Tuesday Morning

155 thoughts on “Tuesday Morning”

1. Anyone following LEI {Lucas Ennergy Inc.} a tiny, but interesting E&P in the Austin Chalk, which holds approx 5,000 acres in the Oily window of the Eagleford(primarily Gonzalez County)? They just recently signed a JV with Hilcorp to develop the Eagleford asset, and now Hilcoprp is cutting a $400 million deal with KKR for the Eagleford.
   Interesting play.

2. AEZ annual meeting today 9:00 am mtn. time.

3. Z – great post this morning – I always enjoy the WIOWIO.

4. Wonder which Obama cronies he will want to run the BP escrow fund?

5. Crys – I know someone in that name, will try to get them to comment.

   Thanks GT, thanks 1520

6. AEZ looking at a strong opening, should see same from the rest of the Bakkens today, noting KOG looking back over $3.50 again, BEXP inching up but no update yet, maybe they save it until next week or Enercom on Thursday.

7. XOM and CVX on the tape disassociating themselves from BP. Saying the job was not up to industry standard practice and that the accident was preventable. Still surprised at the basic lack of money flow from BP to XOM.

8. Maybe XOM and their peers will be seen as evil in the short term with BP. Two weeks until end of second quarter and maybe money will stay away through June 30.

9. Ram – you could be right, it could be an avoid the sector call and wait to see what comes down from congress in terms of new regs.

10. Listening to WLL at Macq. conference.

11. Will keep you apprised on WLL if they say something new but I’m doubting it as they have been speaking a lot at conferences of late.

    Nice to see the HK resilience.

    HAL too. I’ve noted Obama has started to focus more on BP and less on other associated parties in the last couple of days.

    WLL – expect more results in Lewis and Clark at the end of the second quarter (so either that means end of this month or on the 2Q call for the next well).

12. Z: You saw that Qatar was making a big cut to their LNG production. The PXD deal in EFS. Was a price/acre established for that deal? If the price for EFS acres keeps rising, do you expect that to be reflected in HK or EOG? Or do you see this market as still “I don’t care about anything” type market?

13. HK, looks like $21 was the restest sweet spot yesterday…larger ascending triangle forming on the 30 min…updated the 30 min chart for perspective…

14. Tom – saw your email on that, yes, also saw Korea and one other asian country upping their intake of LNG (and coal). On PXD, don’t know will check but agree with your last statement, I don’t think acreage price inflation translates into rising stock prices at the present time.

    Thanks much JB.

15. BP just can’t get any respite. Reporters saying the Gulf Fund may be in the $15 to $20 B range.

16. S&P back to 1,100 which is driving oil back to $76.

    Nicky – any more comments on levels?

17. For folks in CIGX, nice higher low bounce off the 200 day SMA, CIGX has been performing well the last week, would like to see it get back above $1.70 to help turn the trend…

18. WLL Q&A

    – we do not anticipate having difficulties with service prices and availability of tubulars, rigs through at least 2011. They attribute this to their past treatment of vendors. They didn’t drop vendors or push them hard during the last downturn and that’s helping them going forward.

    – looking at M&A opps every week, but going to to be very selective. Pretty standard stuff … I don’t get the feeling they are really on the hunt at the current time, especially given the running room they now have at L&C.

19. Z: Here is a little wrinkle on your WIOWIO. Since you are one of the hardest working energy guys and we all know it(especially during the quarterly CCs), how about after the CCs you make a small list of those companies that most impressed you (good mgmt moves, good fiscal discipline, big upside, biggest surprises) and maybe a few that are losing you and your respect. Call it the quarterly good, bad and ugly. Just a thought.

20. Tom – that’s a good idea.

21. HAL looking exceedingly resilient today. I only say it because it is scoring new highs despite the fact that the market pulled back. I think the news (rumor) that SLB could not/did not run the cement bond log because the well was kicking and BP refused to kill it with heavy fluids, combined with the fact that HAL wanted to make sure the casing was better centered in the wellbore and BP refused to pay for it really helps them on the potential liability front.

