09
Jun

Thursday Bounce

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Market Sentiment Watch: Still random but with an upside bias today due to continued strength from Chinese data (looking more and more like the soft landing everyone wants and therefore less likely that much more tightening will be needed) and comments out of Europe that don't look as dire as usual. The euro looks like it wants to make a bottom here.

 

Ecodata Watch: Jobless claims came in at 456K vs 445K expected. Tomorrow's data on retail sales should be key in determining whether or not this recent attempt by the market to break back will be able to move forward.

Operation "Kick Ass" Watch:

  • The Coast Guard says BP has been dragging it's feet on data requests regarding BP's payment to fisherman and other documents, a sharp contrast to Thad Allen's previously more collaborative comments.
  • Interior Secretary Ken Salazar says U.S. will ask BP to pay salaries of all service workers unemployed by the deep water moratorium.
  • So yesterday BP fell another 16%, losing $17 B in market cap and ...
  • ... is now down 51% ($95 billion) since April 22.
  • What can BP pay on an ongoing basis? Some thoughts:

    • 1Q10 cash flow from operations =  $7.7 B
    • Capital expenditures (excluding acquisitions and divestitures) = $3.8
    • So free cash flow of $3.9 billion in Q1
    • For the year BP saw total capex of $20 B, less $2-$3 billion in divestiture proceeds. 
    • From here I would say any sizable acquisitions are off the table.
    • The dividend congress is up in arms about is a quarterly dividend payable July 21st- and is $0.84 per ADS, which on 3.13 B shares comes to $2.6 B
    • So far, BP has paid nearly $1.43 B in claims, cleanup and capping costs in the 50 days this has gone on.
    • This includes some $50 mm in claims for lost income but obviously no lawsuit settlements
    • The highest and some say best estimate of total costs is $40 B. Given their cash flow that is easily survivable.
    • I would put their odds of cutting the dividend at 75% for the next dividend (it may be offered up as an olive branch at Haywood's trip to D.C. next week) and 90% for dividends there after.
    • I'd guess that they don't eliminate it but cut it in half.  That would put the yield at 4.5% from current levels.
    • A source for Reuters last night indicated BP was contemplating a showdown with the White House over the spread of costs to include salaries owed to workers displaced by the deep water moratorium. BP also stated that it couldn't explain the drop in its shares.

In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. EIA Oil Storage Review
  4. EIA Natural Gas Preview
  5. Stuff We Care About Today
  6. Odds & Ends

Holdings Watch

ZCAT (Zman Catalyst portfolio)

  • $6,000
  • 92% Cash
  • Yesterday’s Trades: None

ZIM (Zman Inefficient Markets portfolio)

  • $4,500
  • 18% Cash
  • Yesterday’s Trades: None

 

Commodity Watch

Crude oil rallied 3.3% to close at $74.38 yesterday before the EIA released an OK inventory report (demand was OK, not great, refinery throughput was higher and the numbers were basically in line with expectations). Crude closed essentially flat with it's pre inventory data release levels after a brief trip close to $75.  This morning crude is trading up slightly.

  • Iran Watch: U.N. passes another round of watered down sanctions.

Natural gas fell $0.13 to close at $4.68 yesterday. Natural gas is simply digesting recent gains. and given improving demand and the time of year, I don't anticipate gas piercing the $4 mark again soon. This morning gas is trading flat.

  • Tropics Watch: Nada

Natural Gas Preview

I'm at 89 BCF on warmer weather, evidence that cooling load was higher, and slightly lower imports week to week.

  • Last Week: 88 Bcf Injection
  • Last Year: 109 Bcf Injection
  • 5 Year Average: 87 Bcf Injection
  • 10 year Hi: 125 Bcf Injection
  • 10 year Low: 73 Bcf Injection

Street is at 93 BCF.

 

Oil Inventory Review


ZComments:

  • Crude withdrawals from the system should accelerate next week based upon a big uptick in refinery utilization that wasn't matched by a big enough jump in crude throughput.
  • Gasoline demand continues to inch higher, and is stronger than I would have expected in light of persistent unemployment.
  • Distillate demand remained strong for the 6th consecutive week - like someone flipped a switch. Exports account for some but not all of this increased demand.
  • Nutshell: OK report, helped to keep crude up. Good to see products demand remain elevated and while it would be nothing to write home about in a normal year, the fact is that this year is an improvement over the last one.

