07
Jul

Wednesday Morning

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Market Sentiment Watch: Energy finally had a decent day, the first in the last two weeks days but sentiment remains mired in the doldrums.  We got another look at the economy with the ISM's non-manufacturing number yesterday and it was also not pretty, but did have the affect of sending the dollar down and crude on a path towards the beginnings of a bounce.... at least before the equity markets decided to run out of steam.  Today should be more quiet with no economic data scheduled and no oil inventory report. In energy stock land, our names were mostly green but volumes were unenthusiastic.  I added a position in ECA to gain more near the money leverage to a potential run in gas prices back above $5 and you can see more reasoning on why I them highlighted in the Stuff section below.

Things that bother me about this kind of market. Everything is either green or red depending on the dominant color of the day. Individual news items and company presentations are holding little if any sway. In other words, the market is more charty and less fundamental than usual. In other other words, it's summer. The group is out at the moment slightly more out of favor than the market itself. We saw this last week in the inexplicable slump of BEXP on more strong results and yesterday in GMXR and NOG (no positions but I monitor them and trade in both from time to time).

  • GMXR ended off 3.5% on what should have been perceived as good news (more on them in the Stuff section).  This doesn't inspire confidence and it doesn't make me want to fish in them or other small fry gassy names at the moment.
  • NOG ended flat on the day, even after saying they goofed their Tuesday release with one well actually performing better than the original release stated.

In Today’s Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Stuff We Care About Today
  4. Odds & Ends

Holdings Watch:

  • ZCAT (Zman Catalyst portfolio):
    • $5,400
    • 89% Cash
    • Yesterday’s Trades:
      • ECA – Added (30) ECA July $33 calls for $0.25 with the stock at $31.30. My play on this slow week on a potential bounce in natural gas due to weather (both record heat and tropics). High risk trade given that we have two weeks left in this period.
  • ZIM (Zman Inefficient Markets portfolio)
    • $3,900 (most of the portfolio is currently leveraged to BP and HAL)
    • 4% Cash
    • Yesterday’s Trades:
      • None

Commodity Watch Crude oil eased $0.16 to close at $71.98 yesterday, giving up early strength with the equity markets. The dollar fell as well but oil has been less concerned with currency issues and more concerned with the state of the global economy for the last week. This morning crude is trading up slightly.

  • Early read on oil inventories (we get them tonight from API and tomorrow from EIA due to the 4th of July Holiday).

    • Crude: Down 2.6 mm bopd. Could be quite a bit larger than this due to imports
    • Gasoline: Down
    • Distillates: Up

Natural gas jumped early but closed flat on the day at $4.68 yesterday as the threat from the southeastern Gulf and from forecast record heat in the northeast was outweighed by the pull of a tired/bored equity market.  This morning gas is trading slightly higher.

  • Tropics Watch: Invest 96L moving into southern Gulf on same line as Alex. Probably spins up into a named storm as it approaches southern Texas. 

Stuff We Care About Today

ECA Thoughts - Big Cap Gas Leverage

  • 94% of production is natural gas
  • About 60% of expected production is hedged for 2010 at $6. 
  • Diversified, large cap gassy name which right now is about all investors have much of an attention span for. (See good news from gassy small cap GMXR yesterday which was all but ignored).
  • Should see positive Street chatter ahead of 2Q numbers as the name rarely disappoints on estimates and should have accelerated their share repurchases as the group weakened after April.
  • JB - puts the chart pattern ahead of other gassy peers

Other Stuff

Mailbag for MD #1:

Question: TEV- Is this superior to or inferior to market value. Can you explain why it’s used more than mkt. value.

Response: Superior for the straightforward reason that it incorporates the balance sheet into the valuation of the company. TEV as I define it is Market Cap + Debt - Working Capital. Looking at the TEV instead of just market cap gives you an idea of the leverage management has taken to generate Cash Flow or Earnings Before Interest, Taxes, and Depreciation & Amortization. 

Question: RP ratio- Is the rule of thumb the greater the years the better and or higher the value, any caveats.

Response: The Reserve to Production ratio simply gives you an idea of how long the current proved reserves would produce. The caveats are that the activity level that produced the volumes in the denominator stay roughly the same going forward and that the company is able to at least replace volumes produced each year. Longer (or higher) RPs are generally a sign of a more stable cash flow stream although this not be the case, especially if reserves are overstated or uneconomic at a nearby price thresh-hold. Higher RP generally results in higher P/CF multiples afforded by the Street, especially in the mid and small cap realms. 

