08
Jul

Thursday – Natural Gas and Oil Invetory Previews

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Market Sentiment Watch:  Finally a decent day but it still seemed rather contrived. Some talking heads put the rally on State Street's quarterly forecast. Doug Kass also called a bottom this morning adding spine to a spineless market. But I think its all technical and the market was due for a bounce. And in the volatile style that currently holds sway, we took out a week's worth of drifting higher in a single trading session. The true test will be whether or not this move has any legs. If you ask Nicky she'll tell you it is already just about spent. Energy land was not left out of the rally, with the XOI, XNG and OIH advancing 3.6%, 4.1%, and 4.4% respectively.

Ecodata Watch

  • Jobless claims fall 21,000 to 454,000 vs a 460,000 forecast.
  • PPI is forecast to come in at - 0.2%
  • Empire State Index is forecast at 18.5
  • We get Industrial Production at 9:15 EST (F = -0.1%)
  • and Philly Fed at 10 EST (F = 11)
  • IMF says global GDP to come in higher than expected at 4.6% this year.

BP Spill Watch:

  • The Helix 1 vessel needs another 3 days to hook up due to 4 to 6 foot seas. Once online this will take capture capacity at Macondo to 53,000 bopd (and if they start collecting that much oil per day and the spill cam still shows oil billowing out the top of  the BOP watch BP share roll back over).
  • CEO Tony Hayward is globe trotting to find sovereign investors, going from Moscow to the Middle East to North Africa in the span of two days.
  • Kuwait Foreign Petroleum Exploration Corporation is reviewing investments in BP projects in Yemen, Egypt and East Asia.
  • BP confirmed last night that the relief well could cap the well as early as month end but that the July 27th date the WSJ is talking about this morning would be a "perfect world" result.


 

In Today’s Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Oil Inventory Preview
  4. Stuff We Care About Today – Offshore driller thoughts
  5. Odds & Ends

Holdings Watch: ZCAT (Zman Catalyst portfolio):

  • $5,800
  • 92% Cash
  • Yesterday’s Trades: NONE

ZIM (Zman Inefficient Markets portfolio)

  • $6,300
  • 2% Cash
  • Yesterday’s Trades: NONE

Commodity Watch: Crude oil jumped $2.09 to close at $74.07 yesterday, blame a peskily strong equity market. After the close, the API released a bullish report (see below). This morning crude is trading up 80 cents.

  • STEO Comment Watch:
    • Deep Water Moratorium Impact: "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)."  "The reductions in crude oil production increase from a monthly average of about 10,000 bpd in September 2010 to nearly 100,000 bpd by December 2011,". ZComment: That's a 1.8% reduction in production based on current volumes.
    • Global Demand Still Seen Rising Swiftly. EIA is still looking for  a 1.5 MM bopd increase in 2010 (up 1.85% and the total volumes are higher due to an upwarrd revision of what was consumed in 2009). Nearly all growth coming from non OECD nations led by China. Lastly, they are still looking for another 1.7% growth in 2011, again with another big Asian pickup.

Natural gas slumped $0.12  to close the day at $4.57 yesterday as tropical disturbance 96L veered away from producing regions of the Gulf and towards Mexico. 96L has since become Tropical Depression 2 and is headed towards a Brownsville landfall tonight. This morning gas is trading up 2 pennies.

  • STEO Watch:

    • Demand up more than previously thought:  EIA has put first half 2010 demand at plus 2.8 Bcfgpd vs 1H09, or up 4.3%.
    • They see demand up less in the second half (big surprise) with the YoY increase amounting to 1.5 Bcfgpd. These figures appear to be reasonable.
    • Production still seen up in 2010, then down in 2011. Offshore declines offset by onshore gains this year, then overcome by offshore next year. 
    • Moratorium impact is combined with assumed hurricane outages to arrive at 10% declines in Gulf production for both 2010 and 2011. That is a big piece of the puzzle falling by a significant amount. Interesting the way they broke out the two pieces, using Bcf for the hurricane outage estimate but Bcfgpd for the moratorium's impact.
      • Hurricane impact this year is estimated to be 166 Bcf vs 19 Bcf in 2009. No estimate is given for 2011.
      • Moratorium is shown as 0.05 Bcfgpd 9 Bcf) for the back half of 2010 and then 0.25 Bcfgpd (91 Bcf) for 2011.
      • The Federal waters of the Gulf of Mexico produce just under 7 Bcfgpd now so I'm not sure how their numbers jive with the 10% decline stated previously. The 0.25 Bcfgpd is only 3.5% and since the Gulf has been relatively stable of late, well, again, the numbers just don't add up.
    • EIA also sees falling imports in 2010 and 2011 (slightly higher LNG offset by lower volumes from Canada). That seems reasonable as well.
    • EIA thinks inventories stick close to last year's levels ending the injection season at 3,810. This is in the heart of my high and low cases so again, reasonable, + or - 200 Bcf.