Crude:




Gasoline:




Distillates:

 




 

Stuff We Care About Today

MCF Operations Update

  • Eloise South discovery - shallow water discovery at Eugene Island 10 - adds net 6 Bcfe to reserves but ...
  • ... Total company reserves revised lower:

    • March 30, 2010: 346.6 Bcfe
    • June 1, 2010: 300 Bcre
    • Largely due to new data at their Dutch and Mary Rose fields - less recoverable reserves based on new bottom hole pressure data.
  • Production: Back up to 90 MMcfepd in the wake of pipeline disruption in the Gulf.
  • Nutshell: MCF continues to motor along and is now 1 for 3 in exploration this calendar year. The balance sheet remains exceedingly strong and the company has no debt. The downward revision to reserves is more than honest of the firm as they don't have to release numbers at this point but went ahead as soon as they had data.... further speaks to Peak's credibility. The reserves revision probably casts a pall over the shares today although the strong market today may mitigate some of the damage. I have little desire to add more offshore exposure at this time due to the BP spill and my sense that onerous legislation is on the horizon and I currently hold EXXI but I may take this one on as a "contrarian/best of breed in a beaten down group" position depending on how hard it gets hit today.
  • Note: read their press release today as Peak addresses the Gulf of Mexico spill and its impact on the industry in some of the most eloquent language that I have seen so far (and that I just happen to agree with).  See press release here

 

I thought the following two paragraphs from MCF's press release were worth copying and pasting here as they are particularly poignant at this time:

“There are two areas that give me great concern. The first is the concept of unlimited environmental liability for a spill, or a limit so high that a debt-free company with an approximate $1.0 billion market cap like Contango is in essence, asked to 'bet the Company' every time we drill a well. The move in recent days by some in Congress to retroactively change the law regarding environmental liability does not give me great confidence in our government. Nor do comments about 'boots on throats'. The second area that causes great concern is the thought of going to jail for a judgment error or equipment failure – especially if the MMS approved the procedures that were being followed.

“There is at the moment, an enormous amount of understandable emotion and anger together with political populism spewing forth along with the Gulf of Mexico spill, but I believe, and hope, that once the spill is contained, that serious reflection and thought will be brought to bear on how the nation, coastal states in particular, and the livelihood of tens of thousands who depend on a vibrant offshore exploration industry, can beneficially coexist. Contango’s capital expenditure plans, even before this spill, were to 'wait out' the upcoming hurricane season, so no adjustment to our capital expenditure plans is required.”

Other Stuff:

TAT Shelf

  • $300 mm shelf filed via combination of equities, debt, warrants
  • Also filed an S3 registering some shares from a Fall 2009 deal. 
  • Not surprised they want to have a shelf on hand and it does mean sales are on the way but given their Turkish prospects and my longer term perspective here I am not overly concerned about the dilution at this point.

Odds & Ends

Analyst Watch:

  • BP  - S&P downgrades to Hold
  • JPM cuts targets on PDE, NE, DO, RIG

 

116 Responses to “Thursday Bounce”

  1. 1
    bill Says:

    You said it right yesterday, the gov’t has found a golden goose to fleece.

    BP needs to stop listening to its pr people and go on the offense

    They can say they are destrying shareholder wealth thats hitting teachers, fireman,widows and orphans

  2. 2
    zman Says:

    Bill – someone else feels that way too. IEA and the UK Press:

    http://www.marketwatch.com/story/uk-press-iea-dredge-up-memory-of-piper-alpha-2010-06-10?reflink=MW_news_stmp

  3. 3
    bill Says:

    After the dust settles,

    -you can bet the liability cap is going to go up

    – which will drive the smaller players away and increase operating expenses

    _ an ultimately cause lower production in the gom

    -The President will use this as an excuse to get off of fossil fuels and to encourage that raise gasoline taxes to create 5 dollar gasoline and blaming BP for the higher price

  4. 4
    zman Says:

    re 3 = yep.

    Several congressman talking about pre drilling relief wells. While upping royalty rates. This will = less production offshore.

    Hey Bill, what is Robry’s # today?

  5. 5
    bill Says:

    interesting..link on 2

    The Daily Telegraph noted Thursday: “Margaret Thatcher did not indulge in such xenophobic ranting against the American company Occidental Petroleum after the Piper Alpha disaster in which more than ten times as many people died.”

    Barry is in over his head

  6. 6
    bill Says:

    robry is on vacation but it was hot last week so i would venture to say the same or lower as last week as you mentioned. I think 89 is reasonable

  7. 7
    zman Says:

    Thanks Bill.

  8. 8
    zman Says:

    Crude trading over $75, NG up 1% pre open and pre inventory report.

    BP up 10% pre market, volatile. Lots of talking heads saying they will or will not die or will be reformed.

    Fadel Gheit this morning saying they could withstand costs of $100 B and still trade higher than here.

  9. 9
    bill Says:

    tph

    ” Offshore domestic E&P increasingly uninvestable if government and/or marketplace is going to drive BP/APC into dust.”