Question: TEV/2010 estimated ebitda- Is the rule of thumb the lower the multiple the better and or higher the value, any caveats.

Answer. Yes. As always there is cheap and there is cheap for a region. I like to compare TEV/ EBITDA vs the peer group AND vs where the stock has historically traded. Some names stay cheap for decades. This could be a Street vs Management issue (credibility) or it could be costs associated with production (high operating cost names generally have lower TEV/EBITDA  multiples.

Question: Any way to create a scorecard?

Response: Probably but I've never done it. I use the data on the Orange Charts as a starting point in looking at the E&P names. If I know that BEXP is always pricey to its peers and the other Bakkens on a forward cash flow and it suddenly becomes cheap, I start to take more notice. The charts are useful in a number of ways but I've never seen a scorecard that worked as we transition from market environment to market environment.


 

Mailbag for MD #2: I’ve been reading through GMXR annual and qtly since last week. From your metrics it seems like they’re underpriced. Is management feathering their own nest. What kind of options program for the management. One of the insiders as per Yahoo that also had a stake in 12/08 was Campbell partners  who it seems ,sold out at $76. I have not been able to do a proper search from your earlier blogs to know what you’re negativity is .

 

 

  • Starting with last thing's first ... my negativity. Management has in the past touted astronomical growth rates. When gas prices were high they often quoted very high RP ratios and reserve pools that were ahead of their peers in terms of optimistic assumptions regarding economic recoveries
  • They didn't hedge enough to satisfy their capex requirement and ended up cutting their production targets multiple times. I don't fault them for missing the coming decline in gas prices as we sat mid 2008 at $14 but I do fault them for not locking in more of the strip to protect their program, a program that was necessary to protect acreage. If there is one thing the Street hates it is the "over promise and under deliver mentality".
  • Then there's the Haynesville well performance ... so, so, not great. When they first started drilling, people were unfairly assuming that their acreage was sweet spot acreage and would produced IPs like some of the HK and CHK wells but not all Haynesvill acreage was created the same. Not sure if this is their fault in the early portrayal of what they had or just Street exuberance but at their former lofty multiples, they needed to be "great" wells.
  • I realize my thinking here is somewhat jaded by the recent past. Debt is actually under control and management is executing on the current plan. I think there is some mistrust still out there of their current and next years guidance and that I think will take another couple of quarterly reports to fade.


BP Spill Group Update:

  • BP has been amongst the better performers of the last week.
  • Yesterday, a third collection vessel was partially hooked up (delayed due to rough seas) and is expected to be online by the end of the week, more than doubling collection capacity to 53,000 bopd.
  • And the Coast Guard confirmed the first relief well is running 7 days ahead of schedule but then commented that the firm still planned on intersection the discovery wellbore in mid August, quashing recent talk of a July interception.
  • BP's CEO is in the Middle East seeking help from sovereign investor funds in warding off a takeover.

 

Odds & Ends

Analyst Watch: All quiet on the analyst front. 

 


116 Responses to “Wednesday Morning”

  1. 1
    milepost_43 Says:

    some negative press for FRACing coming in July???
    EPA schedules public meetings on fracing study
    WASHINGTON, DC, June 21 — The US Environmental Protection Agency has scheduled four public meetings on its proposed study of the relationship between hydraulic fracturing and its potential impacts on drinking water supplies.

    The meetings will be held July 8 in Fort Worth; July 13 in Denver; July 22 in Canonsburg, Pa.; and Aug. 12 in Binghampton, NY. EPA said it will accept comments on the proposed study at the meetings. Stakeholders planning to attend a meeting are asked to register at least 72 hr in advance.

    The meetings will provide information about the proposed study’s scope and design, EPA said in a June 18 announcement. It said it sought guidance from its independent science advisory board to support initial planning and guide the plan’s development..
    SAB members http://yosemite.epa.gov/sab/sabpeople.nsf/WebExternalCommitteeRosters?OpenView&committee=BOARD&secondname=Science%20Advisory%20Board
    don't see many…as in none….technical O&G profs from universities…..

  2. 2
    zman Says:

    MP – could be, can't discount the power of a one sided argument. Thanks for posting that list, looks like all ivory tower types. Wondering what format the "meetings" take. Is anyone from HAL, SLB, BHI invited or will it be just people with jars of dirty water presenting them to the EPA.