Early Read On Natural Gas Storage:

I'm at 80 Bcf (and would be happy to be off this week)

The Street is at 71 Bcf

  • Imports were roughly in line with the prior week; temps were just above normal and in line with last year's readings.
  • Last Week: 60 Bcf Injection
  • Last Year: 74 Bcf Injection
  • 5 Year Average: 95 Bcf Injection
  • 10 year Hi: 147 Bcf Injection
  • 10 year Low: 67 Bcf Injection

Oil Inventory Preview - We get inventories at 11 am EST today.

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.
  • Gasoline was down 0.1 mm barrels
  • Distillates was down 1.0 mm barrels

 

Stuff We Care About Today

Rigs Worth Watching Watch:

Some thoughts:

  • The Obama Administration will battle the oil industry in the 5th Circuit Appeals Court today. A three judge panel will hear oral arguments beginning as the markets close. Not that it matters but the makeup of the pane is two Reagan appointees and one Clinton. Sounds like time to win one for the Gipper.  Average number of jobs at stake: 1,400 per deepwater well.
  • Thinking that if we see the Administration fail in its efforts to overturn the deep water moratorium we could see a bounce in both the shallow and deep water drilling group.
  • CVX got a shallow water GOM permit and just as quickly canceled its planned force majeure of a Hero rig. Local leaders should be touting the number of jobs created or saved out of that.
  • For now just mulling a bounce, the group is always fairly cheap looking on earnings, now it is more so.

 

Other Stuff:

  • MMR Operations Update

    • Blueberry Hill sidetrack is at 23,500 feet, LWD logs look promising below 23,100, wireline logs to run soon. Then on to PTD of 24,000 feet. Sands look similar to the discovery well 3,000 feet to north...looks like a different fault block and not just a downdip penetration.
    • Davy Jones Appraisal at 10,800 feet, drilling ahead towards a PTD of 29,950 feet (think Christmas).
    • Also in the ultra deep, Blackbeard East is drilling below 17,700 feet on the way 29,950 feet (think Thanksgiving).
  • ECA to present at the Morgan Stanley Energy Ideas Conference at 11:30 am EST
  • The second quarter approaches; 2Q release dates starting to roll out: (I'll have the full schedule out next week)
    • HAL July 19
    • ECA July 21
    • SLB July 23
    • ESV July 22
    • BP - July 27 (also the unofficial current target date for a first attempt at capping Macondo)
    • WLL July 28
    • OII July 29
  • NFX - credit rating upped to investment grade by S&P
  • GST on the tape with an operations update

Odds & Ends

Analyst Watch:

  • Nada

Interesting Reading Watch:

106 Responses to “Thursday – Natural Gas and Oil Invetory Previews”

  1. 1
    ram Says:

    Aren't the wells that could be reinspected be a positive for OII or FTI?  I don't get the flow rate guestimates.  The only way you can know flow is to measure with a meter like they do when they are retrieving through pipe.  So like you said, what the heck are people thinking when they said we were leaking 5,000bpd and the picture hasn't changed at the bottom and now we are siphoning 5X and the flow still looks similar. 

  2. 2
    zman Says:

    If you don't pay taxes, I guess you don't know what the going rates are.

    http://latimesblogs.latimes.com/money_co/2010/07/geithner-obama-capital-gains-dividend-tax-rates-kudlow.html

    The silver lining is that it could have been a lot higher than the 20% number he is talking about.

  3. 3
    zman Says:

    The "promise" from Geithner not to excessively jack up cap gains tax rate should help the dividend paying names. That is if people buy into they will stick to that level and not revise it higher later.

  4. 4
    ram Says:

    I saw that piece last night and got a headache what Geithner was talking about.  What is wrong with those guys you keep putting into office ZMAN!  I would hope by now there are teams of people to prevent top officials from saying ignorant statements.