  10. 10
    bill Says:

    community activist in charge of exploration

    >Sec. Salazar fielded several questions regarding the economic impact of the 6 month deepwater drilling moratorium. Apparently the group of experts that provided preliminary data and safety information to the Dept of Interior did not recommend a drilling moratorium…that was the call of Sec. Salazar and Pres. Obama. A majority of the study group signed a letter which stated they disagree with the drilling moratorium and were surprised when it was included in the final report. While we don’t think the time frame of the moratorium is reduced, the line of questioning (and Sec. Salazar’s answers that the administration is mindful of the impact on Gulf Coast jobs) does increase the chance that the moratorium is not extended beyond 6 months…but the well needs to be capped first.

  11. 11
    zman Says:

    It’s a fair comment.

    Off topic: interesting site to play around with:

    http://www.usgovernmentrevenue.com/yearrev2008_0.html#usgs302

  12. 12
    bill Says:

    Back to mcf

    They said they arent drilling until nov which was their plan

    so that means, no exploration costs to expense and the coming qtrs pl should look great

    I think Peak sells out to someone here but who will buy

    I think all the little guys are toast for that matter shallow and or deep

  13. 13
    zman Says:

    British PM Cameron said Britain is read to help BP with the clean up.

  14. 14
    zman Says:

    Cameron to speak with Obama this weekend

    http://www.timesonline.co.uk/tol/news/uk/article7147287.ece

    12-13% of dividends in the UK paid by BP not to mention all the jobs they provide (22K in the U.S., 10K in the U.K).

  15. 15
    1520sbroad Says:

    #10 – there is an op/ed in the WSJ this morning from one of the 7 engineers/experts that details the fact that they did the moratorium was not part of what they reviewed. the piece basically says what is said in #10

  16. 16
    zman Says:

    Nice open, just watching for the moment.

    HK and BEXP where I remain overweight making nice moves back up early.

  17. 17
    zman Says:

    Coals running hard on China data.

  18. 18
    1520sbroad Says:

    new SWN presentation pdf on their site – doesn’t look like much new in there. They present at OGIS in london right now.

  19. 19
    zman Says:

    Thanks 1520. MCF presented at 3 local time so I missed that one. Will be listening to some of these today:

    http://www.ipaa.org/meetings/pdf/102010ogislondonpresentationschedule.pdf

  20. 20
    elijahwc Says:

    SSN reprices and extends rights offering to .577 from .639 and to a 6/30 close. Change in price reflects USD vs Aussie dollar change. Will pressure stock.

  21. 21
    milepost_43 Says:

    MCF PR worth a repeat “The second area that causes great concern is the thought of going to jail for a judgment error or equipment failure….”
    and what I posted a while back from personal experience..

    Oil spill WILL go criminal……………….. —

    No doubt in my mind that accident will go criminal. Following is what resulted from a deadly pipeline accident in WA in 1999. Knew Frank for several years when he was with Shell Pipe Line in joint interest pipelines before he went to Olympic. Still can’t believe he “willfully” put his employees and the public in danger. Actually this “scenario” is one of the reasons I retired early from pipeline management work and elected not to do any consulting afterwards.

    http://www.lpgasmagazine.com/lp-gas-content/your-risk-criminal-liability
    That was the fate of Frank Hopf. Hopf was the former manager for Olympic Pipe Line Co. at the time of a 1999 pipeline rupture that spilled about 236,000 gallons of gasoline into two creeks in Bellingham, Wash. When the gasoline ignited, it created a fireball that killed two 10-year-old children playing on the riverbank. Gas fumes overcame a nearby fisherman, causing him to drown. The subsequent investigation uncovered numerous statutory violations.

    Hopf pled guilty and was sentenced to six months in prison,

    200 hours of community service and three years of probation for willfully failing to train employees as required by the Hazardous Liquid Pipeline Safety Act (HLPSA).

  22. 22
    bill Says:

    classic from tph

    BP = money bags – In response to the questions regarding the economic impact caused by the drilling moratorium, Sec. Salazar said BP must pay the salaries of laid-off oilfield workers. We’re not lawyers, but the legal calculus required to get BP to fund the government mandated moratorium is beyond our ken. No word if BP will be held responsible for the lost revenue of the local café in Houma, LA. As we have said before…BP is worth more alive than dead (as long as they are cash flow positive).

    · Really? – It came out in the hearings that BP’s GOM response plan addressed the seals and sea otters…which don’t reside in the GOM. Bad phone numbers and a listed response expert who was deceased were also present. Certainly there are some ways to improve and strengthen the regulatory process… such as having MMS employees actually read what is submitted to them. Shame on both parties.