  3. 3
    zman Says:

    V – any thoughts on today's oil sands deal in terms of price per reserves?  Does it in your mind put the cross hairs on anyone else?

  4. 4
    milepost_43 Says:

    TGA..Dundee raises target to C$9………. —

    from my ETRADE news alert…no link or details…2Q update scheduled for Aug 5…should have results of more horizon and vert fracing….may add a few Aug calls….

    May 7 2010
    9:51:01 AM by iaa425

    Dundee issues report on Trans-Globe this morning with buy and $8 target maintained
    Four pages of analysis (plus 2 pages of disclosure).

    Buy maintained. $8 target maintained.

    document.write(makeLinkSmaller(‘http://www.investorvillage.com/smbd.asp?mb=10701&mn=871&pt=msg&mid=8974764’));http://www.investorvillage.com/smbd.asp?mb=10701&mn=871&pt=msg&mid=8974764

  5. 5
    zman Says:

    Analyst Watch

    Stephens saying PKD "too cheap to ignore"

  6. 6
    Jerome Blank Says:

    RE: #5 PKD is sitting right above P&F trendline support at $3.50, this level has held since May of last year…it's fun seeing my name in the post….

  7. 7
    1520sbroad Says:

    Not sure if this was posted yesterday – not exactly riveting news.  But a good thing for SWN next time they go to the debt markets.
     
    NEW YORK (AP) — Standard & Poors raised the credit rating on Southwestern Energy Co., saying Tuesday that it has steadily increased production and cash flow.
    The natural gas and oil production and exploration company had its long-term corporate credit rating raised to "BBB-" from "BB+." S&P also raised its unsecured rating to "BBB-" from "BB+."
    S&P analyst Amy Eddy said the outlook was stable, because she expects Southwestern to continue growing reserves and production quickly while still keeping a key debt measure moderate compared to others with similar ratings.
    The company's shares fell 9 cents to close at $37.66.

  8. 8
    zman Says:

    re 6 – thanks for the quick look there. We should put you in the post more often.

    BP trying to run again. People like the idea of a need for a white knight sovereign fund and the comment that BP is not planning a share sale. And probably the fact that BP has given the Justice Department the stiff arm on their demand that the company give them 30 days notice for any asset sales.

  9. 9
    zman Says:

    Baltic Dry index getting more air time on CNBC, Haines just mentioning its now at a 14 month low.

  10. 10
    zman Says:

    Analyst Watch:

    Howard Weil ups BEXP to Market Outperform

  11. 11
    scoop006 Says:

    Z – Are you going to post Italy's photo's

  12. 12
    jat Says:

    re 10, they also initiated rose outperform

  13. 13
    zman Says:

    Scoop – yes, was trying to figure out best way to do it.

     

    Thanks Jat. ROSE has really backed off… no near term catalyst.

  14. 14
    zman Says:

    You can check out Italy's sweet set of wheels here:

    http://zmanbackup.wordpress.com/2010/07/07/hello-from-kandahar/

    I wonder if I can get one of those that runs on CNG?

  15. 15
    elduque Says:

    Credit Suisse – cuts ECA target  to 37 from 39, along with several others

  16. 16
    zman Says:

    Got a Simmons piece last night on oil service sector that basically says what we've been talking about the last few weeks. Things are generally better, EPS wise, than the Street is estimating for 2Q. Along that line, HAL is extending here.

  17. 17
    zman Says:

    Eld – yep, looks like they edged a bunch of Canadian E&P price targets down a bit. Probably related to mark to market on the price of natural gas for 2Q.

  18. 18
    scoop006 Says:

    #14 Hope it's triple armor plated

  19. 19
    VTZ Says:

    All my posts in the last 2 years, I've said that UTS was the most likely takeout target although I always thought it would be to SU following the PCA takeover.
     
    There are really no other properties that are of the quality of UTS because it was the last independant surface mining package and the metrics for land value for mining are way different to insitu. They are paying ~0.60/bbl which is ridiculously cheap still in my mind.

  20. 20
    VTZ Says:

    I would not be surprised if SU tries to outbid… which is probably why they are trading above the offer price.

  21. 21
    zman Says:

    V – I wonder if it brings some of the other smaller names to the fore now. Did you see Waxman trying to stop Keystone? China must be laughing all the way to their new giant oil storage tanks. How does sending that dirty oil sand crude production to the other side of the same planet help the "global" warming issue.