  5. 5
    zman Says:

    Ram – that's a very good point. If Congress were to say, "go forth and reinspect those wells" it would be a boon for oil service and OII would get a big piece of that.

  6. 6
    zman Says:

    Ram – ha, that's obviously the only czar these guys don't yet have.

  7. 7
    zman Says:

    BOP or Reef – any thoughts on the GST release?

  8. 8
    zman Says:

    10 year back over 3% on the jobless number.

  9. 9
    zman Says:

    Byron Wien on CNBC saying the bond market is saying we are going back into recession and that that is wrong.

  10. 10
    BirdsofpreyRcool Says:

    Back from the wilds of Texas… man, it sure is great to hang out with Oil People at BBQs.  Real "salt-of-the-earth" group of people.  Kept politics out of the conversation, for the most part.  But people scratchin' heads about "stuff" coming out of our own govt. 
     
    GST.  Wow.  They won't comment on the Wildman #6H… the Glen Rose well for "competitive purposes."  What does that mean?  I can only speculate… GOOD??  we want to lease more acreage, so don't wanna comment at this point…. BAD?  this well didn't turn out like we hoped, so want to do some more work on it… which is it?  Don't know!  Will try to nose around a little… but, will probably be tough to get a clear read.

  11. 11
    BirdsofpreyRcool Says:

    Want to know why HeadTrader has been complaining about being bored lately?  This article is the #1 top read on bloomberg this morning….
     
    http://www.bloomberg.com/news/2010-07-08/hedge-funds-frozen-in-headlights-scale-back-trading-in-perilous-markets.html

  12. 12
    zman Says:

    Welcome back BOP. MMR had an update, nothing to comment on for EXXI from that.

  13. 13
    zman Says:

    ECA gapping up, nice to see it suddenly above the 50 and 200 day averages this morning after having been capped by the 200 day yesterday. Should be helpful to my recent ZCAT trade in the $33s.

  14. 14
    BirdsofpreyRcool Says:

    Been hearing a lot of commentary from Schiller lately. As bad as things look from where we sit… the Boys in the Trenches aren’t that pessimistic.

    Total agreement that Salazar has NO IDEA what he is doing… but doesn’t mind doing it anyway. However, industry leaders quietly pulling together to come up with solutions that everyone will be able to live with and ye will save face for the govt. So, there’s HOPE out there. Schiller’s private comments y’day seem to have brought some $$ back into EXXI…

  15. 15
    zman Says:

    BOP – thanks for the color. The hearing this afternoon will be key for a lot of offshore workers and companies.

  16. 16
    zman Says:

    SD /ARD drifting higher as we approach the 7/16 vote.

    SSN – still no allocation.

  17. 17
    john11 Says:

    Welcome back Bop. CIGX a bit better, any buzz on timetable?

  18. 18
    zman Says:

    TPH pointing out that SWN finally added gas hedges. I mused about them doing this last week. Position still fairly small but some adds are better than no adds and should be received positively.

  19. 19
    zman Says:

    Disregard the eco data watch aside from jobless claims, those are next week’s numbers.

  20. 20
    zman Says:

    Market went to Nikcy’s 1070 level and petered.

  21. 21
    Dman Says:

    #3 the idea that *anyone* would believe *anything* Geithner says cracks me up. They need to be sent a video of a auditorium full of Chinese students laughing at him when he said the dollar would stay strong. Whatever anyone might say about the Chinese, at least they did laugh at Geithner. Ya gotta take the positives where ya find ’em. What would we do without youtube? Of course the US media continue to act like he’s an actual serious guy. Right.

  22. 22
    BirdsofpreyRcool Says:

    #17 thanks, john11.

    We still have some more CIGX to buy… so (and sorry about this, but) HOPING that it would give me a 1.40 oppy today.

    From what I am hearing, the CigRX launch is entirely in the hands of inVentive. All the work has been completed, so it could be next week or the week after. But it will launch. Also, CIGX reminding people that this is the ONLY non-pharma product that has ever been handed to the inVentive salesforce to market to doctors. Somehow, that is significant. The CigRX product will also be launched simultaneously with infomercials and a website where you can buy the product. As it also works as a “mood enhancer” (think “calming affect” of smoking a cigarette), I am personally looking forward to loading up on the product to get me through the current market.

    So, CigRX will have at least ONE ready customer. Me.

  23. 23
    zman Says:

    NG flat. Inventories at the bottom of the hour.

    Oil up $1.60, #s at top of the hour.

