16
Jul

T.G.I.Shut In

Print Friendly, PDF & Email

Market Sentiment Watch:  Way to go BP! Of course, now we have the somewhat more boring shots of scattered machinery on the ocean floor not spewing hydrocarbons. With the World Cup over and Lance out of contention in the Tour it's a good thing energy earnings kick off next week or we'd be forced to watch the Vail Lacrosse Shootout or even CNBC.

In the broader market, a fairly strong start to earnings (AA, INTC, JPM, GE, AMD better, GOOG worse) has been offset or at least overwhelmed by craptastic data on the U.S. economy. While jobs were better than expected yesterday, that has been the exception and other indicators over the last couple of weeks from home sales to the Philly Fed have been less than inspiring. This has led to a decline in the dollar allowing crude to tread water in the mid $70s. For the record, I'm perfectly comfortable with crude in the $70 to $75 range as every time we break out into the $80s over the last year on less than stellar economic data and OK but not great demand figures, the hangover is worse than the celebration for the e-groups upon oil's retreat. Slow and steady is the better path now and in general. Next week, we get the first real shot at energy earnings (see Calendar below in the stuff section) and I anticipate a bit of a reprieve for the Oil Service sector in general  (thanks again BP ) with E&P being more company story specific. 

BP Spill Watch:

  • The Macondo well  remained shut in overnight.
  • The Coast Guard says it's unlikely BP will keep the well shut in after testing but is more likely to attach all four collection systems (80,000 bopd) to capture all of the volumes until the relief well can kill the well. 
  • Either way, this is worlds away better than continuing to let it produce to the Gulf
  • The President will speak on the well containment efforts this morning. Expect him to downplay the capping event and potentially to take another swipe at BP.  "This battle has just begun ..." etc, etc. For the Gulf Coast he is not wrong but I'd suggest that a resumption of drilling activities would be the best medicine for the Gulf now. 
  • Part of the reason for the original government delay on Wednesday was to wait on seismic shot earlier this week to be processed. The shoot compared the area around the well with data gathered in April and show no anomalies. 
  • The deepest relief well is not currently drilling and is 4 feet laterally from the Macondo wellbore. The team did not want to chance taking a kick from one well to the other during integrity test so the process of drilling, tripping out to range the target, and then tripping back in and drilling ahead has been put on hold through the end of the test so that they can be ready to circulate heavy mud at a moments notice.
  • The second relief well is within close enough proximity of the Macondo wellbore to need to being ranging as well and has now been stopped until the first well hits its target (or fails to).
  • Next steps, most likely reattaching the siphoning system and then proceeding with the relief well kill procedure. 
  • Lastly, I think Matt Simmons, bless his heart, has a little crow to eat since he claimed to "know" the integrity of  the well bore was shot and that they wouldn't be able to shut it in. 

Ecodata Watch:

  • CPI is forecast at 0.0%.
  • We get July Consumer Sentiment at 10 am EST and I would not at all be surprised if economists got this number completely wrong. Street looking for 74.3, last reading 76.0.

 

In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Natural Gas Storage Review
  4. Stuff We Care About Today - Earnings Calendar for next week plus assorted odds and ends.
  5. Odds & Ends

Holdings Watch ZCAT (Zman Catalyst portfolio)

  • $10,000
  • 52% Cash
  • Yesterday’s Trades:
    • Sold (40) of my (60) BP July $40 Calls at $0.60, up 207%. This one didn't go out as a blast since I didn't get confirmation of the trade until after the market was closed due to fast market conditions.

ZIM (Zman Inefficient Markets portfolio)

  • $13,300
  • 7% Cash
  • Yesterday’s Trades:
    • Added (100) BP July $40 calls for $0.07, with the stock at $37.30. Obviously high risk.

Commodity Watch

Crude oil eased $0.42 to close at $76.62 yesterday in listless trading with the rally in the markets coming too late in the day for Nymex. This morning crude is trading up slightly.

  • OPEC Watch: The Cartel sees demand for it's crude rising for the first time in 3 years in 2011. OPEC sees global crude demand rising 1.0 mm bopd, or 1.2% in 2011, just short of the IEA estimate.

Natural gas jumped $0.28 or 6.5% to close at $4.59 yesterday after the EIA reported a lower than expected storage injection (see below). There was a great deal over this number as the recent strength in gas had ebbed as a short term calm has taken over the tropics. This morning gas is trading flat.

  • Tropics Watch: 2 waves headed towards the Gulf, both with a negligible chance of development through the weekend.

Natural Gas Storage Review


ZComments: Whew.  One nervous week for injection down, many more to go. We continue to build a small deficit to year ago levels and to erode the current surplus to the five year average as the week's of warm weather pile up. There is some evidence of help from the industrial sector as well but the end of injection season peak in storage is still very much in question. I think we come in slightly shallow to last year which is really no reason to rejoice. If we get assistance from an extended stretch of heat, the ability of the shaley E&Ps to ratchet up production is likely to keep a lid on gas prices. So right now, we're in about the best position we could expect with a 1.5 to 2.5 year over year bump in production, still not great, still no real need for a rally, but improved nonetheless.


Stuff We Care About Today

Energy Earnings Q2, Week 1 (I'll have the regular table with CC times and estimates out on Monday)

  • Monday: HAL (before market), MMR (not confirmed),
  • Tuesday: NE, BTU, WFT,
  • Wednesday: CLB,
  • Thursday: DO, ESV,
  • Friday: NFX, SLB

Other Stuff We Care About:

  • Niobrara Part 2 tabled for Monday
  • I also have a back of the envelop piece in the works on another single digit midget for Monday
  • SD & ARD shareholders vote on the proposed merger today.
  • SSN rights offering shares arrived in our account today.
  • Fin Reg passed and not without touching on the oil and gas industry. Note in the bill that U.S. companies will be required to disclose all terms in dealing with foreign governments and entities to obtain leasing rights. How this falls under a financial industry reform bill one has to wonder but this amounts to giving your competitors a leg up in the confidential information game because they sure aren't going to voluntarily give U.S. companies the same data.