22. HAL – Added (10) HAL June $25 calls for $0.41 with the stock at $24.70. See today’s post and comment #21 today for reasoning.

23. Morning all. My preference is that we have an abc playing out for wave 2 and that this is the b leg up which should stall here. On the other hand if we go higher and take out yesterdays high I will switch to yesterday’s move down being wave iv and we are still working on the final wave v up before a deeper pullback.

24. Thanks much Nicky

25. Since the late May market sell off and this May presentation VQ has been on a tear. Wanted to buy more but it’s running away.
    http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NDc3MTN8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1

    Presentaion is touting massive amounts of OOIP. I guess the question is…can they get a big chunk of it out of the ground?

26. Little is RAME shooting up – they say they are exploring strategic alternatives. Not sure if anyone would want to buy them, but at least management is awake.

27. I meant – Little RAME is shooting up…

28. Z: Next week CHK is redeeming some of their bonds. If anyone has a replacement that they feel is attractive, please share. Thanks.

29. RAME – saw that, still not for me, history there bugs me. Doesn’t mean it can’t run because that one can’t.

    VQ – yeah, missed that again.

30. Eli and BOP, can you field Tom’s question? BOP is traveling until tonight but I’ll remind her tomorrow if she doesn’t see this.

31. HAL acting well, over $25 now. I continue to hold the $26 calls in addition to the $25s I just took.

32. NFX – Owned in the ZLT, moving nicely again. Surprised they haven’t caught more downside movement on the Gulf moratorium.

33. HK, SWN, RRC all performing well on natural gas moving easily about $5. UPL lagging a bit.

34. 92L – rotation, can’t be an eye yet but looks sort of like one. Bad news for Haiti.
    http://media.myfoxtampabay.com/myfoxhurricane/

35. By the way, 92L has been downgraded for chance of development this morning from 50 to 30%.

36. …which could mean gas pulls back as some of the hype comes out of it. Watch that very closely for the June calls this week.

37. Anyone have the bloomberg.com link for the TED spread?

38. GMXR short covering may be happening…..up 11% now

39. Herold published it’s 2010 E&P spending estimate today. Sees E&P spending up 8% this year and they have taken the GOM deep water moratorium into account… this is probably driving HAL more than what I’ve been talking about.

40. http://preview.bloomberg.com/apps/quote?ticker=.TEDSP:IND

41. Watching Waxman grill BP along with XOM and CVX.

42. Thanks ElD, still well into BOPs uncomfort zone.

43. Waxman bus rolling along on questions of well design. XOM’s Tillerson throwing BP under that bus. “We would have used a totally different well design”.

44. Piece today on back page WSJ discussing APC, that it has been beat down perhaps too much. If APC could get out of its share because of BP gross negligence… seems to me APC will fight BP hard on this point… APC attractive here?

45. Nicky – Have been resisting the urge to ask, “are we there yet?” in terms of here thoughts on yesterday being the wave down. Also, would the new move up still be to about the 1130 level, I think you mentioned that level about 2 weeks ago as the next high.

    S&P at 1104.

46. ratberto – on a valuation basis P/CF, P/reserves, yes, APC is attractive. I saw another piece saying the same thing this morning, that APC is overdone. I have been concerned about the magnitude of liability here but if you go for negligence, which seems to be where we are pointing then I need to consult a lawyer to get an idea of where their liability (if any) is capped. I have not seen them say that they have paid anything so far.

47. Market so green even BP coming even to green on the day. I’ve got an email in with Nicky.

    V – dollar getting dropped pretty sharply again. http://www.barchart.com/charts/stocks/DXY00

48. ratberto,

    I think you could be on to something there. I haven;t seen the WSJ article, but I would think they have a cross claim against BP for any liability incurred as a result of BP’s gross negligence.

49. Big spike in BP.

50. 46 thanks.
    The only winners will be the lawyers. I think the greatest concern of the attorneys is: “What interior should I pick for the new G5?”