  24. 24
    elijahwc Says:

    GDP – A reminder that worst is first!

    From CapOne Southcoast:

    “Most upside to NAV among our onshore E&Ps: We reiterate our STRONG BUY rating and $26 target price, which offers 105% upside (vs 55% for average small-cap), the most among our 27 covered onshore companies. GDP also has the most upside to its consensus target (+85%) among our onshore E&P names. The stock has been a big underperformer YTD, down 48% compared to +5% for our average small-cap.

    2Q production likely within guidance: We spoke with company management yesterday, and it sounds like 2Q production is within guidance of 87 – 91 MMcfe/d (we model 89 MMcfe/d). The big production surge that we were expecting in 4Q10 may actually occur in 3Q as the Haynesville completions backlog begins to clear. We currently estimate 91 MMcfe/d for 3Q & 106 MMcfe/d for 4Q.

    CAPEX reduction & asset sales on the way? YTD, GDP is under-spending its 2010 CAPEX budget of $250MM, so we are looking for a reduction of around 10% in the 2Q call next month (we view this as a positive as it puts the company more in line with estimated cash flow of $75MM).

    Management also mentioned they may look to sell non-core assets such as the Travis Peak & James Lime acreage
    (could bring in as much as $120MM based on current 12 MMcfe/d of net production).
    Our take: We continue to like the risk/reward with this stock coupled with the upcoming well catalysts that could get the stock moving.

    We expect results from GDP’s initial southern east Texas Haynesville & Eagle Ford wells by late August. We currently value GDP’s 40K net Eagle Ford acres (mostly in the oil window in La Salle & Frio Counties) at $6.5K/acre. Even valued at $3K/acre, we would still arrive
    at a $23 NAV with 81% upside. At $5.50 long-term gas (vs the $6.00 we currently model), GDP upside is 44% compared to 3% for our average small-cap. ”

    I remain long GDPAN.

  25. 25
    BirdsofpreyRcool Says:

    elijah — thank you for the GDP update. I’m long the converts there too.

  26. 26
    zman Says:

    Group back to summer mode, opening headfake then sell down. Also pretty typical pre inventory numbers. A little concerned the Street is overly optimistic about the gas number today but here’s to me being too high anyway, would be happy to be wrong on this one.

    On oil, I’m looking for better crude and gasoline numbers than the Street is.

  27. 27
    elduque Says:

    Baltic keeps falling

  28. 28
    zman Says:

    Eld – saw a story on that last night, just one minute.

  29. 29
    zman Says:

    Kind of a basic story but it does point to an upturn in the long term

    http://www.marketwatch.com/story/asia-shipping-shares-belie-baltic-dry-index-drop-2010-07-07

  30. 30
    zman Says:

    Natural gas inventory report:

    78 Bcf. I hate being right.

  31. 31
    zman Says:

    Immediate reaction is a swoon in natural gas leveraged names however there’s a good chance oil takes them higher later in the day.

  32. 32
    Dman Says:

    Z – regarding the spill rate. It ought to be possible for hydrodynamicists to get an estimate of the rate just from the imagery and the scale of the pipe and some estimate of the oil/gas mix. For example, in WWII, a British hydrodynamics expert was able to estimate the yield of the Hiroshima bomb just from the photo. The military freaked out, thinking they had a leak, but all he worked with was the picture.

  33. 33
    elduque Says:

    thanks

  34. 34
    zman Says:

    D – Yeah, they are doing that and using satellites to guesstimate with surface imagery combined with data on plumes. The numbers I have seen range very widely. As to looking at it and gauging it that I would think would be fairly difficult to gauge without a reference case. There is dispersant being applied at the base of the stream, there is an unknown % of methane in the stream, both of which make it more billowy, then there is the impact of both on the oil at that pressure and temp. Not saying it can’t be done but three teams have worked on coming up with a number and last I saw they ranged from 12,000 bopd (which we know is too low) to 80,000 bopd.

  35. 35
    zman Says:

    GMXR – just no love for their update.

  36. 36
    Dman Says:

    Z – in the #29 piece,

    ‘As the industry continues to take delivery of new vessels, “this will lend support to longer-term freight rates,” she said. ‘

    So more ships = higher rates ??

    Do I need another coffee of something?

    BTW BOP, for my calculations, how many CigRX are you gonna need per day?
    🙂

  37. 37
    BirdsofpreyRcool Says:

    Dman — ha!!!