Odds & Ends

Analyst Watch:

  • CAM - GS ups to Buy, adds to America's Conviction Buy List
  • Goldman cuts E&P sector to Neutral - SWN and UPL cut to Neutral, ECA cut to Sell. This is becoming common for GS to adjust ratings on options expiry ... annoying and an attempt to manipulate stocks to the greatest effect which is just one of those things you have to deal with and one of the things we've come to expect from GS.

148 Responses to “T.G.I.Shut In”

  1. 1
    zman Says:

    SD – big pre market rally

    BP slumping pre market on so far not a lot of shares (400K), would have been nice to have a nice pop at the open to sell into … we shall see.

    SSN shares hit the account, 25% refund not yet showing (for the part of the deal that was unsold)

     

     

  2. 2
    zman Says:

    GS downgrade of gassy names and ECA in particular killing the second half of my ECA trade. Net net, it will a positive trade but they have stolen my icing.

  3. 3
    zman Says:

    Addendum to the tropics section, now only one cloud pile with development potential over the weekend and that looks highly doubtful.

  4. 4
    zman Says:

    Dollar getting hit again this morning:

    http://www.barchart.com/charts/futures/DXU10

    There is little that will make OPEC sit up and take notice like a falling dollar. They have been fairly quiet of late, with a number of ministers simply commenting that they are comfortable with this $70 to $80 range. But with dollar giving back it’s entire recent breakout, look for an uptick in commentary regarding quotas (especially if it falls further) as we approach the cartel’s September meeting.

  5. 5
    zman Says:

    CPI

    Headline down 0.1%
    Core up 0.2%.

    Non-event.

    Consumer sentiment at 10 am EST could be a market tripper. After that, expecting pinning action to quickly set in.

  6. 6
    zman Says:

    BP just on the tape:

    “encouraged by pressure test results”

    Pressure in well continues to rise,
    no negative evidence of well damage,
    no breaching seen,
    drilling on the relief well will recommence now, before the pressure test is over.

  7. 7
    zman Says:

    BP – pressure on well at 6,700 psi. That’s good.

  8. 8
    zman Says:

    Also, sea floor surface inspection has turned up no cracks.

  9. 9
    BirdsofpreyRcool Says:

    z — thank you for all your thoughts this morning. Tell me… does your brain EVER turn off? You’re prolific, man.

    Nice call on SD too.

    Credit Markets about flat, as is TED (still stuck around +37bps). FinReg = bad bad legislation (thank you, Scott Brown)… but that’s “old news” now and mrkt will try to look past that.

  10. 10
    1520sbroad Says:

    I’ll second BOP’s thought – super post this morning.

    I like the glimmer of white now showing in chart A as we slip further into the “normal” range for gas in storage and off the big storage numbers from 2009.

    I guess we all know who is “max pain” in SWN, ECA and UPL options…

  11. 11
    zman Says:

    BOP – thanks for that. Unfortunately no to the turn off question but neither does yours.

    That BOE exercise I owe you will be in the Monday post.

    MD – I do plan on answering your reserve revision questions soon but forgot again. In short, if prices fall too far for reserves to be economic, you take the non-cash impairment and they come out of the reserve report. When prices rise again, the reserves may come back on but their is no reversal of the charge through the income statement nor is their a “write up” of equity on the balance sheet. At least we have gotten away from everything hinging on year end pricing to determine the PV10 value.

    Historically, the Street has taken most impairments in stride unless market conditions are expected to remain distressed for an extended period and the threshold for the reserves is highers than most. Again, it’s a non-cash charge, so you can argue the company overpaid for the asset but its all sunk cost at the time the impairment occurs. The reserves are still in the ground. Banks may or may not hit the company on their covenants for that, depends in large part on the size of the impairment. Costs can also change over time yielding an economic play where there wasn’t one before or where one had been taken off the books. EOG used to have a slug of Rockies PUDs we would discount to 0 many years ago (there but good luck getting them out of the ground at a positive IRR) but with changes in tech and with the additional of Rockies takeaway capacity, they came into play….glacially.

    As to who will get hit in the next round of impairments? I don’t track that closely but it would be the same gassy names that have taken hits in recent quarters.

  12. 12
    crysball Says:

    Z,
    CAM (while up in the pre-market) is lagging BP & APC….yet the seem to be in the best postion to limit their liability in the Macondo well.

    http://finance.yahoo.com/q/ta?t=5d&s=CAM&l=on&z=m&q=l&c=bp%2C+apc

    Do you see any opportunitly here?

  13. 13
    zman Says:

    1520 – Yeah, it was either last expiration or the one before that they tried to take advantage of a bored market to further their call. It’s just poor sportsman ship. Glad I sold half of the ECA. The HK, BEXP, SWN, and PXD calls will all be scuds.

  14. 14
    bill Says:

    Sd got a Cramer pump.

    Sd is oversold. It has 80 % of it ng hedged north of 7 and now is more than 50 % oil with hedges over 85 in place

    Worrisome, is its high level of debt

  15. 15
    zman Says:

    Crys – yes, I played them on the way down, spilt milk there, but they really didn’t deserve the bashing they took in front of congress or in the market if you look at the mounting evidence. A quick run through:

    A) Their BOP was not designed to cut through multiple joints of drill pipe. There appeared to be two in the BOP so the rams couldn’t close.
    B) The BOP was sold to RIG in 2001 with a 1 year warranty.
    C) CAM did not have the maintenance contract on the BOP.
    D) BP / RIG modified CAM’s BOP.
    E) That was a CAM unit on the top of the BOP according to Birds of Prey. So good show there.
    F) Current legislation (The BOP Act of 2010) is likely to require significant retooling and replacement of current BOPs. CAM has an excellent record and will likely garner quite a bit of this business. There is also language in the Bill looking at onshore BOP requirements which could turn into a whole new market for them.