  23. 23
    zman Says:

    MP – Ouch. And I agree, it looks like that’s the plan.

  24. 24
    zman Says:

    MCF – not much of a hit (-3.5%) on that reserve revision. Stock has fared better than it’s peers through this. Cheap name, solid balance sheet, low costs.

  25. 25
    zman Says:

    S&P up 24 at 1080. This is one volatile market.

  26. 26
    Nicky Says:

    Good morning. Glad to see the voodoo working! For yesterday it said down bias from 11.30 and today was up! Back in a minute…

  27. 27
    zman Says:

    HAL attempting to fill the gap from the end of May.

    But in a very different part of the oil and gas industry, WLL coming close to regaining cycle high around $90. I continue to hold the common in the ZLT and I expect BEXP to around it’s all time high in similar fashion closer to month end.

  28. 28
    zman Says:

    Take your kids to work day watch: Madeline is a very good girl. She brushes her teeth before her hair.

    BP fought off two bouts of profit taking, now up 12% and trying to climb above pre market levels.

  29. 29
    zman Says:

    Thanks Nicky, I take it 1080 is resistance?

  30. 30
    BossmanG Says:

    Z, I find some odd things about your site now…my firefox browser cannot seem to stop trying to load the site, even though everything seems to show up.

  31. 31
    BossmanG Says:

    Last thing that is seems to be trying to load is “checkout.google.com”

  32. 32
    bill Says:

    bp backlash

    http://online.wsj.com/article/SB10001424052748703302604575294523724355994.html

    I am blown away with all of this..

    can you imagine if we had a moritorium on all airline flights for 6 months due to an aviation accident then propose that the ceo certify that all future flights will be accident free , with penalty of imprisonment, if another accident happens.

    I think Barry is stealing a page from Hugo Chavez..declining popularity.. ratchet up the rhetoric

  33. 33
    md Says:

    BP P/E Ratio at 5X vs. Industry at 10X.
    That would suggest that the current market value of $91BN on my screen has built in $100BN of losses and still has spare change left. This is 2.5 x more than $40BN.

    The Piper is not a good analogy. It’s the enviromental damage that’s at stake.

  34. 34
    zman Says:

    Boss – thanks, I have seen that before. Will look into it.

    Bill – he is certainly bending to comments from the public. Day 51 and he is now going to meet with the widows after being criticized for not doing so earlier.

  35. 35
    bill Says:

    funny thread

    http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_B/threadview?m=tm&bn=26496&tid=195831&mid=195831&tof=9&frt=2

  36. 36
    zman Says:

    Gassy stocks up about 2%, all pulled back in front of inventories due out in 1 minute.

  37. 37
    zman Says:

    99 Bcf.

  38. 38
    zman Says:

    That’s bigger than me and the Street and obviously unwelcome. I don’t get the big variance.

  39. 39
    zman Says:

    That’s an odd number, big build in the East region, bigger than I would have expected. Models seem to be working every other week … makes me think EIA is playing with things. Hmmm.

    Stocks so far shrugging it off pretty well.

  40. 40
    elduque Says:

    bill are you still in ard? I would welcome your comments as to what to own SD or ARD and at what prices?

  41. 41
    Dman Says:

    #34 – that’s what makes this whole thing so pathetic. He has to be told how to feel/act about it & then gets that confused with practical aspects of actually dealing with it. The whole thing is a weird reality show. I’m guessing his team is also clueless, so they wait till polls or a pundit chorus tell them how to feel. Then (at risk of repeating myself) they get issues of tone confused with action.

  42. 42
    elduque Says:

    NG market reacting differently to a bad no., a month ago it would have immediately been down .35 cents

  43. 43
    zman Says:

    ZMAN is an idiot watch: or at least half asleep. Last week had the Memorial day holiday in it…. which I forgot. Industrial demand slumps as a lot of gas users are closed. So the model’s not broken, I’m just half witted.

  44. 44
    Nicky Says:

    Okay back again…
    It looks to me as if we have a double zig zag in play. Which means that off yesterday’s low we are going to see an ABC to the upside. We are currently in c of A. Target for A to complete later today is probably in the high 1080’s or 1092.
    The voodoo (astro) for tomorrow is negative and probably a big swish to the downside from the get go in the morning. That’s fine and will give us our B wave. The astro is then very positive into next Wednesday which will give us our C wave.
    I have been waiting to see whether the area around the 15 – 17th June would be a high or a low. Last night with the close (hardly believing the astro for a big up day today would play out) I was looking at counts which would allow the downside to finish middle of next week. Now it looks like next week will give us a high.
    Bear with me as I will no doubt change the bigger picture counts as we go along. There are potentially both more bullish and bearish patterns out there and I am just trying to tie them in with the cycles.

