. They’re trying to save the well, not the Gulf ecosystem.
    Reply
    0 0 Flag as Offensive Michael on May 25, 1:28 PM said: @Brute:
    That’s a really good point that isn’t getting enough attention. Their entire focus seems to have been to get the oil into a pipeline/tanker. That’s not the same as plugging the hole.

    I’m all for a business trying to save a profitable venture, but not at the cost of wiping out the economies of the entire Gulf coast. LA & MI fisheries are probably already deeply damaged. FL is going to get killed this winter if the sugar sand Gulf beaches get tarballed.

    The gov’t should have stepped in and plugged the hole once BP’s Big White Box failed.

  65. 65
    AAA Says:

    Just to be clear, my post reposted a couple of comments from BI. There were other comments suggesting that there is a non-trivial risk of geologic damage to the ocean floor that could result in micro leaks, which apparently happened at Santa Barbara.

  66. 66
    zman Says:

    AAA – I recall comments about that early on, even a comment that they nuke it (small nuke). Silly at least on the nuke front, not sure about what kind of leaks it might cause. Had meant to ask Wyom or Reef or TexW why they need to drill a full TD well to the top of the reservoir for a relief well and not some shallower depth intersection that would take less time. Thoughts?

  67. 67
    skimo Says:

    62 64 seems more like head in sand than boot on neck by Obamanation… and I’m being polite.

  68. 68
    zman Says:

    Ski – the conflicting statements last weekend …

    Interior – we’re ready to push BP aside

    Coast Guard – replace BP? replace them with what?

    … pretty much say it all.

    If it’s all BP’s fault and they are incompetent then who was it that sold them the leases and approved the permits to drill in the first place? The U.S., so there has to be some shred of responsibility on that entity as well.

  69. 69
    zman Says:

    Market attempting a key reversal.

  70. 70
    Gmlgdc Says:

    re 66 typically you want to only have to intercept one string of casing which is at the bottom, remember you have to drill into the casing to pump kill fluid and cement. I believe wild well is on the job they have a guy named John Wright working for them who is an intercept guru. When we use him a few years back he had never missed.

  71. 71
    zman Says:

    Thanks GMLGDC, would have asked you as well but your moniker is a mouthful. Can we get you a new one like Driller or Wellguy or Spudman? 😉

  72. 72
    Geno Says:

    new name for gmlgdc

  73. 73
    zman Says:

    grazie!

  74. 74
    andy Says:

    re 72 better!!!!

  75. 75
    zman Says:

    AEZ up 5%, getting a little credit.

    I’d play BEXP in the ZCAT for well results either this week or next but it’s hard not knowing if the S&P is set to drop 20 overnight. Sheesh.

  76. 76
    zman Says:

    HAL chart looks pretty interesting, another gap down start to a new recent low. Fundamentals almost universally lauded there by the Street now and cheaper than it has been in awhile. Street also continues to beat the “their not accountable for the spill” drum.

  77. 77
    elduque Says:

    so do you think that AEZ would be your no.1 pick right now or KOG or TAT? Or something else.

    Thank you

  78. 78
    elduque Says:

    thanks to you and John, I did pick up AEZ earlier in the morning.

  79. 79
    Popeye Says:

    “Federal officials who oversaw drilling in the Gulf of Mexico accepted gifts from oil companies, viewed pornography at work and even considered themselves part of industry, the Interior Department inspector general says in a new report”

  80. 80
    zman Says:

    Eld – hmmm. Good question. If I limit it to the really small names, it would be AEZ, just from a pure stock will run each time news hits standpoint in a more normal market. KOG is really cheap now too.

    Moving up the food chain I have to revisit BEXP and WLL and I still own the common of each but no options at the moment.

  81. 81
    elduque Says:

    i assume if you owned SD, you would swap into either AEZ or KOG

  82. 82
    zman Says:

    re 79, yeah, they threw great parties I hear.

    Natural gas up 5 cents, has been resilient during all this.

  83. 83
    zman Says:

    Elduque – not necessarily at this point, you’ve already taken the pain and if they get ARD to close that is a big win for them.

    Also, I own those other two and would want some gassy exposure, so if I came out of something like SD, it would be to go to an HK or maybe a SWN. As painful as that sounds, they’re down for no solid reasoning that I can find. Maybe an SM or an NFX (also owned by me) if you want some interesting catalysts along the way.

  84. 84
    zman Says:

    And Eld – I’m saving so dry powder for coal names – bashed without the commodity being bashed.

  85. 85
    zman Says:

    BP has been doing diagnostics on the BOP all day today, helps to design the top kill. They may start the topkill tomorrow morning.