  16. 16
    zman Says:

    SSN Update: Shares in the account. Please let me know when you see the 25% refund hit. Have not seen in mine yet.

  17. 17
    zman Says:

    Keeping close eye on HAL today, earnings before the open on Monday, looking for a long side trade there.

  18. 18
    tomdavis12 Says:

    Z: Do you have access to the VNR upgrade @ Wells Fargo today?

  19. 19
    Jerome Blank Says:

    Re: #16, have shares yet…

  20. 20
    Jerome Blank Says:

    RE:#19, that is “no SSN shares yet”..

  21. 21
    bill Says:

    new drilling bill has this in it

    The CEOs of energy companies applying for drilling permits would have to certify – under penalty of jail time – that well designs are safe, blowout preventers have redundant systems and the firms are capable of halting a runaway well. Violations could be punished by up to $10 million or 10 years in prison.

  22. 22
    zman Says:

    Tom – I do not.

    re 21. wow.

  23. 23
    zman Says:

    So should airline CEOs serve jail time if one of their planes crashes? How about the manufacturer of the plane? What about cars? A lot more than 11 people were killed in planes, trains, and automobiles last year. Shouldn’t all those CEOs be in jail now?

  24. 24
    Jerome Blank Says:

    RE: #23 a statute is potentially unconstitutunal if it attempts to criminalize action that is not intentional. Criminal acts involve intent…

  25. 25
    zman Says:

    BP selling the good news early. Watching.

  26. 26
    BirdsofpreyRcool Says:

    #21 — hmmmm…. and the Obama Administration wonders why it is perceived as “unfriendly to private business”?? Maybe Warren Buffett can clue his pal BHO in on some of the facts.

  27. 27
    zman Says:

    JB – thanks much.

  28. 28
    Jerome Blank Says:

    Thinking I cold develop an entire practice area around this act….

  29. 29
    zman Says:

    BP – For many reasons I am no day trader. But I do expect it to take a run this morning and if not then to firm into the end of the day on takeover thoughts. I think such thinking is early but it may drive the shares today.

  30. 30
    Jerome Blank Says:

    Have not seen revisions, but there were provisions in the new fin reform that substantially change the fiduciary obligations of brokers, to raise the bar closer to the obligations owed by fin’l advisors…

  31. 31
    BirdsofpreyRcool Says:

    HeadTrader points out that “Tree Hugger Number” out in about 10 mins… could set the near-term tone.

  32. 32
    BirdsofpreyRcool Says:

    (HT just cracks me up, sometimes… he is actually a pretty happy fellow)

  33. 33
    bill Says:

    23,24

    Agreed,

    Didnt they already do that with sarbanes

    certify the numbers and if they are wrong go-to-jail

  34. 34
    BirdsofpreyRcool Says:

    EXXI getting kicked in the tenders… any reason why? (Other than Schiller faces jail time, if anything “unforeseen” happens.) Sheesh.

  35. 35
    Jerome Blank Says:

    Is anyone else still waiting for SSN shares…called broker looking for phone call back on status….

  36. 36
    Jerome Blank Says:

    Negligence is not crimnal, otherwise a lot of traders would be in jail…gross negligence possible…ie complete disregard for safety or welfare

  37. 37
    BirdsofpreyRcool Says:

    Tree Huggers not happy… U of Mich Sentiment index in at 66.5 vs 74 expected.

  38. 38
    zman Says:

    Should have used wadded up economists in the first junk shot.

  39. 39
    Jerome Blank Says:

    So, I’m the only one who did not get the SSN shares?

  40. 40
    Pati Says:

    SSN — have == HAD full allotment, now 3/4. Calling Schwab.

  41. 41
    VTZ Says:

    I expect gold to hold off this attack between 1175 and 1185. Ideally a bounce off of those levels would be an ok weekly close and keep the chart intact from a bullish perspective.

  42. 42
    zman Says:

    No one should get their full order, just 75% and a check back to the account for the delta.

  43. 43
    zman Says:

    President speaking on Macondo well now. Nothing new, trying to rein in optimism.

    The $38s and $39s are trading actively and I still expect a bounce in the shares later in the day.

  44. 44
    zman Says:

    Last I’ll say on BP for a bit – this pull back, should it continue, sets up another 10% rally on the day relief well kills the well.

  45. 45
    VTZ Says:

    I don’t understand how killing the well now or later does anything to limit or change the liability at this point.

  46. 46
    bill Says:

    ard/sd deal approved

    TULSA, Okla.–(BUSINESS WIRE)– Arena Resources, Inc. (ARD

    ARD ARENA RESOURCES INC 36.0100
    Change +0.7200 (+2.04%) AS OF 10:21 AM ET 07/16/10.
    Chart for ARD Research

    ) (“Arena”) (“Company”) announced today that Arena stockholders had voted to approve the proposed merger with SandRidge Energy, Inc. (SD

    Loading… Loading…

    ) (“SandRidge”). Under the terms of the amended merger agreement, Arena stockholders will receive 4.7771 shares of SandRidge common stock and $4.50 in cash for each share of Arena common stock.