51. BP jumping up 80 cents now, down see the reason.

52. re 50. I have a number of lawyer friends (they washed out of B school or just didn’t want to face life at the time I guess so more school was a nice diversion) but only one of them is a self described ambulance chaser. I told him as much as I like his company that if he didn’t jump ship and move south that he’d never forgive himself. This will be going on long after we’re all flying around in hover cars.

53. SPX…the 200 day moving avg resistance at 1105, right here, is a widely watched critical juncture…if there is a break above this, things begin to look much better for a continued move higher, SPX prints a new P&F buy signal at 1110….

54. RE 47: Yeah, gold responding to the USD now that it breached 1224 and 1228 to the upside again. Gold is really building a good base around these levels. I like this consolidation.

    To me the euro and USD are both in a race to the bottom (much to the dismay of the strong USD Kudlow bulls) so it doesn’t surprise me to see wild gyrations like this. In fact, I’m sure it will actually get worse at some point.

    Moves like this are the least you can expect after the euro has been brutalized as bad as it has been although im pretty sure the euro drop will resume shortly to at least retest the bottom but more than likely fall further.

55. Stupak grilling XOM and CVX over their spill response plans (200K bopd and 166 K bopd respectively is what they say they can handle).

    I wonder why they don’t have names like NFX and ATPG there. Congress should be thankful it was a “big oil” name that did this and not one of the little names, given that the government’s plan so far has been to leave capping, containment, and cleanup large to the company. There are a lot of little companies who this could have happened to and they have no where near the resources of BP to deal with it, and if you think BP is doing a poor job, having spent over $1.6 B in less than 2 months on this then imagine how a smaller, much less cash rich name would be coping.

56. No kidding, Z. Any news on BP re that spike?

57. I wonder if there will be a “stress test” for all shelf and deep water players? Can you imagine if the Feds would say you are too small, we now own the well because you couldn’t contain an accident?

58. AAA – nothing I see on the tape except stuff that would make it fall, not rise. There was a 10 minute period of higher than normal buying, had to be a big fund of a few of them as we saw 2 mm shares per minute during that time. Still watching the testimony on CSPAN 3 but nothing there has been good for BP yet.

    XOM just said big oil companies are not well equipped to handle big offshore oil spills. Hmmm, kind of makes me think those spill response plans are a solve for an MMS and EPA requirement and not meant to be actually used.

59. Ram – there will be a stress test by default if they raise that liability cap or take it away altogether. As MCF’s CEO said something like, “you’d be asking me to risk the future of the company each time I drill a well.” That’ll push some out of the Gulf entirely. Should be a modest push on acreage prices onshore in the EFS.

60. You would think most of the land acreage in the U.S. will get a bump, especially the “hot” spots.

61. Ram – by the way, BP gave all proceeds of the collected oil to a wildlife fund. They didn’t say for how long, I’m guessing forever.

62. re 60. Exactly. DVN looks smarter by the day, lucky though that may be or not.

63. Reuters story saying BP shares spike unexpectedly during testimony. Gives no reason.

64. Has anybody done a “break up” value of BP to get an understanding of how undervalued BP might be?

65. Does anyone have an opinion on XEC versus DVN? Talk about a tale of two stocks!

66. re 64. I have not seen a detailed one but I’m sure they’ve been done. Largely depends on the size of the liabilities. I did a quick sketch two weeks ago and the reserves are trading for a little over $5/ BOE which is really cheap.

    They have 18.3 billion barrels of proved reserves and produce a whopping 4 mm boepd. That’s about 57% liquids on the reserves.

    Then you have all the other assets (refining, chemicals, gathering systems, etc). That’s worth $26 at book, not sure if book is fair or if it should be a bit lower. The majors as a whole trade at a fraction of book but if you look at indie refiners (who don’t have the upstream segment but do have retail marketing, like a VLO or a TSO) you get them trading at 0.5 to 0.7x so maybe BP’s refining segment is worth $15 to $20 B.