  86. 86
    zman Says:

    AEZ acting sort of popular now. In a stabilized market it should revisit the recent high. I’ll do a more complete work up on it for the morning.

  87. 87
    jiveyjr Says:

    yeah, buddy on dat AEZ…way to go ZMAN

  88. 88
    jiveyjr Says:

    Cramer must have all his minions ginned up on SD…if so I’m thankful; I own too much of that dog much higher

  89. 89
    Popeye Says:

    My screen is turning green, it must be a mistake.

  90. 90
    zman Says:

    thanks J but actually John deserves credit. Never assume I’ve seen news on one of our names, especially if I didn’t say something about in the post. I have too many screens and sometimes I miss things as they scroll by.

  91. 91
    zman Says:

    This is a pretty amazing key reversal for the S&P, almost green now.

  92. 92
    elduque Says:

    never ever underestimate the market being manipulated higher.

  93. 93
    jiveyjr Says:

    JB may have a different take, but with the McClellan at lows not previously seen I consider this bounce anemic…of course it may get follow through tomorrow, or in the next ten mins for all I know

  94. 94
    zman Says:

    Eld – FST should be on the very interesting right now list as well.

  95. 95
    Dman Says:

    Z – FST catalyst or inefficiency?

  96. 96
    choices Says:

    Anybody see any news on CIGX-up 21.85%.

  97. 97
    Dman Says:

    CIGX up 22% for those keeping score

  98. 98
    Jerome Blank Says:

    Re: #93, jivey, I’m thinking we may get a bullish divergence vs. the S&P…S&P went to new relative lows, I doubt the $NYMO will break -136.21, so the McClellan could signal the divergence…

    CIGX up 21% today…

  99. 99
    Dman Says:

    Snap!

  100. 100
    zman Says:

    Re FST – after those earnings? Both.

  101. 101
    jiveyjr Says:

    briefing just says KOG announced a new $200 million credit facility

  102. 102
    john11 Says:

    Good job BOP called that one re KOG.

  103. 103
    Nicky Says:

    Rally came on even lower volume than yesterdays’ move down. That said thank god for a rally! Anyway resistance is at 1090,1100. I actually think we are going to make it back to the 1120 area before rolling over again. Thursday and Friday the voodoo is very bullish….

  104. 104
    zman Says:

    KOG – they said they were more than pleased with the size and terms of the revolver. $200 mm is the revolver with a $20 mm borrowing base at present.

  105. 105
    zman Says:

    5 minute video explaining what BP is doing to prep for the topkill

    http://bp.concerts.com/gom/rovs_24052010.htm

  106. 106
    BirdsofpreyRcool Says:

    Phew — out for most of the day on other (non-energy) stuff. Didn’t have much to add today, however. Didn’t think sentiment would get so bad. Or TED would go so wide. And North Korea was that delusional. And totally underestimated BP’s response to Macondo. And didn’t think even the Dems would allow a Senate bill on “financial reform” out of the box that was this stupid/awful/shoot-ourselves-in-the-foot/everything-but-the-breadbasket bill. So, doing some wound-licking on top of everything else.

    That said, CIGX is up today (although it never should have been down… or up that much… or whatever; stock price doesn’t really matter until they launch). Hearing that product is currently being produced for the Richmond, VA test market launch. That launch was pushed back two weeks to mid-June… no surprise, in this mrkt and with all the “stuff” going on. Company wants to make sure packaging is totally cool with the FDA, among other things.

    KOG making me feel like a proud parent with their announcement of a $200mm credit facility with Wells Fargo. A perfectly acceptable bank (bettern Paribas, eh z?). KOG said that would be done “in a couple of days,” a couple of days ago. It is just so gratifying when a company does what it says it is going to. Also, $20mm borrowing base is better than I expected. Way to go, Lynn and The Boys!! Thank you.

  107. 107
    zman Says:

    Missed ya BOP! Picked up a $20 laying on the ground on AEZ today while you were out.

  108. 108
    zman Says:

    API Watch:

    Crude down by 0.56 mm barrels
    Gasoline down by 3.1 mm barrels

    haven’t seen their distillates number yet but those first two should be warmly received by the markets, especially if EIA follows with like numbers.

  109. 109
    BirdsofpreyRcool Says:

    Also, did anyone catch Duane Grubert on CNBC today? He looks like a hippy, with that long-ish hair, but he knows his stuff. However, when the Talking Heads THs) were aghast at his recommending an OFFSHORE OIL PLAY, he could have done a better job ‘splaining why EXXI is NOT BP. He mentioned “shallower water” and one of the THs said something like “only 300 ft”… Duane should have said, “no, only 30 ft… AND their BOP is ABOVE THE WATERLINE, not a mile under the salty sea.” Oh well, it’s actually pretty tough to keep a cool head and answer everything the way you want to, when doing one of those TV interviews… you are trying so hard not to look stupid, since you are looking into a lens with no feedback. At least they let Duane put out his $38 price target on EXXI. Thank you, Duane.