    Chairman of the Board and co-founder Mr. Tim Rochford commented, “We are very pleased with the voting results and wish to thank our stockholders for their ongoing support and confidence in management over the years. My partner and fellow board member, Mr. Stan McCabe, and I have made every effort to fulfill our commitment to you, our stockholders, by building a public company on sound fundamentals that could withstand the volatility of the marketplace. We have done our best to be accessible and to regularly communicate to our stockholders through releases, conference calls and presentations at sales conferences. To this end, I wish to express my personal thanks and gratitude to all the analysts, brokers and bankers, both investment and commercial, without whose support and guidance we could not have achieved our goals. To our talented and dedicated employees, both in the office and in the field, many thanks for your continued effort and hard work. I also wish to thank our board members who have worked tirelessly through this process. Their expertise, individually and collectively, has resulted in a transaction that not only brings immediate value to Arena stockholders, but more importantly, the opportunity to participate in the future growth of SandRidge. I continue to be impressed with Tom Ward and the excellent management staff he has assembled. His commitment to building a more balanced company with tremendous assets, both oil and gas, in an area we know well, the Permian Basin, has convinced me this has the potential to truly be one of the more outstanding growth opportunities for years to come.”

  47. 47
    elijahwc Says:

    SSN shares not in at Citi/Smith barney nor Morgan Stanley

  48. 48
    zman Says:

    Not the liability, just sentiment, and having it not flowing now saves on the bill to the EPA and the ongoing cleanup. Mostly helps sentiment and would be acquirers with their models.

  49. 49
    bondbuddha Says:

    Mortgage collateral making new highs again today.

  50. 50
    Popeye Says:

    I was charged the .63 for the 25K SSN shares. If anyone has their refund I would love to hear.

  51. 51
    BirdsofpreyRcool Says:

    #38 — for sure.

    There were 62 economists who weighed in with their carefully-modeled prediction of the Sentiment #. Not ONE of the 62 “predicted” a reading lower than 71.

    Just something to keep in mind, next time you hear “most economists agree that…. “

  52. 52
    West Says:

    XEC, http://www.investors.com/NewsAndAnalysis/Article.aspx?id=538828&ven=yahoo&p=2 , Recent article from IBD New America featuring XEC.I am looking for XEC production rate to be in excess of 700 mmcfpde at the end of the 2nd qtr, rate was 585 mmcfpde at the end of the first quarter. The Yeagua wells are now producing over 400 mmcfgpde using TX RRC data. They normally issue production guidance about 10 days before their quarterly call. Their first well that they drilled in the Yeague in 07/09, the Two Sisters #1 , that IPed for 40 mmcfgpde is still making 40 mmcfgpde 10 months later. In recent CC they said that Nine Dragons #1 should be as good as the 2 Sisters #1. That is saying something. The 700mm figure does not include any increase in production from Cana or Permian Basin which we know there will be some improvement since they have 7 rigs running in the Cana and at least 3 rigs in the PB.Adding to position in here.

  53. 53
    zman Says:

    Refunds from oversubscriptions often take several days to a week or more following placement of the shares.

  54. 54
    reefguy Says:

    GST Field Trip Report:
    Travelled to Hilltop Lake yesterday…Wildman #6H was acidizing(could smell the spent acis) Only two 210 BBl tanks in permanant battery, suggests not a great well to come. The 7H Wildman (proposed EF/woodbine)not yet spud. Streater was drilling below 15,500′.
    Most interesting was Rippy #1 Easterling some 15 miles NE. a 10 stage frac in about 5000′ of lateral is flowing back with oil from(Woodbine/Eagleford) zone.

  55. 55
    bill Says:

    is this new news?

    http://www.investorvillage.com/smbd.asp?mb=2156&mn=145&pt=msg&mid=9272091

  56. 56
    RMD Says:

    The General Assembly of PA intends to pass a severance tax on nat gas & Gov Rendell is in favor.

  57. 57
    zman Says:

    Thanks West, Reef.

  58. 58
    tomdavis12 Says:

    Z: Any undervalued yield plays look interesting to you?

  59. 59
    zman Says:

    Bill – No, the Brad Olson 9-16 was one of the early Rough Rider high rate wells, came on in the center of that area at about 2,100 BEOpd in October 2009.

  60. 60
    BirdsofpreyRcool Says:

    reef — great scouting work, guy. Did you drive your battered old pick-up to the well site?

    Sorry to hear the Wildman #6H sounds marginal. Think they will follow up with more GR horizontals?

    Also, is GST operating the Rippy well?

  61. 61
    zman Says:

    Tom – WHX.

    I hold LINE as well but the valuation is probably more fullish. It does however have catalyst potential in the near term as they sort out their granite wash effort. Not a lot of MLPs out there holding high profile stuff like that.

  62. 62
    Jerome Blank Says:

    Re: #40, Pati, #37, Eli, regarding SSN shares thanks, have not heard anything from broker yet…

  63. 63
    bill Says:

    59, i read it as a 2nd well to be spud

  64. 64
    zman Says:

    Nicky Blackberry Watch:

    Hi Z

    Looks like a low into 16 – 19th – hopefully a little lower than here into say the 1067 area….

    Nicky

  65. 65
    zman Says:

    Bill – thanks for pointing out the deal is done. Good deal for SD holders … ARD not as much. SD probably moves higher next week, all things being equal, meant to play, didn’t so watching now. Earnings call could be interesting if they will run it the right way, laying out the new vision in easily identifiable chunks and not getting bogged down in a geology lesson on their traditional West Texas Overthrust stuff.

  66. 66
    zman Says:

    SSN – for those of you with Schwab accounts and full shares, as always, this is not a recommendation because I never do that but I am thinking hard about taking my 40 cents and running, at least on the new shares. That’s just too much of a gift horse in this hinky market. What keeps me from doing it immediately is the thought that July 26th is not far away. If they get the deal done on the 24,000 acres being sold at all, the stock should perform. If they get the high end of the range as they expect, then we should be thinking that the rights shares are a quick double from the $0.5777 offer price. If the deal doesn’t happen or is repriced lower, then lookout below, back to the old range. Prudence says I take some off the table pre deal, how much is simply a judgement call based on individual risk tolerance levels.

    BP trying to work through the profit takers. The $38s are acting well, the $40s are currently toast.