  45. 45
    zman Says:

    Good use of stimulus funds. Our sister city is putting in a CNG pump station. CHK and SWN are putting up $100K each as well.

  46. 46
    elduque Says:

    thanks Nicky

  47. 47
    1520sbroad Says:

    Z – any details on #45 – link to a story? I would love to see that in my neck of the woods.

  48. 48
    zman Says:

    re 47

    http://www.arkansasonline.com/news/2010/jun/10/nlr-set-move-ahead-natural-gas-station-20100610/

  49. 49
    Dman Says:

    #45 Time for a Zman’s Energy Vehicle…

    #43 so that’s why CHK, HK acting like it’s no big deal.

  50. 50
    bill Says:

    Peak , pretty good presentation

    Peak embarassed at what the US Gov’t is saying about BP

    Whats being talked about today will drive independents out of gom

    Peak say at some point adults will come back in

    http://www.investorcalendar.com/IC/CEPage.asp?ID=159342&CID=

    says ng looking better

  51. 51
    Dman Says:

    HAL: big MACD upswing on daily chart. Gap overhead at $24.66. No gap from today’s 7% jump. Expiration next week: largest open interest at $25 on both puts & calls. Could get interesting: gap almost certainly will get filled, but can it stay below $25 all week? More likely highly volatile.

  52. 52
    Popeye Says:

    In addition to our fleet of hybrids:

    The City of Newport Beach, Calif., partnered with Clean Energy, Inc. to install a new compressed natural gas (CNG) fueling station in the city. The grand opening was May 19.

    Located in the City’s General Services Corporation Yard, the station will be open 24 hours a day, seven days a week to serve public fleets and private vehicles.

    Under an agreement with Clean Energy, the City receives a $0.05 (5 cent) royalty fee for every gallon sold at the station, according to a city press release.

    The City of Newport Beach recently purchased four CNG refuse collection trucks and will be looking at CNG powered sedans and light trucks as it replace vehicles in the future.

    Mayor Keith Curry explained, “Converting to CNG is the right thing to do fiscally and environmentally. This public-private partnership will reduce our city energy costs, generate new revenue, and help clean up our environment. Being energy efficient is an important element of our Fiscal Sustainability Plan.”

    In addition to the City’s CNG vehicles, other companies and agencies with CNG fleets that may use the station include AT&T, Waste Management, Yellow Cab, Airport Shuttles, CR&R, Athens Street Sweeping, and Ware Disposal.

  53. 53
    zman Says:

    JB – care to take a stab at this falling knife BP?

  54. 54
    zman Says:

    AEZ catching the reinvigorated Bakken wave. Still holding in the ZLT, thinking it moves higher with oil and is a mini-BEXP in terms of catalyst after catalyst in the form of well announcements all year long. This is one thing that I’d like to see KOG work on is setting and then meeting deadlines.

  55. 55
    zman Says:

    Holder repeating what everyone else has already said, that BP will pay for the cleanup. He declined to comment on whether the Admin would seek an injunction barring BP from distributing the dividend. I’d bet Obama and Cameron work out either no change, a 50% reduction, or an escrow account for the dividend over the weekend.

  56. 56
    elijahwc Says:

    PXD on the 52 week New High List Again. Here is part of the resaon: India’s Reliance Indus fresh off their recent MShale deal is now =

    http://www.reuters.com/article/idUSBMA00778620100610

  57. 57
    zman Says:

    Eli – on a call, back to ya in 15 minutes. Good on you West.

  58. 58
    jiveyjr Says:

    Bloomberg’s newest mag has an article “Shale Effect”…shows TPH per share values for the shale assets of four companies as follows:

    CHK $45

    HK $47

    RRC $65

    SWN $ 54

  59. 59
    Paul in Kansas City Says:

    Royalty Trusts; by far the best idea I’ve had the past 12 months! I trimmed a little of HGT and I have been looking for a replacement position.

  60. 60
    Jerome Blank Says:

    #53, BP, opened right in the middle of yesterday’s range, so the daily is classic indecision…dialing down to the 30 min intraday, BP hit resistance at the 20 period SMA, rolling over a bit here off resistance, but from a 30 min perspective, I think you need to be looking for the higher high off the low, a convincing candle with good vol, even the 5 min is not a great deal of help, but the 5 min does feel very heavy at the moment, perhaps going to fill some of the opening gap….

  61. 61
    zman Says:

    J – part of what I like about HK, lots of resource potential not in the stock compared to RRC and SWN vs their stock prices. Also, with HK, you get a stronger balance sheet and higher growth than you do with CHK.