    Debt is about $32 B with cash probably down to $5 plus some for the coming dividend.

    So at $31.50, you’ve got TEV less refining of about $120. Add to that $40 B just to throw out a liability number for the Gulf and that takes TEV applicable to the reserves of $160 B which values the reserves at $7.50/BOE … still darn cheap.

67. Paul – West is the axe on XEC so I’ll defer to him on that. I have tried in the past to play DVN and the stock has had trouble getting to what I’d call a fair valuation. Am planning to watch DVN and XEC more closely now. XEC is a much more interesting name to me at the moment from a story perspective but I only played quickly for a small gain awhile back and have missed this big move of late.

68. BP says some employees have been put on administrative leave but no one has been fired yet.

69. Thanks ZMAN. I still don’t have what it takes to buy BP because it’s to cheap – yet.

70. Ram – Hey, good on you, I’m in and higher and poorer for it. Sometimes back of the envelop is dangerous and sometimes its just early.

71. S&P minute chart looks like a telephone pole suddenly Nicky.

72. Good afternoon. Back, but multiplexing…. just got this IM from XACS1 that is worth sharing.

    Also, HT pointing out SPX right on 200 day MA right now….

    ——————————————

    Credit is now trading in line with the equity markets- intraday. It appears as if the investment grade credit markets were underperforming the SPX this morning due a pricing discrepancy between the CDX Index and its underlying members….this difference is commonly referred to as SKEW. We expect this difference to collapse with individual member spreads tighthening. What is MORE IMPORTANT is that this is the fourth trading day in which SPX point volatility has been increasing relative to CDX spread volatility. The recent reduction in absolute and relative credit spread volatility materially reduces that likelihood that the credit markets will spark another massive equity market sell-off, in our opinion. The steepening and stabilizing of bank CDS spreads – if it continues – would also likely cause equities to rise and VIX volatility to trend lower.

73. Welcome back BOP and thanks.

74. FYI – today is quarterly estimated tax day.

75. HT makes a very good point, we’re just below the 200 day sma on the S&P.

    Oil at 76.61 … drifting comfortably.
    NG up a dime all day. If that potential storm fades tomorrow or overnight, I’d expect a test of $5 support.

76. Interesting comment on why TED is so wide… there’s some truth in it… but still think the majority of the spread widening is due to global investor jitters. TED headed a tad south today… for the first time in a looooong time.
    —————————————

    ED Spread Widening on Bill Demand, Not on Risks

    By Liz Capo McCormick
    June 15 (Bloomberg) — The difference between what banks and the government pay to borrow money for three months is widening because of demand for Treasury bills, not risk aversion, according to JPMorgan Chase & Co.
    The CHART OF THE DAY shows the TED spread, or difference between the three-month dollar London interbank offered rate, or Libor, and the bill rate, which has widened 56 percent since May
    7 to 0.48 percentage point yesterday. Libor has increased 25 percent, while the bill rate has fallen 55 percent. The TED spread, which averaged 0.32 percentage point in the decade before mid-2007, is often seen as gauge of perceived credit risk in the banking system.
    The “widening in TED spreads is not an indicator of heightened risk aversion; rather it is simply due to the increased demand for T-bills from a variety of institutional investors,” wrote New York-based Alex Roever, head of short- term debt strategy at JPMorgan, and Teresa Ho, a strategist, in a research note on June 11. “Coming into this quarter-end, there is a heightened demand for bills as a place for cash to rest. Potential for heightened shareholder redemptions” is part of the reason why money-market funds are also increasing short- dated bill positions, according to the analysts.
    An elevated amount of cash in the hands of institutional investors and on corporate balance sheets is contributing to the rise in demand for Treasury bills and the fall in rates, according to Roever and Ho.
    The three-month Treasury bill rate dropped yesterday to as low as 0.0487 percent, the least since Jan. 26, from 0.1552 percent at the end of last month.
    The rate fell below zero for the first time in December
    2008 as investors sought the relative safety of short-term U.S.
    government securities after the collapse of Lehman Brothers Holdings Inc. Negative bill rates mean investors are willing to pay the government to hold their money, protecting them from the potential losses of other investments.