  67. 67
    BirdsofpreyRcool Says:

    Adding to #64… rare check in by TechTrader… he thinks Monday will be a big down day. His voodoo can change, of course, but that is what he thinks right here, right now.

  68. 68
    cargocult Says:

    Schwab has SSN shares in my account.

    We already have civil and criminal laws that cover fraud and negligence. There really is no apparent need to specifically require drillers to use due care. It is a given. Normally we are legally responsible when our actions or inaction injure another party. The fact that BP put up $20B so readily indicates that they wanted to win the PR part of this legal nightmare, at least.

    Political types from both parties play to their constituencies with exaggerated rhetoric. The less they can actually do in a crisis, the more they posture. Hopefully this will not lead to war with England over the missed dividend.

  69. 69
    BirdsofpreyRcool Says:

    well said, cargo.

  70. 70
    BirdsofpreyRcool Says:

    Credit indices starting to nose-dive into lunch time.

    IG + 3 1/8 bps wider now

  71. 71
    zman Says:

    Thanks BOP – appreciate the credit updates.

  72. 72
    bill Says:

    what the hell is going with hk

  73. 73
    zman Says:

    Bill – I can’t wait to see Peak’s response to the 10 years and $10mm issue. I can’t see MCF spudding a well again if that is upheld.

  74. 74
    zman Says:

    Bill – same things as with the rest of the gassy names. No interest from the Street. GS downgraded many names in the sector. I own the HK common and some calls this time around. I will not add more calls until earnings at this point. Should be a couple of catalysts in the 2Q call but of late, catalysts have been ignored and I don’t think their Bossier test is going to wow anyone. Not meaning the results will be off putting, just that no one will care, despite the fact that it opens another play for them if they get it to work which they are pretty likely to.

    CAM now up a whopping 6 cents on that GS America’s Conviction Buy List upgrade. They should probably change the name of that rating, conviction strikes a little too close to home these days.

  75. 75
    BirdsofpreyRcool Says:

    GS — wouldn’t be surprised if GS worked with the govt on the timing and amount of the charge and fine. After all, for a mere $500mm, the DoJ was able to use the GS headlines to help BHO jam thru “financial reform” that really does nothing but make it harder for smaller banks to survive. GS was a big winner here. Also, think GS will back away from their status as a “bank holding company” in order to avoid the regulation they helped pass.

    ha! Historically, I am NOT a “consipiracy theorist.” But I also don’t believe in mere coincidence, either. ugh.

  76. 76
    VTZ Says:

    The GS settlement is another pile of SEC BS meant to keep congress off their back and I agree that the timing was intended to help fin reg and to restore some semblance of credibility to the SEC from the general public.

    In reality the SEC settlement is a copout and a get-ou-of-jail-free card for GS. They basically got government approval for fraud.

  77. 77
    elijahwc Says:

    For those with an interest in ATPG comes the theater of the bizarre:

    http://seekingalpha.com/article/214885-atpg-and-jpm-what-s-a-half-billion-dollar-math-error-among-friends

    http://seekingalpha.com/article/214871-sell-side-snafu-of-the-day-jpmorgan-edition

    http://seekingalpha.com/article/214887-atp-sorry-jpm-analyst-made-a-9-valuation-error-on-your-10-stock

  78. 78
    baylor3217 Says:

    Anyone know how to see option chains on yahoo via iPhone now? They changed their website and the iPhone app doesn’t seem to do it either.

  79. 79
    zman Says:

    http://www.marketwatch.com/story/consumer-sentiments-mysterious-free-fall-2010-07-16

  80. 80
    zman Says:

    Baylor – download the iswim ap.

  81. 81
    zman Says:

    Re 80 – If you are not logged in the quotes are 20 minutes delayed, if you are they should be live.

  82. 82
    crysball Says:

    SSN shares showing up in Schwab & Ameritrade accounts………….but NOT in E*Trade Accounts.

  83. 83
    zman Says:

    Market at LOD, at 1070.

  84. 84
    zman Says:

    Nice call Nicky.

  85. 85
    BirdsofpreyRcool Says:

    sometimes, political cartoons just say it best…

    http://townhall.com/cartoons/cartoonist/ChipBok/2010/07/1/

  86. 86
    ram Says:

    ZMAN – Still thinking BP rises into close?

  87. 87
    zman Says:

    Ram – I would think so, yes, but would not be surprised given the market today if it’s muted or even if it tanks if the market decides to.

  88. 88
    Nicky Says:

    Good afternoon.

    1068 would be a 38% retrace of the rally off 1015. I am looking for a cycle low to form between now and Monday….if the market can hold in the 60’s then i favor a run at 1130 and higher…

  89. 89
    zman Says:

    Scotland denies link between BP and Lockerbie bomber case although BP admits it did lobby to get him freed early.

    Meanwhile, the U.S. Congress, which reserves the right to sit in judgment on everything from BP to gravity will hold an inquest on the matter.

  90. 90
    zman Says:

    Thanks Nicky, spot on of late as usual.

  91. 91
    bill Says:

    73. He’s on record saying he wont drill in the gom with those rules

    can they morph mcf into an mlp and just liquidate over time

    MCF is trading at 2 per mcf of proved producing reserves

    The pl will look real nice with no EP expenses and the 2 new wells coming online and the shut in gas flowing even with 4.50 ng

  92. 92
    RMD Says:

    Anyone see news on VNR? I show an N for news but none comes up, and stock is only 1 of 2 green (SD the other)?

  93. 93
    john11 Says:

    VNR got an upgrade from Wells Fargo to outperform, tgt $25-28

  94. 94
    zman Says:

    Bill – That’s not a bad idea given his very low operating costs. Probably a royalty trust that will be done in about 4 years but be able to pay out nicely.

  95. 95
    md Says:

    Thx for your explanation.
    what happened to QBC.