  22. 22
    VTZ Says:

    RE 21 – Makes it worse because now you have transportation emissions.
     
    I just really can't believe how cheap the reserves are selling for. It's not like it's speculative land. You know exactly what you are buying.

  23. 23
    zman Says:

    V – Also wondering, does this maybe put a more positive spin on participants like a CVE

  24. 24
    zman Says:

    So on the cheapness, no help for a more speculative player like a BQI.

  25. 25
    VTZ Says:

    Waxman trying to stop Keystone is one of those things that is going to provoke actions from Canadian govts one of these days.
     
    In terms of smaller names, there is still going to be consolidation among the smaller insitu producers although it would be hard to pick out names. I would not be surprised however to see Laracina go public… the Canada Pension Plan Investment Board just got a private placement in them.
    http://www.laricinaenergy.com/news/39/83/Laricina-Energy-Secures-250-million-Investment-From-Canada-Pension-Plan-Investment-Board-and-Announces-Private-Placement-Offering-for-up-to-an-Additional-51-million.html

  26. 26
    zman Says:

    SSN update: Nothing to update, no allotment yet.

  27. 27
    zman Says:

    JB – Any new HAL thoughts here?

  28. 28
    zman Says:

    Baylor – turned off the editor plug in so you can speak, looking for a workaround plug in.

  29. 29
    VTZ Says:

    BQI is trash! Don't make me tell you again! 🙂 There aren't even playing the same sport, nevermind ballpark comapred to UTS.
     
    In terms of CVE and other insitu players, the value proposition doesn't really change in my mind. This transaction does show that Majors will be willing to invest large amounts of capital into the oil sands and so it does bode well for takeouts/mergers of all the small insitus.  

  30. 30
    scoop006 Says:

    Z- Any word from Ms. Nicky ?

  31. 31
    zman Says:

    Scoop – yeah, she’s on vacation. 🙁

    Hear ya V, just trying to get your blood pressure up.

  32. 32
    zman Says:

    Fed’s Fisher Watch:

    Second half to be slower than first
    He doesn’t expect negative growth ahead
    Fed has ‘done enough’ to stimulate growth
    Inflation is not an issue now

    In case you were wondering why the market just bounced, those headlines just came across.

  33. 33
    zman Says:

    more Fisher:

    No sign yet of contagion from Europe

  34. 34
    Jerome Blank Says:

    Re:#27, HAL, trade above $27.74 would print a higher high on the daily, first support is $27, next resistance is $29.50…

  35. 35
    Jerome Blank Says:

    RE: #34 HAL correction on next resistance, the 100/200 at just under $29…

  36. 36
    zman Says:

    JB – thanks, I was just happy to see it pop back up through the 50 day. On balance volume back up off the floor as well, well above that last recent high you mentioned.

  37. 37
    Dman Says:

    WLL trying to get out of own way.

  38. 38
    elduque Says:

    Any further thoughts on GST??

  39. 39
    zman Says:

    NG down 11 cents as tropical fears fizzle. I think the real impetus for gas will be the heat wave and the generation of a greater number of threats from the tropics so early in the season.

    And if I was BP, I’d hurry the floating riser system along. And the relief wells. Going to be very hard to finish with the amount of tropical action the Gulf is going to see soon.

  40. 40
    Jerome Blank Says:

    RE: #36, I’m thinking that if the mkt weakens, HAL may try to test this mornings gap at $26.40 to $26.60, which is essentially a test of the 50 day SMA support level on the daily…30 min added

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

  41. 41
    zman Says:

    Dman – Funny, I was just thinking that 15 bucks in the last couple of weeks was enough. Mulling a trade there.

    Eld – Nothing from me, maybe from Reef or one of the gang. I think BOP is on vacation until tomorrow.

  42. 42
    zman Says:

    Thanks JB, will go have a look.

  43. 43
    zman Says:

    I see what you are seeing now JB, thanks. If you are new to JB’s charts know that you can click Chartbook on the right hand side of the screen to quickly page through all the charts. Very good stuff.

  44. 44
    zman Says:

    JB – Know I asked before but where do you see resistance now on BP?

  45. 45
    zman Says:

    S&P at that key 1040 level.

  46. 46
    Dman Says:

    Z – in addition to the basic fundamentals here for HAL, does it also work as a tropical play?

  47. 47
    zman Says:

    Re 46, yes, to the extent if jacks up natural gas prices.

    S&P 1043.