  110. 110
    BirdsofpreyRcool Says:

    z — Wow-sers on the AEZ. But, that is what you’re good at. Watching the energy sidewalk like a hawk, looking for those $20 bills. Way to go.

  111. 111
    Wyoming Says:

    RE 66,

    If you drill a shallow kill, the mud you pump will have a minimal kill hydrostatic.

    Water=.433 psi/ft pressure gradient
    17# mud = .86 psi/ft (say this is what we need)

    Hit you kill well below the mud line and you only add 2,150 psi of kill pressure. Remember the well blew out with basically water. Take the kill well down to 20,000 feet. Now the kill mud will 8,600 psi to the water hydrostatic. You have 6,000 psi more kill pressure relative to the 5,000ft of kill fluid below the mud line.

  112. 112
    zman Says:

    Thanks Wyoming, clear as mud. No, seriously.

  113. 113
    zman Says:

    BP on the tape with a leak of several thousand barrels from a storage facility at the trans-alaska pipeline. Pipeline curtailed to 16% of normal volumes. Details in post tomorrow.

  114. 114
    BirdsofpreyRcool Says:

    BedTime Market Strategist

    Wild Ride.

    Today’s early 3% drop took the correction from the April 26th peak to an approximately 15% pullback in almost exactly a month. The 1 year performance of the S&P 500 is a 21% gain. Over the 3 and 6 month time frame, however, the performance is negative. Such a quick and forceful correction should alleviate any vertigo related to the initial 83% increase from the March 2009 lows. Buyers finally materialized as the S&P 500 dropped below 13x this year’s earnings. Moving up the quality spectrum, the S&P 100 and the Dow Industrials moved below 12.5x this year’s earnings. Today’s low was 1040, which is slightly lower than the low registered in February. The trading action both Friday and today has illustrated that buyers are emerging below the 1070 level on the S&P 500, which is despite the Korea tensions, Spanish Regional Bank woes and more German rhetoric regarding short selling. At this rate, the Germans will order all sell buttons removed from computers by next week. It would be funny if they turned around and told everyone hiding in Bunds that they could not sell them.

    A couple of days with buyers emerging when prices appear right does not make a trend, but it is a positive sign. When the S&P 500 was at 1200, it was not very responsive to the earnings and economic reports. One month and a 15% correction later should set the stage for positive economic reports to carry more weight. Over the next 8 trading sessions, there will be a rash of economic data culminating with the Non-Farm Payrolls report next Friday. That report will follow Memorial Day weekend and the start of the summer vacation season. We can’t dismiss the possibility of more negative headlines out of Europe, in fact, they will probably keep coming. We also can’t guarantee that spreads won’t keep widening, although the Fed’s Central Bank swap lines should provide some relief. These upcoming economic reports should provide some tailwinds (or at least offset some of these headwinds) for Bulls who want to use the correction as an opportunity to access a good combination of price and liquidity prior to vacation season. In addition, one also needs to keep in mind the potential of asset allocation rotation due to the poor performance of equities and the strong performance of bonds so far in May.

  115. 115
    VTZ Says:

    BP is going to get toasted.

  116. 116
    VTZ Says:

    I wouldn’t doubt that BP gets bought out / merged after the liabilities get defined for all this.

  117. 117
    zman Says:

    V – maybe so. It increases the risk premium on all of the offshore players and players with Gulf interests, at least in the eyes of the markets and their insurance companies greatly. Saw a congresswoman from LA (Dem) mention that insurance premiums for the offshore operations in the Gulf are up 10 to 50% since the accident.

  118. 118
    Wyoming Says:

    Couple other comments about the shallow kill. My example assumed pipe is to surface and no holes. In BP’s case they have holes and this is why they are pumping the junk in order to plug them. Second comment, while it is not impossible, going shallow to intercept with a kill well will cause some sever angles that make it difficult to drill and increase the risk of failure or a sidetrack as we call it. Going deeper will allow for a less severe degree of deviation or a high angle well.

  119. 119
    zman Says:

    Wyoming – just watched them hook up the tube that will pump the mud. Amazing.

    http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/homepage/STAGING/local_assets/bp_homepage/html/rov_stream.html

  120. 120
    zman Says:

    BEXP on the tape with two more big Bakken completions, details in post today.

Leave a Reply

Zman's Energy Brain ~ oil, gas, stocks, etc… is is proudly powered by Wordpress
Navigation Theme by GPS Gazette

s2Member®