  96. 96
    ram Says:

    BP seems to be pinned at 37.5. The MM is confused between AUG and JULY?

  97. 97
    zman Says:

    Have not watched QBC in a long time.

    BP does seem pinned, market is very pinned.

  98. 98
    cargocult Says:

    Are we expecting anything special from WRES?

  99. 99
    zman Says:

    Cargo – I am not, only 1/4 of an eyeball on them of late as I do not own it any longer.

  100. 100
    BirdsofpreyRcool Says:

    Headline from HeadTrader —

    “B of A’s ‘brutal honesty’ on cost of new rules pushed banks lower”

    This is tanking the overall mrkt.

    You may “hate the banks”… but “kicking them in the #ss” only results in hurting everyone. Guess that concept is lost on most elected officials.

    (Like kicking the “greedy bondholders”… only raised the cost of capital for everyone in order to compensate for governmental kleptocrasy.)

    Just few musings…

  101. 101
    Pati Says:

    Keep musing, BOP; pearls of wisdom!

  102. 102
    zman Says:

    Market at your level Nicky. Here’s to a bottom. Going for a walk.

  103. 103
    BirdsofpreyRcool Says:

    Just something to keep in mind… as we watch and experience the unfolding of ObamaCare and FinReg over the next few years, it will be helpful to recall that it was the Republicans that made both of those bills possible. We can try to pin it on the Democratic Majority… but really it was Olympia Snowe (ObamaCare) and Scott Brown (FinReg) who made these outrageous pieces of legislation possible.

    No “good legislation” is 2,600 pages long. Period.

  104. 104
    bill Says:

    just heard on cnbc..re the markets

    “communisim isnt bullish”

  105. 105
    BirdsofpreyRcool Says:

    good to have you back, bill. Missed your comments.

    Dismal stuff. But, maybe We The People need a good hard look at what “Progressivism” really does (and costs). Then at least we can go down the chosen path with eyes wide open… instead of voting on vague concepts and empty rhetoric.

    It’s Friday. The Dow is down 234 pts… sometimes you just have to say stuff.

  106. 106
    zman Says:

    Bill – sounds like Kudlow.

    BOP – another good point.

    Mea Culpa Watch: I don’t often have 2 hour 11 baggers. Sometimes fast markets are hard to trade as the orders get fouled up at your broker or the visibility goes haywire as it did yesterday when the bid asks on Level 1 did not follow those on Level 2. So when you see me say “fair warning” that means I’m in the process of getting out of a hot one.

    Yesterday I got out of 40 of 120 options in the $40 July BP calls. Those 40 didn’t even confirm until after the close and for that account that was about a 200% gain. For the 100 taken earlier in the day at 7 cents, to watch them go as high as $0.85 and not punt is pretty unforgivable in my personal book. So $700 turned into $8,500 is now $0. It doesn’t wound me other than my pride but it does stink and in today’s markets it does happen. I was not even able to enter the trade on the ZIM so I have nothing to contest and only a cold beer to contemplate around the closing bell. Again, I’ve done this for a long time, and even if the government doesn’t understand this, sometimes things just break and you can’t just legislate that they won’t. I do hope someone made some $ off that one as it was up for all the right reasons. Now I’m going for that walk.

  107. 107
    RMD Says:

    john11: thanks. Will look for WFC report.

  108. 108
    choices Says:

    BOP-#103-I have said it many times that there is not a dime’s worth of difference between politicians from either party-it just depends upon which lobby group is pulling which strings on which politician, ie the money. I get more and more depressed watching these clowns on C-Span and on the cable news and have vowed to watch much less. I see the Repubs winning big time in Nov which is an indication of how badly this admin and this Congress have failed the country-but still (prob many or at least some) incumbants will be re-elected.

    I have “tried” to stay from the extremes in my opinions but I have seen over the years how dishonest govt (both sides) is with the wars, crony capitalism, incompetence, fiscal irresponsibility etc etc-I spent many months in Vietnam, nothing compared to the unbelieveable service the military in performing now with 4,5,6 tours and they wonder why troops are suffering increased PTSD.

    Third parties do not have a chance, maybe independents will help but the irony is that neither party has the confidence of the country in running the economy-maybe grid lock is the answer and we just stumble thru-Pickens’ piece yesterday was remarkable for its clarity but the odds are even that nothing gets done.

    End of the Friday rant-apologies to all, especially Z, Cargo-let us try to make money in spite of the politicians and govt.

  109. 109
    zman Says:

    Choices – no need for apology, it’s been a tough ride of late and I’m right there with you.

    Vertical spread in August BP $40 / $45 calls is interesting here. Leery of the Monday market.

  110. 110
    BirdsofpreyRcool Says:

    choices — you are a wise person with the experience to back up your words. Frankly, I appreciated your Friday Rant. Thank you.

  111. 111
    Paul in Kansas City Says:

    I feel your pain Z.

  112. 112
    zman Says:

    ZTRADE – ZCAT – BP

    BP – Added (5) BP $40 calls for $1.67 with the stock stuck at around $37.50. Well continues to hold steady.

  113. 113
    zman Says:

    Well holding steady:

    http://news.yahoo.com/s/ap/20100716/ap_on_bi_ge/us_gulf_oil_spill

  114. 114
    Jerome Blank Says:

    KOG…looking at the weekly (data now fixed), the 200 SMA weekly, the 50 SMA weekly and the long term lower supporting trendline all come conjoin at about $2.75, I’ll be looking to add if it actually gets there….

  115. 115
    Jerome Blank Says:

    TAT still holding right on weekly trendline support at $3.00, WRES pulling back to daily support after breaking out above the bearish descending trangle…

  116. 116
    zman Says:

    JB – Thoughts on SD?