  62. 62
    zman Says:

    Paul – Nothing like getting paid to wait in a rising commodity price environment. I need to take a closer look at SJT in that area. Still holding the WHX.

  63. 63
    zman Says:

    Thank JB. It started selling off immediately after the Holder comment mentioned above. Very nervous stock. I could see another up day tomorrow of the same scale however as some speculate on Merger Monday and what Cameron and Obama are going to chat about, giving greater clarity to how much support the UK is going to provide in return for getting the POTUS to lay off the rhetoric.

  64. 64
    zman Says:

    Moddy’s cuts RIG to negative

  65. 65
    Paul in Kansas City Says:

    I would very much like to add an oil royalty trust; DMLP is interestng as they monetize mineral rights; McDep.com has excellent free resources for ideas (almosta s good as the Zman!); still liking the MLPs and am searching for transportation/processing/storage MLP that seems cheap; probably not right now in this market. My purchases at the $15 price point of HGT a few months ago was LUCKY !today!

  66. 66
    zman Says:

    I’m using WHX for my oil royalty exposure. 58% of total BOEs. I could do BPT or some of the other but find their math a bit difficult to forecast by comparison. Was thinging SJT because of the uptick and apparent support for higher gas here. Doing a back of the envelope on it now while I watch this market trade with what I’d call bored conviction.

  67. 67
    zman Says:

    Passed on three of my own ideas this week (EOG and DO, both over-reactions to news items) and WLT which is moving on China with the other coals. Not too concerned about “missing” the early moves as this is summer style trading and seems to reverse without notice on a whim. I’d rather see some real conviction come into play.

  68. 68
    zman Says:

    CXPO – borrowing based redetermined at $100mm, prior base $105. Stock is $2.70, will be more interested around $2.50.

  69. 69
    bill Says:

    http://finance.yahoo.com/tech-ticker/article/501906/England-Is-Now-Freaking-Out-About-The-U.S.-Reaction-To-BP

  70. 70
    zman Says:

    I think it is very good news that operations at the cap continue to be stable and ramp.

    Re 69 – Wonder if the British will offer troops/skimmers for the Gulf Coast. Saw an article saying the U.S. had turned down offers of aid from over a dozen countries.

    Glad to see more green on the screen extending through the lunch hour but would like to see 3 days of green S&P closes here.

    BEXP should have 2 wells ready for press release now. Thinking there’s a better than even chance of a press release there next week. The big press releases come around month end from them, should be close on timing with AEZ announcing their next Bakken test and following that, EOG announcing their Montana Bakken well which should given them a boost back above $115 if the well is good.

    Bill – have you done any more thinking on SD/ARD of late.

  71. 71
    tomdavis12 Says:

    Z: RIG has a busted convertible bond 1.625% 12/15/37 that is putable back to the company 12/15/10. The offer is below par to yield 7% for 6mo paper. Cusip# 893830AU3. I know BOP is not around to offer an informed opinion. NE has had 4 downgrades and stock is higher. Multiple changes of opinion usually signal highs and lows.

  72. 72
    zman Says:

    Tom – that sounds like something for Eli.

  73. 73
    zman Says:

    New circuit breakers in place today:

    http://news.yahoo.com/s/ap/20100610/ap_on_bi_ge/us_market_plunge_sec

  74. 74
    tomdavis12 Says:

    Z: EOG is one of the new “mudflap” circuit breaker stocks.

  75. 75
    Dman Says:

    #69 interesting links in that yahoo article. I never heard that BO returned a Churchill bust. Wonder how long it had ben there? Nor did I know that there was anti-British stuff in his book.

    Did anyone read it? Kidding! Honestly I’d fall off my chair if anyone here did read it, but I’m kinda curious about this anti British thing. Just not curious enough to read the book.

    When BPs CEO was going around making bonehead comments in his soft British accent, I kinda though “oh no, this could set off subconscious Revolutionary War vibes”. Obama decided to capitalize on it. But I don’t think it will help him.

  76. 76
    zman Says:

    Tom – yeah, that’s a weird set of rules, not uncommon for 10% moves in the 500 in individual names, especially in the energy related names. I don’t get halting a stock on news that is interpretational like an ongoing call or analyst meeting.

  77. 77
    Nicky Says:

    Okay it looks like we are on our way to a new high for this move – hopefully anyway. The last hour of trading this positive energy should start to wear off.

  78. 78
    zman Says:

    How down does tomorrow look to you N?