77. Thanks again BOP, makes sense.

    I’m listening to the hearings, doing a little work on a new name but here if anyone’s got anything.

78. HT pointing out that this is NOT a mrkt for day traders. Most of the action takes place in pre-mrkt open. He is spending his days lobbing insults at me over the IM system. HT is totally bored.

    So guess it’s like that KOG trade a week back. Bought at 3.22 and watched it go much lower. But liked the price, outlook, story, and direction of oil prices… just have to be willing to hold thru some pain… can take a week or two or three. Not a marktet for ADD-Traders.

79. wcoaster …. you lookin’ at LEI?

80. Volumes in the E&P area look very light to me.

81. HT saying volumes in general are very light… last Thursday was the last time he had any fun.

82. BOP – re 78. It’s the pathetic closes we’ve been seeing that are so hard to take when one is having trouble staying awake anyway.

83. tomdavis — you are looking for some bonds to replace your CHKs? What about some DNRs? Double-B rated and all onshore… what kind of yield/rating you looking for?

84. That wave in the Atlantic has been downed to a 20% chance of development. The water is more than warm enough but it’s encountering blocking winds and shear depending on which forecaster you believe. The evaporation of the potential storm can be very hard on gas prices, especially if they spike up on the storm. My one gas play in this expiry is HK and I’m coming out now.

85. think traders are watching TED… if TED can’t Go Happy during the day, then sell into close.

    FWIW, HT thinks we go lower here, then close at around HOD. So, we shall see….

86. Regarding Decline Curves in Hot Plays:

    Had a wide ranging discussion with CFO of KOG, after HK had published their new study on choking wells down and the resultant change in Decline curve and INCREASE IN EUR.

    KOG is doing something very similar in all their wells.

    The net effect not only increases EUR’s, it gets you off the treadmill of having to increase your drilling of wells to maintain growthand offset the effects of rapid declines……and of course it decreases IP rates, as well as chaneing the decline curve shape.

    The important TAKEAWAYS from the discussion was:
    1) The pricipal of choking wells down seems to apply to both Gas fields like Haynesville, and Oiy fields like the Bakken/TFS.
    2) Neither HK or KOG can explain the exact dyinamics of how & why this works….but they can QUANTIFY THE RESULTS of doing so, and their Consulting Reserve Engineers are giving them EUR credits for doing so.
    3) those who MAIXIMIZE IP rates, and try to take the profit out early [BEXP, AEZ] and use the the high IR rates PR to hype the share price are locking themselves into a business model, which requires ever more drilling [Capex] to overcome the decline curves…….which may be OK early in the life of field and with rising prices, but will eat your lunch as the filed matures and/or commodity prices decline.
    4) HK has data on both new wells and reentering old wells which supports the chokedown approach.

87. ZTRADE – ZIM – HK

    Sold (75) June HK $21 calls for $0.75, up 186%.

88. crysball — great info and chat notes. The KOG CFO is repeating what the CEO has been saying for a while (duh). KOG is the turtle to BEXP and AEZ’s hare. It’s not as exciting, but it builds more production in the long run.

    Didn’t know about the HK study. Thank you for pointing that out.

89. HK testing intraday topside ascending triangle trendline resistance now, support at $21.40…

90. oops… the “duh” was aimed at the CFO… not crysball!

91. BOP: I am looking for BB or better, par or better, better company fundamentals and not concerned about yield just return of principal. I looked today at the TSO 6.625 11/1/15. Have some KWK also.

92. tomdavis — i would take e&p assets over refinery assets any day. But that is just my bias. What about some of the bonds that HK has o/s?

    I can send you the latest Relative Value Bond Shopping List, if you wish.