    Pretty much one a day, sets the mood. 😉

  38. 38
    Dman Says:

    #34 Dispersant right at the outlet? OK.

    Also, since they have switched the pumping off a few times, they’ve had a chance to see how that affects the eruption at the bottom. But I guess the uncertainties could still be large, so you get the wide range. Not to mention the complication of the rate increasing with time.

  39. 39
    zman Says:

    NG at 5 week low on that number… should be about done to the downside.

    http://www.barchart.com/charts/futures/NGQ10

  40. 40
    zman Says:

    OAS back above $15. Look for Buy recommendations to start hitting a week from today through the following Monday.

    Oil inventories in 15 minutes.

  41. 41
    zman Says:

    re 38. Yeah, if you are a fan of spill cam, it is a small whitish pipe (looks like a stray) that comes into frame every so often, spewing dispersant right underneath the flow.

  42. 42
    zman Says:

    Liking how the ECA trades relative to SWN, HK for those seeking gas exposure. Size, hedges helping, less easily whipsawed. I have no trouble with the fundamental stories at either HK or SWN but they’ve been ugly traders of late. If you get a bullish gas number than SWN is going to be the most reactive but for a play along with gas ECA is getting more interesting to me.

  43. 43
    zman Says:

    EIA Oil Inventory Report:

    Inventories:
    Crude Down 5.0 mm barrels (much bigger than expected but not as big as API last night)
    Gasoline UP 1.3 mm barrels
    Distillates Up 0.3 mm barrels

  44. 44
    zman Says:

    more EIA

    Imports were not down as much as expected so expect some carry over into next week.

    Gasoline demand – remaining elevated at 9.449 mm bopd, flat with last week.

    Distillate demand took a nice bounce after retreating the past several weeks.

  45. 45
    zman Says:

    More EIA …

    Cushing stocks eased slightly, down 200,000 barrels to 35.8 mm barrels. Good to see.

    Nutshell: Not bad numbers but the gasoline build giving the Street pause. Crude maintain $75+.

  46. 46
    elduque Says:

    Where do you find Cushing and can we get a course in how to read the new reports

  47. 47
    zman Says:

    Eld

    You find that report in the overview PDF, here:

    http://ir.eia.gov/wpsr/overview.pdf

    Search cushing in the PDF box or look on page 4.

    Re course: will put something together for what I look it which is what I consider to be the high points. Note that there is A LOT more data in the new release than in the old one BUT no back data for historical comparisons on the new stuff. Maybe over time I will find a use for GTAB stocks on the East Coast but I really, really doubt it.

  48. 48
    zman Says:

    Baylor – have to turn my editor back on for a bit. Apologies.

  49. 49
    zman Says:

    Listening to ECA speaking at Morgan Stanley. Will pass along anything interesting.

  50. 50
    zman Says:

    Crude cracked $75 as the S&P went red.

  51. 51
    zman Says:

    Obama administration will immediately issue a new drilling ban if their appeal fails today. However, if the appeals court supports them they won't issue the new ban. Some much for checks and balances. Sheesh.

  52. 52
    zman Says:

    ECA – nothing new from an operations standpoint. Interesting comments on natural gas.

    ECA working to educate public on safety of unconventional gas drilling (fracking). Talking about efficiency of gas vs coal for generation, less emissions by 1/4 vs gasoline and diesel and 1/2 emissions of coal for generation. Says that the EPA's note the other day will result in large scale closure of coal fired plants.

  53. 53
    cargocult Says:

    Not directly on topic, but does anyone have an opinion regarding gold? And if buying mining shares are better than a stake in the stuff with CEF or somesuch?

  54. 54
    elduque Says:

    Ok, I have been buying AEM, GG and AUY the last few days. At the same time I am long POT, FCX and a slew of oil and gas producers. Why? I believe that commodities are the place to be over the next 5 years. The Fed wants inflation and I believe they will do everything in their power to get it.

    Gold in some ways, is my least favorite commodity, because it really doesn't do anything. However, there is enough people who believe it is a store of value. It probably is when you think of the amount of debt that is under the dollar.
    The mining stocks give you better leverage on the upside and unfortunately they go down faster. They should all have gang buster earnings this quarter and for many quarters to come. I have a couple of reports that I can email you if you like.

  55. 55
    john11 Says:

    Friend mention that S&A Resource report pumped EVEP VNR and MHR in their report, helping prices today.  Don't have details.