  79. 79
    zman Says:

    Not much of a reaction in NG prices to today’s report. Strip off 3 to 4 cents.

    http://www.barchart.com/futures/commodities/NG

  80. 80
    Nicky Says:

    Everything about tomorrow looks down to me, at least early part of the day. Wave pattern is completing up here, astro is negative…..
    The very bearish count says the top being put in up here will be significant……

  81. 81
    zman Says:

    I’ll lay off the BP comments other than to predict that the president will talk to the CEO. 51 days and counting and no phone call or visit. Gibbs saying Obama may meet with BP officials but not necessarily Hayward when Hayward is in D.C. before congress next week. Does Obama have something more pressing to deal with? This is weird. Anyway, still thinking this bounce is not yet spent and that the name is undervalued here. As per the post, I’m not in the BK camp.

    grabbing late lunch.

  82. 82
    md Says:

    N
    Please expound on #80 last senetence

  83. 83
    Nicky Says:

    An interesting perspective from across the pond –

    I spoke to my mother in the UK today about the oil spill in the Gulf. The British press have had a love affair with Obama ever since he became President and my mother has not had a bad word to say about him. That has changed! Apparently the British are absolutely furious at the way they believe he is pointing the finger at the Brits over this. She said someone ought to tell him that BP is 40% British owned and 38% American (her words and I have no idea if she is right!). As BP is featured very heavily in pension funds, reducing the dividend would be disastrous for pensioners who are relying on that. Her take was that Obama is just trying to lower the share price so they become vulnerable to an American takeover egged on by a whole lot of US Senators who have oil interests of their own. She also said he now is sounding manic, irrational and like he has lot the plot! I used to like him but not after this was the final comment.

    Personally I never had any illusions about him in the first place but interesting to see the tide turning over there….

  84. 84
    Dman Says:

    #81 Weird it is. Governance in the Twilight Zone.

    #76 They are banning 10% moves! Yeesh. Have they ever looked at a stock?

    Hope they don’t get around to rolling this out for the small fry.

  85. 85
    Nicky Says:

    md – its possible that the high today will complete a wave ii and we turn down in a wave iii….I don’t favor it being the top due to the cycles but either way I am shorting later today and depending on tomorrow’s action will see if that trade lasts a few hours or a few days….

  86. 86
    Nicky Says:

    Should see a surge to the upside here….

  87. 87
    jiveyjr Says:

    re: 61…thx for your comments…I bought HK again some time back when BOP did…been in and out of it because I get frustrated with them but it looks like they have some great assets and that I should just buy more and take it off my quote screen

  88. 88
    zman Says:

    Jivey – I own a couple of lots of it, a little below here. My sense is that gassy stocks have been out of favor all year and that while the story has been changing and analysts have noticed the change and moved targets and ratings higher on the name, the Street could care less. No with gas actually showing some signs of life, the name should be an easy one for institutional brokers to push to their clients. Often as tackily put as “load up and wait for a hurricane”.

  89. 89
    zman Says:

    Nicky – any other sevant like traits you wish to share with us.

    So how down is down in your book tomorrow?

    Where is first critical support for you?

    And do you still feel that we are forming the inverted H&S? Just with a lower right hand shoulder … or is that concept busted now? Thanks.

  90. 90
    tomdavis12 Says:

    Z: MLP’s rated outperform by CSFB: BWP, EPD, ETP, ETE, KMR & PAA.

  91. 91
    Nicky Says:

    re # 89. Still hoping for the 1088 -92 area, could fall short of course.

    Support is at 1066, 1060.

    Regarding the inverted h and s. Obviously aware of them but don’t base trading around them as everyone seems to see them and they just get busted so often.

  92. 92
    Jerome Blank Says:

    BP…interesting bullish flag forming on the 5 min, at the 20/50 support zone…goes without saying, keep stops tight if you take it…

  93. 93
    zman Says:

    OK thanks Nicky and JB. Lot of late strength in the broad market and especially in the onshore piece of the group.

  94. 94
    elijahwc Says:

    #71 & #71 on the RIG cvts:

    RIG actually has three. Two 1.5% of 12/15/37 (the b’s and c’s) and the one you mentioned the 1.625% of 12/15/37 (the a’s). All are Senior paper and all are serially putable ( a’s this December, b’s December of ’11 and c’s December of ’12). Conversion ratio of 5.931 is the same for all issues. This morning the a’s were 95.25 to 95.75 = YTP of 10ish, B’s 85.75 by 86.25 w/YTP 11ish & c’s 80.875 by 81.375 w/YTP of 9.5ish.

    Now, would I buy the short paper? Probally not. Why? Because should the worst happen (and I don’t think it will)it will certainly happen within the next six months and all senior paper will be treated equally without regard to maturity. So you might as well pay the least for the roller coaster ride.

    It will also pay you the most if things work out.

  95. 95
    Nicky Says:

    looks like we are working on a small iv with another pop in v to come….

