Vacation Thursday

Posted on by zman

Market Sentiment Watch: Still on vacation so will be brief. Should be another fairly dull but green trading session with all eyes focusing on tomorrow's payrolls figure after much stronger than expected ADP figures, solid same store sales results this morning, an ECB rate hike overnight, and jobless claims that didn't disappoint either. Oil touched $98 just after ADP. Feels like squeeze time in U.S. equities  I may take a video of all of the activity when we pass back through the Eagle Ford Shale on Saturday and email it to the White House as a suggestion for taking care of the jobs issue.  Unreal number of sand trucks, rigs, pipe yards etc in such a relatively small slice of Texas.

Ecodata Watch:

  • Jobless claims came in at 418,000 vs 424,000 expected and 428,000 last week.
  • ADP Payrolls came in at  157,000 vs 78,000 expected (88,000 from small business alone)

Tomorrow's Ecodata:

  • Nonfarm Payrolls - 115,000 expected vs 54,000 last month,
  • Unemployment rate expected to stay flat at 9.1%

In Today’s Post:

  1. Oil Inventory Preview
  2. Natural Gas Inventory Preview
  3. Stuff We Care About Today
  4. Odds & Ends

Natural Gas Inventory Preview: (10:30 am EST)

Street is at +81 BCF for tomorrow’s report.I would not be surprised to see it come in a touch lower.

  • Last Week: +78 Bcf
  • Last Year:  +76 Bcf
  • 5 Year Average: +80 Bcf

Oil Inventory Preview (11 am EST)

API Watch: Bullish across the board, if EIA looks the same look for a push back to $100. It will be interesting to see if AAA was wrong about the decline in holiday related traffic (yeah, I know this period doesn't cover the holiday but it does cover the pre holiday buying that hit before the weekend).

  • Crude:  DOWN 3.2 mm barrels
  • Gasoline: DOWN 1.9 mm barrels
  • Distillates: DOWN 1.6 mm barrels

Stuff We Care About Today

SPR Watch:

  • Who bid on the 30 mm barrels?
    • Note the high concentration of financial bidders - JP Morgan has no refineries last time I checked but bid on more barrels than either SUN or TSO.
    • Note also the high number of barrels going to vessels instead of pipes. That's a bet on higher prices in the future.

GMXR - spud first Williston well, a Three Forks test in Stark County (Lewis and Clark area); not really newsworthy but given their size and the pressure on them to get moving early in the new play (for them) I understand throwing it into a pr.

RIG - Marianas rig took on water while being mobilized to a job off Ghana, no injuries, situation now under control.

Odds & Ends

Analyst Watch:

  • GEOI - target upped $3 to $33 at Suntrust
  • DNR - target cut $2 to $28 at Susquehanna
  • NE - target cut $6 to $44 at RBC
  • FST - B of A cuts to Underperform; Macquarie cuts to Neutral - follows ops update last night

111 thoughts on “Vacation Thursday”

  1. Analyst Watch

    KOG – Northland ups to Outperform. More squeeze time there, the second most shorted Bakken name.

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  4. NE Fleet update disappointing. Rig downtime & newbuild delays probably reason for RBC downgrade. Earning projections now ’11 1.80 – ’12 3.90 – ’13 4.60. Second half of ’11 is still the rat through the snake trick. 32 newbuilds to be delivered 12 drillships 12 JU’s & 8 semisubs. Not all spoken for. Replacement cycle not expansion.

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  7. Gabelli & Co comments on RIG this morning:

    “Yesterday it was reported and confirmed by Transocean that the Marianas semi-submersible rig had a water leak on board. 108 non-essential personnel were evacuated from the rig while 13 remained on board. The rig is stable and there are no injuries.
    Although we do not believe that the rig is damaged beyond repair, we have estimated that should the Marianas have to be scrapped EPS would be reduced by $0.25 in 2011 and $0.40 in 2012. Our 2012 PMV would fall to $84. We currently maintain our 2011 and 2012 EPS estimates of $4.80 and $6.50.
    We continue to recommend purchasing Transocean shares and believe the stock is attractively valued trading at 9.5x our 2012 EPS estimate and 6x our 2012 EBITDA estimate of $4.6 billion. We view a potential sale or spin-off of non-core assets as well as an improving balance sheet to act as a catalyst to achieve our 2012 PMV of $89”

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  8. Pritchard snippet on GMXR

    “GMXR has spud its first WB well, a Three Forks test in Stark County, ND near where WLL ($58.26-N-$71) has been drilling some very nice wells. The company expects to complete the well later this quarter. GMXR has said it expects to deploy its second rig in McKenzie County, ND in September. The company believes it has 136 potential operated WB locations assuming 10,000 ft. laterals. With almost 25K net acres, GMXR is highly levered to the WB relative to its size, and success here, in its recently acquired Niobrara assets (~40K net acres), and/or in its oily horizontal Cotton Valley and Norphlet Sand plays in East TX could be the catalysts the stock needs”

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  10. Green Day for Credit.