    BP pushing through $33. Thinking to take half off the table in the $31s soonish.

  48. 48
    Jerome Blank Says:

    RE: #44 BP, I think the big resistance spot to watch from here is $34…this would be a huge new P&F buy signal…probably wait for pullbacks off the buy signal…

  49. 49
    zman Says:

    Thanks JB, looking to sell some, probably will cut it in half today.

  50. 50
    john11 Says:

    Laughed when i voted for JB today..words were “servers struggle”. Added to AEZ position.

  51. 51
    Pati Says:

    Under UTS on the Globe, French Total is buying.

  52. 52
    Jerome Blank Says:

    RE: #50 john , thank you for the vote…

  53. 53
    choices Says:

    JB-thanks-voted-EOG seems to be holding in here

  54. 54
    elduque Says:

    Any thoughts why HK has been so quiet about current drilling activities.

  55. 55
    scoop006 Says:

    Matt Simmons on CNBC sats “BP Relief Well is a shame” proposes using nukes

  56. 56
    Jerome Blank Says:

    RE: #53, choices, thank you, EOG is currently sandwiched between 100 day SMA resistance and lower channel line and P&F trendline support, looking for a break away from one of these levels, I think right now a break higher….

  57. 57
    skimo Says:

    jb thanks voted 🙂

  58. 58
    Jerome Blank Says:

    RE: #57, skimo, thank you for the vote and smile…

  59. 59
    bondbuddha Says:

    JB thanks for the charts, voted, $$

  60. 60
    Jerome Blank Says:

    RE: #59, bondbuddha, thank you much…

  61. 61
    zman Says:

    re 54. Since 2008, they’ve only occasionally done operations updates outside of earnings reports. They did a big report a couple of months back on the Black Hawk and Red Hawk activities in the Eagle Ford and it got very little airplay from the Street. The numbers they put up continue to improve and the stock languishes despite good hedges. Could be some “frac fear” in the name and some “it’s almost all gas fear” as well.

  62. 62
    zman Says:

    Matt Simmons – I haven’t seen the data on the wellbore that he claims to have seen about the two pieces of casing in the BOP. From what I could tell and what BP said earlier, that looks like two pieces of drill pipe in the BOP. It seems like a jump to me to see that and say that the casing is destroyed and therefore the well can’t be capped. Matt also said 120,000 bopd flow rate. Like everything else with him of late, this number is over the top. If they do cap it I’ll think he has truly jumped the shark. Wyoming, Texw, Reef, any thoughts?

  63. 63
    choices Says:

    Here we go (a post for s slow day)
    S & P=1500(just have to break 1040 first) and then throw a dart-heh

    http://www.thedisciplinedinvestor.com/blog/2010/07/07/sp-500-target-1500-video-bull/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+thedisciplinedinvestor/EBHR+

  64. 64
    elduque Says:

    I think this would be a good time to put the Germany/Spain game on. Mkt. is quiet.

  65. 65
    zman Says:

    I asked Italy about those antennae on the car as I’m a geek at heart. Got this feedback.

    Z,
    All of our vehicles run three radios of various types – VHF, HF, FM, UHF or SATCOM. I run two FM radios and a SATCOM. The black protusion in the front and the fatter antennas in the front and back are electronic countermeasures that protect us from certain types of roadside bombs.
    My mobile command post vehicle is bigger than my “daily” driver and supports a few additional radios and even limited tactical internet to display unmanned aerial vehicle video feeds and other intel stuff. It drives with me in the patrol and then I hop in the back to command and control.
    When walking, it’s me an one FM radio, a sat cell phone for emergencies and an RTO (Radio Telephone Operator – a 1940’s throwback term that hangs around out of tradition) with another radio or two.
    Was doing a recon today and got shot at. It had been over a year since the last time i was shot at. Sort of like riding a bike though. One of our .50 cal gunners got the TB with the RPG. I like it quiet, but the enemy has a vote.

  66. 66
    elduque Says:

    street consensus for tomorrow’s no. is 72. What does your model show?

  67. 67
    Dman Says:

    Z – re Matt. How does anyone know what the actual flow rate is already?

  68. 68
    petra Says:

    Z had to step out for a few minutes.

  69. 69
    Geno Says:

    Re 62 I am trying to figure out what difference it makes what is in the BOP Stack you are going to kill it from the bottom up, not the top down. Although not done all the time a kill well is something that is done and does work. What it you when the nuke way and it did not work. How about a little radioactive oil to go on your beach.