  117. 117
    Jerome Blank Says:

    The BP intraday charts look look interesting…I’ve update the 5 and 30 min, support $37.20, resistance $37.60, if resistance breaks, I could see a try for $38 easy…

  118. 118
    zman Says:

    Thanks JB, pretty much given up on today is its expiry and everything is being held down. Max pain on most things is lower and the broad market has no life in it. I think we could see another move as more news on the relief wells trickles out in coming days. Also, latest news on the pressure test is positive. It looks like they can keep the well shut in instead of producing it to siphon until the relief well connects. Maybe we get the end of day rally for a potential takeout but it looks stuck.

  119. 119
    Jerome Blank Says:

    SD trading right up at topside daily trendline resistance today…updated the daily for new perspective, I ‘ll look at the 30 next….

  120. 120
    zman Says:

    Thanks, voted:

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

  121. 121
    zman Says:

    Pressure at 6,700 and steadily, slowly building. They want the well up towards 8,000. No sign of leaks on the ocean floor or from the stack.

  122. 122
    jat Says:

    Appropriate movie quote Friday?

    “That is what “to the pain” means. It means I leave you in anguish, wallowing in freakish misery, forever”

  123. 123
    Jerome Blank Says:

    SD 30 min chart added, SD has a great looking 30 min channel which is finding support above the lower channel line at the 20 period SMA at about $6.50, longs would need any stops below $6.40, with the target to at least the double top at the upper daily channel line at $6.80….

  124. 124
    zman Says:

    Princess Bride

  125. 125
    jat Says:

    Give it up to the man in freakish misery.

    Now do you want an I-always-love-HAL-no-matter-what beer mug or t-shirt?

  126. 126
    Jerome Blank Says:

    Re: #120, Zman, thank you…

  127. 127
    zman Says:

    S&P giving back the last 6 sessions today.

  128. 128
    BirdsofpreyRcool Says:

    jat — HeadTrader is wallowing in freakish misery too… can he have a mug? Of course, to HT “a mug” means something that holds beer. Lots and lots of beer.

  129. 129
    Jerome Blank Says:

    CIGX, flagging at the daily topside trianlge trendline, not going down all that much…

  130. 130
    zman Says:

    re 125 yes, I’ll take some sort of tankard or stein, or chipped plastic cup if you please sir.

  131. 131
    BirdsofpreyRcool Says:

    JB — but i want CIGX to go down from here. I still have some more shares to buy.

    No idea if they launch (as we thought they would) next week. They aren’t saying. Stock can do anything, until then.

  132. 132
    BirdsofpreyRcool Says:

    jat — oops. thought you were refering to an I-Always-etc. COFFEE mug. Should have read closer… it makes my comment a whole lot less funny.

  133. 133
    zman Says:

    OAS trading back to a penny green on the day. Someone else expects kind words to be in print next week.

  134. 134
    BirdsofpreyRcool Says:

    This just in from HeadTrader
    —————————————-

    DOE RE MI BEER, by Homer J. Simpson.

    DOUGH… the stuff…that buys me beer…
    RAY….. the guy that sells me beer…
    ME…… the guy… who drinks the beer,
    FAR….. the distance to my beer
    SO…… I think I’ll have a beer…
    LA…… La la la la la la beer
    TEA….. no thanks, I’m drinking beer…
    That will bring us back to…(Looks into an empty glass)
    D’OH!

  135. 135
    Pati Says:

    Does that mean HT’s prior prediction for Monday is still on?

  136. 136
    Wyoming Says:

    The 8,000 psi is probably what they are expecting from the BHP. Gas bubble rising will displace liquids, which reduces hydrostatic head, allowing more gas in and they better be careful. The question they should be asking themselves is if the pressure they have gets onto the next string, how much do they de-rate the burst? They drilled how many hours thru that string to get to TD.? Memory recalls, there were a lot of liners. Problem is that burst probability is right below the casing head (weakest point).

  137. 137
    zman Says:

    Re 136. This is why I ask you question even when you are far, far away.

  138. 138
    zman Says:

    Beerthirty. Have a good weekend.

  139. 139
    BirdsofpreyRcool Says:

    Pati — I asked HT that… but he hasn’t heard an update from TechTrader. I’ll post anything I hear.

    This mrkt is just honest-to-goodness brutal. Both longs and shorts are screaming. (On different days, but both sides are not making money.)

  140. 140
    Wyoming Says:

    Not for much longer, 30 hours to flight thirty.

  141. 141
    RMD Says:

    quick take on CRED valuation after brief chat with mgt (using 2Q April/10 numbers):
    278 boe/d at $64,000/d (probably too high as that is KOG’s valuation) = $18mm
    2.75mmcf/d @$10,000/m (also high) = $28mm

    total = $46mm. Mkt cap $76mm.
    What else? 6,000 net acres on Rez in Bakken @ $5,000/ac = $30mm….gets to market cap but not cheap. (Co. says my math is about right.)
    Calliope gas recovery system for wells deeper than 10,000 ft., simple system, little competition at that depth. No industry acceptance of biz model giving CRED share os gas recovered. Have (first?) 3-5 well test (“joint evaluation”), not with CHK. Value uncertain, revenue small I’d guess at moment.
    Reserves 20.2bcfe; PV-10 $40mm with $24.7mm asset writedown in ’09. 2 areas are 40,000 net ac. in Kansas and 6,000 in Bakken, both oily.
    Conservatively run, founded by accountant, new CEO, group attempted takeover in ’08 and RR Advisors still owns 18% of stock at higher cost, production peaked in ’06, co. not drilled a gas well in 2 yr.s as 4 yrs ago BofD refocused co to oil.
    Sounds like production starts growing again in ’11 from 40 net wells drilled in Kansas (45% success rate expected) and ? net Bakken wells and “we expect the Bakken to add very significantly to Credo’s production and reserves over the next few years.”

  142. 142
    PackMan Says:

    Communism isn’t bullish. I heard that too on CNBC today (background noise) and I nearly spit up all over my monitors laughing (so true !).