  56. 56
    VTZ Says:

    cargo – The equities are currently undervalued compared to the gold price and equities are the best way to speculate due to the potentially massive earnings power. If you want to protect yourself, buy CEF.

  57. 57
    VTZ Says:

    People looking to buy gold who dont yet have a position should be buyers at 1180 ish, 1150 ish and 1080 ish but they should consider themselves lucky if they see 1080.

  58. 58
    zman Says:

    Analyst Watch:

    Barclays raising price targets on refiners ahead of 2Q. Makes sense.

  59. 59
    zman Says:

    Thad Allen saying BP is 7 to 10 days away from intersecting the well with the relief well. U.S. has asked for a detailed plan of the action and for a contingency plan. BP said yesterday it does have a plan, should the relief well fail, to hook flows to nearby production facilities. They are also expected to hook up the third ship this weekend.

  60. 60
    zman Says:

    ECA struggling higher, up 2%, SWN flat, HK down 1.5%. Gassy stocks mixed in general. GMXR getting slapped.

    HAL forging ahead, second only to APC in the BP spill group on the day. APC is probably going to reject BP's bill for cleanup costs.

    BP flattish after a couple of good days of runs, I would think it runs up into the weekend on cap hype. I don't expect capping over the weekend but I would anticipate that capacity goes to either 53,000 bopd (if Producer Helix 1 is added) and to 80,000 bopd (if they decide to swap the cap and put a total of 4 vessels on production).

  61. 61
    choices Says:

    http://www.centralfund.com/Nav%20Form.htm
    http://www.sprottphysicalgoldtrust.com/Net-Asset-Value/default.aspx
    Cargo, I would just add that CEF has about 41% silver, which you probably know, so it will be a little more volatile than a pure gold fund such as PHYS or GTU-the premium (links above) is something to watch.
     
    "Conventional wisdom", whatever that is worth, holds that the summer months are not "usually" good months for gold equities and that equities usually kick off in Sep-Oct.  Of course, we live in interesting times, that is nothing is normal about these mkts currently.

  62. 62
    ram Says:

    You would think that if 80,000 bopd is captured and documented, that nearly no oil is coming out of the BOP.  Also, the fine per bopd woul be a bigger peice of their liability with a known flow rate of 80,000 bopd versus the estimated 5,000 bopd for several weeks.

  63. 63
    zman Says:

    Yep. Capturing more is double edged sword until they cap it.

  64. 64
    cargocult Says:

    Thank you all for your insights on gold. I have a small position in CEF as a way to keep some powder dry.

    elduque, if you want to forward your reports through zman I would appreciate it.

  65. 65
    RMD Says:

    #52:  a friend in Wash., DC said they were without power for most of the night becasue a transformer (or something) blew due to the a/c load.  Congress undoubtedly has backup generators so would not "feel the pain".

  66. 66
    zman Says:

    Oil closing on pre inventory report levels at 75.41

    NG holding at 4.40, down 3.7%. Really don't get why the Street had that number so low. 78 is not bad considering imports, the weather, and where production has been. Maybe they were thinking more coal fired generation would have been displaced but smoothed over time, that really didn't hold water.

  67. 67
    milepost_43 Says:

    EAIAF….No gold trader here but do hold this one for the longer term……good story…..
    From Canaccord
    East Asia Minerals* (EAS : TSX-V : $5.69) http://www.eaminerals.com/s/home.asp

    Moon river, wider than a mile, I'm crossing you in style some day. Investors were over the moon on news that East Asia's drilling has expanded the gold-rich Miwah Main Zone in Northern Sumatra, Indonesia and confirmed potential to connect with the Moon River area. Hole 33, stepping out towards Moon River, has interested 1.68 g/t gold over 230.5 metres (partial assay, potential to extend interval). Hole 34, designed to test west of all drilling to date, encountered 87.9 metres of 0.55 g/t Au.

    According to Michael Hawkins, President and CEO of East Asia, "The results of EMD033 are very significant, with the gold assays validating a large previously untested area of the shallow, gently north dipping Miwah Main Zone between Moon River and the central Block M area. This supports the notion of wide superior gold grade intervals in the Block M area extending northerly from EMD008-012A. Based on detailed drill core logging we anticipate that the gold mineralization in EMD033 will extend contiguously past the partial assay interval for a considerable distance." Drilling is ongoing at Miwah with two rigs (a third is expected to be added soon), the current program is to complete 45 holes between Q2/10 and Q2/11 at Miwah. Canaccord

  68. 68
    zman Says:

    Rigs uniformly red in front of this afternoon’s hearing on GOM drilling.