93. BOP: 92 Sure. That would be great.

94. (HK is not BB, so probably not what you are looking for)

95. Crys – I agree to a certain extent although I have heard fewer companies of respectable size say it applies yet on the oil side. If oil prices are high now and I think they are at least fairly valued if not high then maximizing liquids production makes more sense relative to gas. But I hear what you are saying. BEXP is already running into the problem with press releasing every well with higher and higher IPs. It keeps setting it’s own bar higher. The stock has been going sideways as cash flow catches up to the past appreciation in the shares.

    But as to KOG, I don’t think they have done things to choke back the wells and therefore have intentionally kept the initial rates low. I just don’t buy it and if that’s the story they are now selling I’d very much like to hear that confirmed. Is that what KOG is saying?

    I have heard one comment from EOG on this and it was pretty tentative re the Bakken.

96. On my screen and to my squinty eye, the S&P looks to be just through the 200 day sma.

97. Still holding the HAL calls from earlier. The higher strike $26s are starting to wake up as well.

    Bakken list moving nicely again.

    Crude up through $77.

98. #28 & 30 TD question on CHK bond replacement. Yes CHKprD @ <85. Par is 100, conversion ratio of 2.2639 & divi of 4.50. Sorry it took so long. Been away.

99. KOG — don’t think it’s so much that they “choke back” as they don’t maximize their PRs with reporting high IP rates. KOG keeps saying that even “24-hr tests” can be apples-and-oranges, when different companies report them. But KOG won’t elaborate further. They just say to watch for their decline curves and EURs. That is what KOG is more focused on. Thing is, you need a yr to pass to get that data. So, still collecting data.

100. Nat gas over $5…. oh what a diff 3 wks makes.

101. I won’t belabor this but HK said the cross over on cumulative production comes pretty quickly on their choked back and wider choke wells. So I think you can tell things from the 30 and 60 day rates. WLL also reports big IPs, a number around 4,000 boepd and while I don’t consider BEXP to be conservative, I do think the guys at WLL are. I’ll put together a list of the available 30 and 60 day rates and the declines from IP on a company to company to company basis.

102. re 100. Potential spinner mid Atlantic drove it there. It’s early and that wave is losing cohesion.

103. Also, have to compare the IP to the lateral and frac stage length…

104. #103… go ahead… say it…. “DUH”

105. Missed you BOP!

106. TGA in the hopper for Thursday. I know, I know, I’m slow.

107. BOP – EXXI spoke at Macquarie today and will be at Enercom in London I think on Thursday.

108. Z: When is the presentation scheduled for that BEXP is participating in? Also, any target (time and price) for exiting BEXP?

109. Z – not checked to see if you have relayed my email on here. If not – then I basically said that everything about this rally makes me nervous! The volume is lousy, the move is wedgie,ending diagonal and therefore corrective.

     Its going to be very difficult to try and spot the top. The astro does not turn negative until after the close TOMORROW so we are therefore looking at another up day tomorrow although not likely to be as big as a move as today.
     Cycles point to the same timeframe for a top and then at least a 3 – 5 day pullback.

     The astro for next week looks awful and points to a large move to the downside. There is the risk of another debt crisis or bank crisis plus earthquakes. I know people in LA who are actually moving out next week as they are so concerned about this!

     Okay so where is the likely area for a high tomorrow. We are into my target area already so likely we are looking to test higher levels. 1122 is a number I am looking at and if you want to really push it then yes 1130 although that seems on the high side to me.

110. eog hardly participating, PA hangover?

111. Earthquakes? Who or what is predicting an earthquake – and specifically in Southern California?

112. Guru – Re the calls, hopefully Thursday. Re the stock no time frame. I was more concerned about the P/CF multiple earlier this year but the stock went side ways allowing the denominator to catch up and they have done enough deals for this year I think.

113. Ram – many astrologers are extremely worried about it in the time period of the 25th – 30th June. Last night in LA there was a 5.7 quake..was centered 80 miles east of san diego.
     Now that is not to say its gonna happen just that the voodoo is aligned!