  70. 70
    jat Says:

    VTZ– is the $0.60-$0.66 price based on contingent resource?

  71. 71
    zman Says:

    STEO out, comments in a moment.

    Re Storage: I’m at 80 Bcf but I still lack a number I’d like to see. Maybe I get down to 75 to 80 but they look a bit low to me. Hope I’m wrong.

    Dman – Not possible at this time to know the flow rate. But I don’t recall a lot of 120,000 bopd single well producers out there.

    Gino – I think he thinks it was a massive downhole explosion that destroyed the casing to such an extent that you’d have a really big lost circulation issue. I think that’s far fetched and again ask how he comes up with this stuff.

  72. 72
    zman Says:

    GMXR = 0 change today. They have to be scratching their heads wondering what investors want.

  73. 73
    VTZ Says:

    jat – Based on estimated recoverable resources that could be economically extracted.

    There is really no guessing on how much can be extracted.

  74. 74
    Geno Says:

    RE 71 Discovery well at Spindel Top flow 100,000 BOPD for many years.

  75. 75
    zman Says:

    Geno – right but that was a long time ago in a galaxy far, far away. Even if Macondo was a Thunderhorse class discovery, which pre drill it was not, I’d be suspect of the 120,000 bopd figure. Thunderhorse has a capacity of 250,000 bopd from several wells and is already in decline despite bringing on additional development wells. Maybe you could argue its the uncontrolled nature of the this well’s production but a rate like that would be on the crest, optimally positioned, etc. All I’m saying is that Matt has made a living being an extremist (not always wrongly I’d add) but his recent comments have been over the top, even for him.

  76. 76
    zman Says:

    Moratorium impact revised higher by EIA

    This Outlook includes EIA’s revised estimates of reductions in production resulting from the 6-month deepwater drilling moratorium announced by Secretary of the Interior Salazar on May 27. The reductions in crude oil production resulting from the moratorium are estimated to average about 31,000 barrels per day (bbl/d) in the fourth quarter of 2010 (compared with an estimated 26,000 bbl/d in last month’s Outlook)and about 82,000 bbl/d in 2011 (up from 70,000 bbl/d). EIA will continue to refine its estimated moratorium impacts as additional information becomes available.

  77. 77
    zman Says:

    EIA taking gas price average for this year up 22 cents to 4.70 from prior projection due to increased hurricane impact expectation.

  78. 78
    zman Says:

    Here’s a quote that I’m suspicious of but would like to be true.

    “if every household in the country replaced just three 60-watt incandescent light bulbs with CFLs, we would reduce as much pollution as if we took 3.5 million cars off the roads!”

    Got that off a bulb website but if true, Obama should mail everyone a dozen bulbs and can the cap and trade idea.

  79. 79
    Geno Says:

    I don’t disagree the number is not that high and he does not help the industry with his outrageous comments.

  80. 80
    zman Says:

    Geno – hear ya on that, he seems to be falling into the “if I say something over the top I get more money if it happens and if not, oh well, something else will come along to hype”. Getting really tired of that behavior.

  81. 81
    zman Says:

    Nicky just blackberried in:

    Looks like a typical ABC rally and we are now in C. Look for resistance at 1050. Will try and come back with more later when I am on the laptop.

  82. 82
    ram Says:

    Do you think the on shore no frac E&P’s will take off?

  83. 83
    zman Says:

    re 82. Not really, not unless either the market rallies or we have gotten a clear picture from EPA about it’s plans.

  84. 84
    zman Says:

    Oh, you said no frac. Maybe, still mulling that.

  85. 85
    RMD Says:

    62 & 80: Simmons & Co. sent a letter a while ago disavowing themselves of Matt.

  86. 86
    zman Says:

    RMD – yeah, he’s out, doing his own thing now.

  87. 87
    zman Says:

    Wyoming basically agreed with my points on the well above, will send comments later today.

  88. 88
    ram Says:

    Unless we get a flood of imports, if regulations go into long term effect, I would imagine the “good” guys would get pushed higher.

  89. 89
    Dman Says:

    On Matt: so far he’s been right to be skeptical of BP’s ability to cork it. The flow rates increased steadily, consistent with erosion. Is he right about the relief well? That’s the big one and I wonder where his info comes from. Seems to be relying on the fact of the two pipes in the BOP as an indicator of the force involved. I thought we heard about the two pipes weeks ago (??). Also relies on some scientific analysis of the flow rate. I certainly have no reason to believe the govt/BP figure. There have been instances of local police combined with Homeland Security and BP staff actually confiscating reporter’s cameras and handing the material over to BP if the reporters got close to a BP facility, even on public land. Why are several layers of govt. conspiring with BP to (unconstitutionally) shut down reportage of this?