  69. 69
    Dman Says:

    Petrobank (PBEGF) down to $36. I wonder if other Canadian juniors have been bit hit that hard. (I never seem to get time to get familiar with them).

  70. 70
    Dman Says:

    Dang my new keyboard. Typos everywhere.

  71. 71
    zman Says:

    JB – voted, thanks for the charts on ECA. Working higher.

  72. 72
    Jerome Blank Says:

    Re: #22, CIGX, there’s a big triangle developing on the daily, I’ve updated the chart, the buy spot at $1.40 is right at the lower triangle trendline, CIGX hit resistance and pulled back off the 100 day SMA today, the breakout from here would be above $1.80…

  73. 73
    Jerome Blank Says:

    RE: #71, Zman, thank you…

  74. 74
    VTZ Says:

    RE 69 – Petrobank is more of a midcap and its much more of a developmental project other than its stakes in petrobakken and petrominerales compared to other midcap that have converted from trusts or are in the process thereof.

  75. 75
    Fiveanddimer Says:

    ref 67: thanks for the info on East Asia Minerals, the largest holding in my portfolio of junior gold/silver stocks. Drill Results show they are sitting on an enormous deposit in Indonesia. But because they are only developing the deposit and currently produce no gold, their shares (like any other development co.) can be mind-bogglingly volatile. Stocks like this have taught me a hard lesson over the past several years. I hold them only because I can stand the volatility. I would not dream of recommending them either to my best friend or my worst enemy. Buyer beware; if you can stand the extreme turbulence (and I mean “extreme”), you could be rewarded nicely.

  76. 76
    Dman Says:

    #74 thanks V. I actually subscribe to a service that is all about Canadian juniors but I never get time to study it. Ridiculous. I really ought to do it.

  77. 77
    VTZ Says:

    RE 74 – Think of PBG as similar to ATH with the CPG/PBN and PMG assets to finance their activities.

  78. 78
    zman Says:

    Florida going to put a constitutional amendment on the Nov ballot to ban drilling off their shores. Cuba of course will be happy to do it for them.

  79. 79
    ram Says:

    What is the distance from land that is still considered part of that countries domain?

  80. 80
    VTZ Says:

    For those interested in transglobe:

    TransGlobe Apartment REIT (TGA.UN) – $9.30 – Canada’s Newest Multi-Res Pure-Play
    Sector Perform, Average Risk, Price Target: $10.00
    RBC CM has initiated on TransGlobe Apartment REIT (TGA) with a Sector Perform, Average Risk rating and $10 price target.
    Underpinned by tremendous tenant diversification, limited rental-dedicated construction, and the fact that shelter is a basic necessity, apartments have a history of stability which makes them well suited for the REIT structure. TransGlobe REIT contracts the services of TransGlobe Investment Management (TGIM) to administer and operate its business. TGIM intends to sell additional properties to TGA and TGA has a right-of-first-opportunity to acquire ~18,000 remaining units. TGA’s capital structure includes comparatively higher gearing (61% LTV), shorter-term (3.2 w-a mortgage term), low cost (4.0%) mortgages. This enhances near-term FFO/AFFO and yield generation, possibly at the expense of longer-term organic growth. These factors may manifest in a below-average P/AFFO multiple. The IPO forecast includes a large NOI step-up versus recent history. While much of this appears contractual in nature, RBC CM sees modest risk in the near-term, and is happy to allow TGA to “season” and demonstrate its ability execute.

  81. 81
    VTZ Says:

    Oops posted the wrong one… one sec.

  82. 82
    VTZ Says:

    Sorry for spamming, it was the right PDF but the text is mixed up and I didn’t read it first.

  83. 83
    zman Says:

    Don’t know how they work it with Cuba but they should be able to drill up to 200 miles off their coast (economic zone), as long as that is within international waters and not U.S. waters … so maybe they could drill within 12 miles of the Florida coast. But even if they were limited to 12 miles off their own coast or if the drilling is from some place else like Mississippi Canyon (where Macondo is) a well problem like this will impact them. This is just pandering to the outcry.

  84. 84
    milepost_43 Says:

    #75…hear you…had a NICE trade Mar to May…like the obvious stop @ 5ish from Mar for risk management..

    hold any GORO??