    SD — methinks there are just better movers than SD. Got out of a few thousand shares at 6.91 after hours Thursday and not tempted to go back in yet, although I guess this merger news might get it moving.

    Here’s one for Z and BOP about Ken Salazar:

    “Ken the Job Killer” gets skewered

    http://www.nypost.com/p/news/opinion/opedcolumnists/ken_the_jobs_killer_aNKVG60zow8gb5d8AZoq9H

  143. 143
    PackMan Says:

    BOP; agreed, this market is brutal.

    I really was hoping for a more benign expiration Friday.

    Major carnage. I need to pay more attention to the early news flow and its likely affect on the robots (I would normally say sentiment, but its really the robots, they must have algos for keywords like “consumer confidence big drop” and just go into sell everything or buy everything mode).

    Plus, Z had a comment early this morning on GS E&P downgrades on expiration day that in retrospect looks like a tell that we all should have gotten short on.

    Especially since GS is the market.

  144. 144
    zman Says:

    40+ hours, so far, so good.

    http://news.yahoo.com/s/ap/us_gulf_oil_spill

    Pressure at 6,745 psi, rising 2 to 10 psi per hour. They had wanted to see 8 to 9,000 psi, link says 7,500 is their target now.

  145. 145
    crysball Says:

    Vaalco Energy [EGY] Update
    Vaalco completed the first sidetrack on the SE Etame discovery well, and while stating they are still analyzing the results, have procceeded with the 2nd Sidetrack to delinieate the fielld. The second sidetrack will be completed by the end of July.

    Additionally, Vaalco has met with the consortium partners and elected to exercise the 2 additional well drill slot option with the Vantage Drilling, which will be added on to the end of the current drilling program and run well into late Q4…..one weell [S. Tchibiala] is a slam dunk development well, and the other well [Omangou] is an exploration well….but on trend.

    IMHO Vaalco [with the consent of the Gabon Gov’t] will declare the SE Etame discovery commercial, and subsequently announce a plan to build and install a Production Platform from which they can not only produce SE Etame discover [as an open hole gravel packed horizontal well in the Gamba Samds], but also use this platform to access the three shut-in Vertical wells in the North Tchibala field, and tie both fields back to their existing FPSO [Petrole Natumpia]. These wells were drilled back in the 70’s & 80’s but never produced. North Tchibala has PUD reserves of 18.1 million barrels.

    My model shows Vaalco currently [end of Q2] has $2 /share in cash [current market close price of $5.65 USD]and ZERO debt.

    They are currently producing 24,000 b/d gross [28.7 %NRI] from 9 wells in the shallow offshore Gabon Etame concession, and expect both reserves and producution to increase going forward.

    The Vaalco business model is to walk in the footseps of the majors, and buy up concessions the majors deem not economic [on the cheap] and then use the majors tech data and supplement with their owwn 3-D.

    In an interesting way, Vaalco is a ‘SAFE HAVEN’….. a US based [NYSE traded] small cap which is growing, profitable, zero leveraged, in an OIL FRIENDLY POLITICALLY STABLE arena[Gabon & Angola] which gets 99% of revenues from OIL .

    Am also expecting some announcements in the nest two months:
    ~ a JV for their on-shore Gabon concession [Mutumba] where they currently hold a 100 WI, but drilled 2 dusters back in 2009,
    ~ Angola shallow offshore block 5, where they pan to drill 2 exploration wells in 2011[semi-sub due to 500’ depth]. They are the operator with a 40% WI, but their partner [Interoil Norway] has surrendered their 40% interest due to multiple missed cash calls….expecting Angola to announce a new partner and extension of drilling program.

    Here is the news release of 7/16:
    http://finance.yahoo.com/news/VAALCO-Energy-Provides-Update-prnews-2428126952.html?x=0&.v=1

  146. 146
    zman Says:

    Crys – Do you know what the pre drill reserve estimate was on SE Etame?

    Though we haven’t seen much of an impact yet (at least not according to a couple of E&Ps and one rig company), the Gomex moratorium should end up resulting in a modest decline in floater day rates in places like West Africa. It only gets better for rates if the EU and/or Norway make good on their comments regarding their own moratoriums.

  147. 147
    zman Says:

    The wrap will be out in the morning.

    FYI, well still holding tight, confidence increasing that they have it contained.

    FYI 2. BP lobbied Great Britain to help it get an oil contract with Libya. The Lockerbie bomber was not involved according to both BP and the British Government. Reports that BP admitted lobbying to get the bomber’s release were erroneous.

  148. 148
    crysball Says:

    Z,
    According to a Vaalco Prsentation[June 2010 RBC Capital Markets~Attached]. The gross unrisked potential for the SE Etame drilling target was 27.1 Million Barrels……but this may be a little misleading, as the drill target was Dentale Sands, but they actually found oil in the the Gamba Sands. The pay on the discover well was only 16′, which is why they are drilling 2 sidetracks to ascertain the size of the field.

    For reasons noted above[#145], IMHO they [Gabon] will declare this field commerical.

    http://www.vaalco.com/presentations/RBC_%20June_2010.pdf

    The 2010 Capex budget will increase with the two additional drilling slots they just exercised on the Sapphire Driller High Spec Jackup Rig, [Vantage Drilling], and they will need to increase topside processing capacity on the FPSO to handle the additional production once they go over 25,000 barrels/day……however my model shows the cash flow generated will keep up with the increased Capex demands (my model also shows that at the end of June they had $116 Million in Cash, or approx. $2/share.[Note in the Q1 statement they had $106 milion in cash].

    Full disclosure am Very Long Vaalco, and have been for several years, but try to keep an objective view of the company.

    p.s Still no SSN rights showing up in the E*Trade accounts.

Leave a Reply

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

s2Member®