    One point from the video I can’t argue with: they need a backup plan. Have they got one? Does Obama even give a damn? Hard to tell but he usually just relies on advice. How right has that advice been? To ask the question is to answer it.

  90. 90
    Pati Says:

    Kass yesterday on Fast Money, says bottom this year is in:

    http://www.cnbc.com/id/38112449

  91. 91
    tomdavis12 Says:

    Z: Are you in the camp that believes that our current administration is using this disaster to push their own agenda? When I tell people that Taiwan (Whale 1),Belgium and Netherlands have offered to help our GOM clean up and we have refused. The reason to not amend the Jones Act I hear is to push the “Clean Energy” agenda and because organized labor is not in favor of this. The Whale 1 alone is a 10 story ship that can process 500,000 oily water gallons / day. Why is there no motivated clean up? If you agree, I am thinking the market might be stuck until Nov elections.

  92. 92
    baylor3217 Says:

    Re 28 much appreciated and thanks for hearing your customers

  93. 93
    zman Says:

    91

    Hahahahaha. Who me? And I quote Rahm Emanuel “never waste a disaster”. My only error there was thinking they’d wait longer to go solar-wild, maybe with a targeted plan at the end of the moratorium but instead, the green push came in the same first presidential speech. Don’t get me wrong, I’m an all sources advocate and efficiency as well because I think we need all of it to move forward (gas, coal, nuclear, solar, wind, biofuels, algae etc).

    On the cleanup, that’s out of my realm to discuss. To me the clean up “seems” disorganized. I don’t know why you would have put any oil company in charge of clean up and paying bills for recompense. Especially one you have basically called incompetent repeatedly in the court of public opinion. BP and other oil companies are not generally set up for a comprehesive. Can they do it? Yes. Is it the best use of their time and available resources. Probably not. I again ask, what if this had been a much less financially capable firm? Like NFX or ATPG who drill in the deep waters. Personally I would organize whatever needs to be done in each region and send BP the bill. But maybe this way leaders have “plausible deniability” or some similar govt. phrase in the event of failure. I also think there has been a lot of use of photo ops while EPA and the Corp delay cleanup and containment efforts. EPA was concerned about the water discharged back into the Gulf by the A Whale. For goodness sake, have they seen what’s in the Gulf now?!

  94. 94
    zman Says:

    Back to green on my HAL position after a trip to worthless land last week. Still holding.

  95. 95
    reefguy Says:

    Matt Simmons: said this about two months ago, that the well was unplugable and would drain much of its reservoir(more than 100 MM BBLs) into Gulf. Said they only way to stop it was nuclear. Believes the entire gulf will be a polluted mess for years to come.
    Simmons and company disavowed him and he “retired” as Chairman about two weeks ago.
    Either he is nuts or we are all going be wishing he was. I think and have said that a COVENTIONAL explosive sharge would seal the leak below the mudline, charging shallow reservoirs but keeping it out of the water. A 10,000 pound bomb will act as a shape charge sealing of the casing.
    I think if the casing was toast as Simmons contends, then the shallow zones would already be sucking up much of the reservoir; we know this is not the case.

  96. 96
    zman Says:

    Thanks Reef, that helps.

    Did you look at VYOG at all… inching higher. I can’t determine from the public docs if they are for real or not. Looks worthy of mad money.

  97. 97
    Dman Says:

    #91 the refusal of various offers for the cleanup is what I meant in #89 as to whether if Obama gives a damn. He is one of the most cynical pols I’ve ever seen and that’s saying something.

    Anyway, #95 the other guy on TV along with Matt was also pushing the conventional explosive idea. Just because the Russians used nukes doesn’t mean that’s the only way! They always go for overkill and they never bothered to even pretend to give a damn about the environment. Besides, they had tactical nukes lying around and they had to be good for *something*, right?

    I think reef puts it right: either Matt is mad or we’ll be wishing he were.

  98. 98
    zman Says:

    More from Nicky:

    Well my original target for this bounce was 1075 which yesterday looked impossible. Cycle wise we only have a day or so more for upside.