114. Z according to your list from enercom, Bexp speaks 10:50 thursday BST which equals 5:50 am est.

115. Z and GT: Thanks for the BEXP info and targets.

116. Thanks Nicky.

117. Gary – maybe, dunno. It had a good little bounce following that well so relative position wise it’s probably on par with the other big caps.

118. Z:

     One more quesion: For someone who is not so conversant with the terms in oil exploration, what does EUR stand for? What does it signify? I did not see this term in your Dictionary.

119. #105 [blushing…] thx.

120. Re 118 Estimated Ultimate Recovery, how much gas or oil a well will make in is life

121. guru — while you’re at it…. ask him how EUR relates to OOIP. (one of my fave acronyms)

122. Gotta go grab an intern, back in 20.

123. (sorry… OOIP is just fun to say…)

124. Estimated ultimate recovery is what they think they’ll get out of the Original Oil in Place. Varies from play type to play type and has generally increased over time with technology but is often surprisingly low.

125. …also depends on prices which is why some call it economic instead of estimated for the E in EUR. Gotta run, back in 20.

126. OOIP is easier to calculate with the EUR being an educated guess. Mature plays giving historical curves to refine the percentage and frontier plays being an educated guess.

127. “Lightning Strike and Fire on Ship Halts Containment of Leaking Oil in Gulf”

128. http://www.foxnews.com/us/2010/06/15/bp-ship-halts-oil-capture-gulf/

129. #127 — that is just plain weird !

130. It sounds like a very dangerous business. I understand they have been spraying water around the ships near the site to keep the fumes down. Those guys need combat pay.

131. Sounds like pretty much a non-event but “stuff” does happen.

132. Yeah, except that containment is shut down at the moment.

133. 20 minutes to go and so far no fade in the broad market in site.

134. # 65 , Paul finished moving to the side today in XEC. Hoping for pullback to the bottom of flag formation around 75. It is hard for me to me out of the name but I think either tomorrow or thursday we may get a little pullback. I’m assuming a large holder has being selling all day at around 80 so it will probably pop when they get thru. They just got another well in South Texas and this play is now over 20% of their total company production. The Cana is terrific and they have a huge position in the Avalon shale play in New Mexico which are 1 year payout wells according to local coffee shop talk. The Bone Springs is a good looking play also. The have just posted a new presentation for their show this week.

135. Brazil schooling North Korea in world cup action despite the low score so far.

     Elsewhere, most of our names looking to close at HOD.

     Nice 8% move in KOG.

136. Here’s to a good API report tonight, would expect to see the imports figure come off along with another down week for Cushing stocks. Demand should also keep inching up. Normally we get smallish builds in crude and both products this week of the year but last year, we saw a very large build in gasoline so we should be able to eat away at the recent year over year surplus we’ve been slowly adding to over the last month. Distillates I expect to hold just above last week’s levels.

137. Congrats West, nice run.

     I have to ask, anything new on the EOG well in se Montana.

     Also, are you hearing anything on the Collingwood shale?

138. Volumes have doubled for many names since I said they were weak earlier, but they are still very low in E&P and in some service names as well like HAL.

     Beerthirty.

139. Wow. HT called it. Closed at HOD. Also closed at XACS#2’s key level of 1115. If we can hold this level for a week or so, then the Credit Bears will start to cover. Then it’s Katy Bar the Door!

140. BOP – yep, he got that one right for sure. Has TT dropped off the radar?

     Swimthirty

141. Nicky — based partly on your comments from over a week ago, I swapped from some low-beta stuff into higher-beta stuff before I left on vacay. Just want to say “thanks.” The Evil Plan is working.

142. TT made too much $$. He is off in his own world right now. Might hear from him again… but, he’s flying under the radar for now (sadly for us).