  85. 85
    crysball Says:

    APC is running on ‘NO News.’…….wonder if the Bloomberg note yesterday on an agreement with BP to cap liabiliity on Macondo Well is (or has ) happened.

    Realize ‘Z’ expects them to reject the BP offer.

  86. 86
    ram Says:

    If they play their cards right, it sounds like Cuba can strike a deal with the U.S.

  87. 87
    crysball Says:

    Re APC,
    Bought $42.50 July calls yesterday, and sold late this AM (too early).

    Have just sold $42.50 July puts.

  88. 88
    zman Says:

    Crys – the first $272 mm payment was due today. I hear the check was not in the mail.

    Also Hackett is in Asia meeting with investors. Sources say that’s going well, lot of people thinking he has a good case, that it would go to arbitration, not courts if BP presses them.

  89. 89
    john11 Says:

    Not sure if mentioned earlier..APC did get an upgrade from Pritchard this morning with a $72 tgt.

  90. 90
    zman Says:

    Thanks John.

    Those comments in 88 come partly from Citi who reiterated a $75 target on APC.

  91. 91
    BirdsofpreyRcool Says:

    JB #72 — thank you. Was hoping for 1.40 y’day, today, or tomorrow. But, may have to revise higer. Bought a bunch at 1.55-ish. Want to add the last piece lower. So, waiting in the weeds here….

    Voted!

  92. 92
    zman Says:

    BP roadshow story:

    http://www.marketwatch.com/story/bps-upbeat-roadshow-2010-07-08

  93. 93
    Jerome Blank Says:

    Re: #91, BOP, thank you…

  94. 94
    Garyinhou Says:

    any thoughts on eog over next few days leading into expiry

  95. 95
    zman Says:

    Gary – That and WLL probably due for a bounce but I’m not nibbling until earnings. I really ought to own the common in EOG and still may up here. I own the WLL now. I think EOG has an eventful quarterly release planned and I want to own it in the ZCAT pre and the ZIM post that call. But as from now until the end of expiry, it seems all technical to me. Oil should be strong into next week but can’t say same about the broad market. I leave that for Nicky.

  96. 96
    Garyinhou Says:

    thanks z

  97. 97
    zman Says:

    Shell on CNBC saying BP has some assets in the U.S. it would like to own.

  98. 98
    Pati Says:

    Z, a couple days ago you mentioned DNR, that you and an old-time oil friend thought it might be an acquisition target. Any further thoughts?

  99. 99
    zman Says:

    Pati – That’s kind of a long term play on a concerted effort to inhibit fraccing. I used to follow them closely for a living but lost interest over the years. Planning to revisit. If I go that way it will not be an options trade.

  100. 100
    zman Says:

    Wow, two up days in a row, bestill my beerthirty.

  101. 101
    zman Says:

    Appeals court says it will rule on the moratorium early next week.

  102. 102
    PackMan Says:

    http://www.reuters.com/article/idUSTRE65O5TA20100708

    Obama admin loses appeal to stay deepwater drilling.

  103. 103
    PackMan Says:

    could be a short lived victory for the companies that want to drill … tied up in more litigation and red tape.

  104. 104
    zman Says:

    Pack – thanks for the headsup, didn't expect them to reject the Admin so quickly. The new moratorium will be issued tonight and then that will be taken back to the original judge. And I would imagine he trounces them again. Takes time. Someone ought to hold Salazar in contempt.

  105. 105
    zman Says:

    SSN allocation = 75% of what you requested.
    Company raised $6.2 mm
    Still anticipates closing of the acreage sale by July 26
    Details of the pro forma look in the post tomorrow.

  106. 106
    crysball Says:

    Extremely    'candid' &  'HAWKISH'  comments  on Iran  by  UAE's US Ambassador  at a PUBLIC Forum:
    http://www.washingtontimes.com/news/2010/jul/6/uae-ambassador-endorses-bombing-irans-nuclear-prog/
    Since  UAE  does  $12 Billion in trade  with  Iran  it  is  of  SOME SIGNIFICANCE   and  has a lot  to lose by  making  such  a statement, it seems  particularly significant  they are  calling  for  a military strikke  on Iran's  Nuclear  Weaons  facilities…………and  simultaneously  worryingg  Obama  lacks the POLITICAL WILL  to  do what  is necessary to  make it happen.

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