  99. 99
    Dman Says:

    Ag commodities up big. Looks like they might have bottomed. POT, IPI have had 3 months in hell.

    Eli, any thoughts on that bunch? Look like bargains to me but I don’t have much insight into what makes them move.

  100. 100
    Dman Says:

    BTW, if it wasn’t for the serious topic, I like a bit of madness on TV. Bring it on Matt …

  101. 101
    Geno Says:

    Also forgot to add as they drill the relief well if it was communicating with shallower sands they would have taken a kick in the relief well the reason you set a lot of pipe is to make sure you have all sands behind pipe before you enter the producing well

  102. 102
    choices Says:

    I certainly may be wrong on this because I have not done any research but I thought the Jones Act simply mandated that any shipments from one American port to another American port required American flagged carriers-I am not clear if this is true why it needs amendment to allow foreign assistance-does anyone have more detailed information?

  103. 103
    RMD Says:

    GEOI’s update ends with Aubrey-like opinions on his stock, though without the supporting data:
    “market valuation does not adequately reflect our continued performance, demonstrated ability to generate additional projects or acreage valuations equivalent to competitors in our areas of operations, as reflected in market prices and recent IPO’S.”

  104. 104
    cargocult Says:

    Now can we get back to green on BEXP.

  105. 105
    skimo Says:

    re 78
    I would be very careful putting CFL lamps in my house. They are more prone to “catastrophic failure” than incandescent and they have small amounts of mercury in them as do all fluorescent lamps. Not a good thing to have around kids when they break. I’ll wait until LED’s come down in price to replace incandescent. While they also include some interesting chemicals, they last forever and don’t seem to have catastrophic failures.

  106. 106
    Popeye Says:

    Dow trying for 10k.

  107. 107
    zman Says:

    Surely there is more reason behind this rally than Fisher’s comments?

    Ski – yeah, I know. LED needs to get brighter too. $80 to $100 for a dim flood light is not what I had in mind.

  108. 108
    zman Says:

    BP Watch:

    American depositary shares of BP climbed 2.9%. Chief Executive Tony Hayward met with Abu Dhabi’s powerful Crown Prince Mohammed bin Zayed Al Nahyan during a visit to the oil-rich sheikdom Wednesday, and said that he would be happy to see the city state’s sovereign wealth fund buy a stake of up to 10% in BP, a person with knowledge of the meeting told Zawya Dow Jones.

    WSJ saying Hayward is off to Algeria now.

  109. 109
    milepost_43 Says:

    Ban on New Offshore Oil Drilling Urged by Europe Energy Chief
    July 07, 2010, 12:54 PM EDT
    http://www.businessweek.com/news/2010-07-07/ban-on-new-offshore-oil-drilling-urged-by-europe-energy-chief.html?campaign_id=rss_aol_news

    Is the whole world going NUTS??? AAHHH!!!

  110. 110
    zman Says:

    MP – saw Norway was looking at it a few weeks back. All I can say is … higher prices.

  111. 111
    reefguy Says:

    z-#96…well one of the directors statrd the World Series of Poker Tour…no real oil and gas professionals. The market cap is all leasehold valued…run away please

  112. 112
    crysball Says:

    Bloomberg isreporting APC has cut a deal with BP on Liability on Macondo well…….to be anounced tomorrow.

  113. 113
    zman Says:

    Reef – my thinking as well. Makes me wonder if Samson bagged them and if so, why so low.

    Crys – thanks.

    TSLA continues to get flipped

    Beerthirty. Nice to see such a green close but I go back to my opening statement about what an all or none market this is. Volumes were OK but not outstanding.

  114. 114
    Paul in Kansas City Says:

    Kass and Helene Meisler over at Real Money have good comments regarding market indicators and where the market might rally from here; Kass said on yahoo this morning he saw 10% upside from this mornings levels on the S&P.

  115. 115
    zman Says:

    API Watch

    Crude down 7.3 mm barrels – not surprising with over 1 mm bopd of Mexican crude offline for most of last week due to Alex. The Street is looking for a 2 mm barrel draw down tomorrow which will doubtless be too small

    Gasoline was down 0.1 mm barrels – in line with consensus

    Distillates was down 1.0 mm barrels – the opposite of expectations of a 1 mm barrel build.

  116. 116
    zman Says:

    80% chance of formation, tracking to S. Texas.
    http://www.crownweather.com/
    http://weather.myfoxtampabay.com/maps/WTVT/custom/storms/storm1_models.html

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