143. Obama Oval Office = 8 pm EST tonight. Look for some BP bashing and pushing of an alternative energy agenda.

     The next hot deal:

     http://www.marketwatch.com/story/tesla-motors-files-for-178-million-ipo-2010-06-15?reflink=MW_news_stmp

144. TED Spread made a (relatively) large move tighter today. Still far from my “All Clear” level of around 25bps… but, nice to see the tightening move hold. It hasn’t, of late. And Mr. Market has been paying attention to that.

145. # 137, I think that EOG is working the science project on this area to get the correct formula for max ROR. BEXP has the acreage across the lease line to the south and southwest which will be productive imo . The question here is EUR amounts and probably Bakken Lite #s is what I am thinking. BEXP’s well that they are completing now in Montana is further west than the Carat, so the big question where does the formation pinchout or thermal mature playout to the west in this play? The pink line as BOP likes to call it, as we saw on the Eastern side of the Parshall and KOG’s acreage on the east side of the Missouri River. I think BEXP has the reserves and the tech to move the stock price much higher, but they also have to deal with the hot money running in and out of the name constantly……EOG side note, their Niobrara wells in Wyoming look to be successful with additional locations and rigs on the way.

146. BOP – re 141 – wow I am pleased to hear that. Hope you had a great vacation too.

147. Govt have revised estimates for the BP leak up from 35k to 60k.

148. Thanks Nicky, I’m sure big O’s speech tonight and the timing of this increase in the flow are purely coincidental, lol.

     B of A has issued orders to its traders to limit the duration of oil traders with BP as a counterparty.

149. West; thank you for the helpful comments!

150. Fitch just lowered APC outlook to Negative.

151. Welcome Back BOP, missed your commentary.

     JB voted.

     Nicky #23 any range for a deeper pullbak?

     VTZ any thoughts on best unhedged gold producers with options available? GLD options too pricey.

     zman nice play on HK which I happened to join you on.

152. BedTime Market Strategist… good one!
     —————————————

     Taking Stock.

     In our June 8th Bedtime, we noted that we were not believers in the bear arguments that sparked the May sell off and we highlighted the three factors we were watching that would shift us from Neutral to Bullish on the S&P 500. The factors were: Valuation, Behavior/Volatility and Economic. Valuation, which we described as “very attractive,” was the only one of the three that was correctly aligned. It appears this week is on pace for the Behavior/Volatility category to fall into place. As we explained, “If it [the Vix] can finally break and stay below 30 for approximately a week, it will be as close as you can get to a ‘coast is clear’ signal.” We noted that it would mean turning bullish higher, but we were comfortable taking that stance because we believed the reduced risk would be ample compensation. The final category in which we are looking for improvement is the economy. We continue to remain focused upon weekly Initial Jobless Claims. As we noted a week ago, new cycle lows are achievable from current levels but we would like to see them materialize.

     There is a plethora of May economic data that will be released over the next few days which has the potential to move the dial in either direction. It is a positive sign to see the S&P 500 clear the 200 day moving average and post its highest close since May 17th. Today there were very positive anecdotal comments out of a number of industrial and transport companies. For example, we heard that business travelers are back. Then there was also Best Buy who attributed its Q1 earnings miss to the misalignment of its internal SG&A forecast with street estimates. Although they reaffirmed their full year earnings guidance, they talked about a choppier consumer.

     We believe it is important for investors to be price sensitive and exercise discipline. While the pendulum is shifting in the right direction, investors should try to ensure they don’t get caught chasing prices created by dual short squeezes. The short squeeze in the Euro has helped fuel a short squeeze in U.S. equities. The anecdotal company commentary added fuel to the fire. We are confident that the fundamentals of the Euro have not magically improved overnight. In addition, the negative headlines also have not miraculously disappeared, rather, the market finally had some positive news and price action on which to focus.

     Click here for PDF.

153. [PDF link did not come through… but it is that same thing I just posted]

     thanks, mimster! 🙂

154. RE: #151, mimster, thank you for the vote…

155. Wednesday post is up.

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