    Even before the ADP Jobs and Jobless Claims reports, the credit markets were trying to go green. After the reports, solidly green.

    Also, oil up… a lot. And more talk about how the SPR release was 1) political, and 2) won’t do what they thought it would. Biggest buyer in the SPR auction was JPMo… who owns precisely ZERO refineries. So… was releasing “emergency” inventory from the SPR supposed to REDUCE “financial speculators” in the crude market? Ha! It did the exact opposite.

    Crude that JPMo bought is headed for storage… they will sell it when…. wait for it…. WAIT for it…. PRICES ARE HIGHER.

    Nice work, Timmeh.

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  11. Eli: Thanks for your snippets today. Is there any income ideas you own on GMXR. Those KWK 7 1/8 ’16 bonds look cheap. Did nibble.

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  12. Doesn’t the energy market ALWAYS go up when Z is on vacation? Collection anyone?

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  13. re 5: I don’t understand the 2/3 or 66% participation of Fort Peck Energy. Does that give Fort Peck Energy 66% WI?

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  17. mim — #13 everything is negotiable. You can “sell” 40% of a well in return for the buyer paying 60% of the WI costs, just to pull numbers out of my hat.

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  20. Nice moves in group, seeing some catchup action in names like TPLM.

    NOG putting pain to shorts now up through 200 day

    Watching chick in toga getting married on the beach.

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  22. Z, Don’t know whether you were joking about the video, but if you did take a video or pictures of the activity in the Eagle Ford I would like to see it if your website has the ability to put it up – or perhaps you can put it on Youtube and provide a link.

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  23. re 17 Thansk for explanation. re KOG and MHR the credit goes to you, zman and the rest here. I just read and try to learn from you all.

    BTW: I am not a girl, you are probably thinking of ‘Mad Madam Mim’, as far as I know we are not related, well maybe the ‘mad’ part.

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  25. Longshot – still undervalued to the group, more on that next week, will leave the ta call to jb, sorg

    JS – the shots I have right now are hard to see of the flares and rigs without zooming as they were a bit off the highway. The baker hughes rig app for iPad was spot on though and we knew where to look before we crested each small hill. Will post a few snaps to my twitter feed.

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  26. Mim – re Fort Peck – yeah, what bop said, they get a carry for letting SSN in on the play. We will be able to tell pretty accurately by the end of the quarter what they paid on the first 20,000 acres as the cash will be out of the balance sheet by then. Ask questions if you have them on it and I will answer in tomorrow’s post

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  27. NOG at the major resistance area around 24..there’s a number of scattered resistance areas above but 24 is the last well defined one……
    26 is the most defined resistance going forward

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  28. #23 — had a girlfriend in college by the name of “Mim.” So just nostalgic, I guess. 🙂

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  31. Nice to see WLL recovering

    And NFX

    EOG setting a low bar for e quarter in terms of stock price, should be playing catchup soon. Have not seen their 3q date yet but it’s generally early in the group, liquids should be strong this quarter.

    CHK = nothing but up since NYT article. Kind of like the story of NOG and the shepherd.

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  33. ROSE holding near all time high as well

    MMR and EXXI holding nicely following last weeks update

    OAS – creeping on up despite e open ended 2q production warning, bar set low there too now, and name is still one of the cheapest on a TEV/acre basis.

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  34. HK – looking poised to run higher, expecting another strong, strong production quarter out of them, with more strong EFS well results and maybe a west Texas surprise. They won’t be adding more acreage soon so talk will be debt reduction and capital discipline on their call.

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  37. Hear ya on a the NOG sales, won’t be straight back up but not ready to sell any of the trading position just yet, le t alone the overweight in the core. Shorts have got to be losing faith in the name now,

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  38. FST read release with esp. interest because of their entry into Crockett county via their New Ventures groups purchase of 48,000 net ac. targeting Wolfcamp and conventional horizons. Paid < $1,000/ac so guessing have been accumulation acres for a while. Will spend $50mm for 6 wells in 2H11 so there will be lots of science project in those wells; suggesting development mode in '12.
    AREX this has to be positive for AREX as FST is ~30 mi. west of AREX; not much as been announced west of AREX though EOG has some ac. there. My hope (since I'm long) is AREX solves the "how to drill an economic well here" problem, though if they continue with mediocre results a longer term solution would be someone with expertise buys them for their acreage position.
    I don't know FST well and few St. comments confuse pre/post Lone Pine numbers. Looks like fatal error of '11 capx up, production down and less than guidance. Production est up 10-12% in '12. Stock near $23 proved NAV according to one analyst.

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  39. TAT’s not following the group. What’s up with that? Ha…All hat, not cattle.