  96. 96
    zman Says:

    BRACH group all performing nicely for a change. Maybe the cross the pond spirit of brotherly love will inspire come cooler heads thinking in the names. Would be good to see BP close at HOD here.

  97. 97
    zman Says:

    Thanks Eli for the ongoing seminar in busted bonds.

  98. 98
    zman Says:

    British insurance group RSA calling Obama’s comments “prejudicial and personal”. Honestly BP deserves much but not all of this. But since the Admin is key to work off of public sentiment, both in the U.S. and abroad, I’d bet we see the rhetoric from the president toned down by tomorrow.

  99. 99
    Geno Says:

    Z-pretty good article by RSA Chairman over attacks by POTUS on BP http://www.reuters.com/article/idAFLDE6592GA20100610?rpc=44

  100. 100
    elduque Says:

    I think that what BP has been able to accomplish is amazing, given the gravity of the situation. We live in an age where mistakes are never supposed to happen. They just happen all the time and were not aware of them.

  101. 101
    elduque Says:

    I must confess, I did buy some BP at these low levels.

  102. 102
    zman Says:

    Geno – comments from Wyoming emailed in to me last night.

    “Geno had you covered on it. Sharp guy and seems like he has been around and he actually invests money in this market.

    BTW, ever see a workover cost more than an grassroots well? Try and pull out the “second” string of unknown drillpipe. My example well was $9mm and we did not get everything and we knew what was in the well. In this case, you would probably need a rig, riser, BOP stack to get on it, and of course, you will need to run some impression blocks to get an estimate if the top of the pipe can accept a spear or preferably an overshot. Nothing egged or flared out that you will be trying to fish. Then you would have to make sure you grab on to the one you think would come out …. Just messing around with you. Workovers are bad news and of course I get involved in them frequently.

    Shears are only rated for the sizes to be encountered. They won’t do double duty.”

    Helps to explain the continued rally in CAM, no matter what the rest of this group are doing.

  103. 103
    Dman Says:

    OIH gap filled

  104. 104
    zman Says:

    Eld – yeah, instant gratification society. Unfortunately I have found no ap on my iphone to plug a well a mile down. But I can watch some robots try on it.

    Dman – yes, my HAL calls are starting to show very modest signs of life.

  105. 105
    Jerome Blank Says:

    BP really pressing up against resistance on the 5 min…seems like it wants to run…

  106. 106
    zman Says:

    NG driven green in aftermarket trading.

    Pretty impressive rally here.

  107. 107
    Geno Says:

    Z, here’s my latest idea on controlling the well. Build a containment box big enough to cover the entire BOP stack and assembly. The bottom side should be open, the top would have a 2 foot piece of pipe fitted in the middle. Fill the whole thing up with grease (seal). Pick it up with heavy weight drillpipe and lower the whole thing down to the well. Remove the present vent and shove this new (let’s call it the “Geno”) Geno over the entire assembly and apply weight, as much as possible from the drillship. The grease should act as a seal and the well could be produced up the drillpipe. Genius

  108. 108
    West Says:

    2 plays off PXD move, MHR and FST these besides the standard HK, EOG

  109. 109
    zman Says:

    re 107 – I like it!

    MHR – well soon.

    FST – they just never get enough credit. I agree that that should change in this new onshore landscape. Lots of catalysts for those guys.

    I would add SM as well.

  110. 110
    Popeye Says:

    Strong close.

  111. 111
    zman Says:

    re 110 – yep, across the board HODs or very near for most of the stuff we watch. Another day like this for BEXP and I’ll actually smile again.

    Here’s to follow through for BP on all fronts tomorrow.

    beerthirty.

  112. 112
    Geno Says:

    I think I’ll send my plans to Tony!

  113. 113
    zman Says:

    Geno – hear ya go:

    http://blog.makerbot.com/2010/06/05/deepwater-horizon-call-to-action/

  114. 114
    AAA Says:

    Geno, re 107, isn’t that basically wahat they tried with the original containment dome? They claimed it filled up with hydrates.

  115. 115
    elijahwc Says:

    Tiny KOG catches a tease from The Oxford Club, a fairly large and well followed tout sheet (newsletter).

    http://www.stockgumshoe.com/2010/06/americas-new-oil-haven-part-two-tiny-company-sitting-on-3-8-million-barrels.html

  116. 116
    bill Says:

    >Bill – have you done any more thinking on SD/ARD of late

    Im still in ard. i think sd wins it and with the arbitrage(arbs buying ard, shorting sd, sd is oversold and will pop post merger

    Improving ng prices also should help sd.

    Sd is 80 % hedged to ng in 2010, the problem is 2011 and beyond, but prices could improve with more use (demand) and lower supply (Moritorium) which is making me feel better on all the ng names

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