    But I do hope that’s temporary.

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  40. re 30 – same, lightening as the shorts get squeezed. Well above cost basis at this point, was adding for the 3 months going down.

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  41. Re 35 – thanks, that is an oddball of a number, no revision, just odd. Oil numbers in a few then I hit the beach.

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  42. Report on Dow News that GLNG “Filed Mixed Securities Shelf – details to follow”. I can’t find any details on it. Must be the reason why the stock is -2.88% today.

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  43. #41 – does seem lumpy. next week has a holiday in it so the lumpiness will continue

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  44. FWIW I’m going to sell down part of my KOG at 6.94 a recent daily pivot point…should be some resistance there and if not…I’ll have made some walking around money…thx BOP and everyone

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  48. thx, BOP..that’s a nice compliment from you…

    but let me assure you I’m more a Rascal B than trader…a bit sloppy compared to JB and Zorg; but I get by

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  49. Reef,
    Thanks for the ‘read’ on the Passport and Ringbolt [Phospate]. ‘Radio Silence’ speaks VOLUMES.

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  50. More EIA

    As expected no change in SPR levels

    Imports were up 1 mm bopd, that’s a blip , won’t last long but led to the lackluster sized withdrawal in crude

    Gasoline demand remained relatively high at 9.3 mm bpd,
    Distillate saw a minor bounce

    Utilization was 88.4, up barely from last week

    Stocks at Cushing were down 0.5 mm barrels to 37 mm, continuing to back away from danger zone levels for WTI prices

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  51. Crude holding up $1.75 post numbers

    NG down a dime, not surprising, we’re very probably at the low end of the near term NG price band.

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  53. there’s a gap up on 5/27 where the stock opened at 6.75… that has now been filled but seems to be offering resistance here…maybe we bust thru that and move on up to my target…if not maybe this is it, at least for today

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  56. LINE looking poised as well, they should announced their 2Q distribution in 3 weeks, looking for a 2 to 3 cent increase.

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  58. Justin — WindRiver’s COB is actively trying to raise that $2mm funding. He is having no problem, finding people (especially from existing shareholders) who are willing to put up the dough, at this point… just comes down to terms that everyone can agree on. Not done yet… that I know of… but could be, any day now.

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  59. TPLM…Volume buying pressure turning on the weekly and daily time frames..looks good for more…

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  69. Duane G gets a $26 NAV on MMR and $44 on EXXI using $80 oil and $4.50 gas. He notes the photos of the production platforms ma ke the pt. that MMR intends to produce, not just test.

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  70. re 58 its very comforting to have Birds of Prey circling overhead, that is unless you are the prey.

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  77. Herb Greenberg ~ sooner or later the shorts are going to be right.

    Straight out of stopped clock investing 101.

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  84. It’s a little hard to read the SPR bidding price. Looks like averaged $107.

    Doesn’t that seem high? Or is it a compromise between WTI and Brent?

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  85. Rob – it’s along the gulf coast so cheapish to LLS , SPR contains a blend crudes, don’t have the mix at hand but it should be close to cuurent blend price. So much going to vessels makes it hard to see any kind of near term real impact.

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  86. Hearing some positive rumblings re: 2 MMR/EXXI ultra-deep wells. Sounds like LaFitte has something… and that they may have hooked the fish (the lost pipe) at the bottom of BBE. Currently retrieving the pipe outta the hole. Plans would then be to drill another 100 ft or so, then log the well. They got a heckuva kick in the Sparta Sands at BBE… want to log it. Thinking we will get the details from MMR prior to their GHS presentation… which is right around their next earnings release on July 19th.

    Sounds like good news, if all true. Getting the sense that MMR and the UD Program are gathering (positive) steam. Been a while since the mo-mo was felt there… although MMR’s last operational update was as good as it gets (imho).

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  89. Thanks for the added UD color BOP. If the team gets hydrocarbon bearing sand in all 4 wells can’t see MMR as a standalone co.

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  90. RB – from earlier – you’re welcome

    From NOG average Slawson operated well payout is 6 to 9 months now. NDIC numbers confirm.

    TPLM – still playing catchup. Others with near term catchup potential. REXX, EOG, WLL SSN sdcjf.

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  91. z — think FCX for MMR is in the stars (somewhere… sometime… “there’s a place for us, a time and place for us”…. you know how the song goes).

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  95. Didn’t say that. Don’t really care who it is as long as they pay 3x current.

    As expected, dull green day.

    Oil numbers were only ok vs expectations, not nearly as nice as the API data set

    Beer thirty

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  96. #88 EPMprA: Small deal small company. Don’t know the company or credit, but a quick glance gives the impression that at 8.5% they got a heck of a deal for a company with very little to back it.

    But then again, I do not know this company. Is there something new here?

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  97. #95 — you’re right. You didn’t say that. I would think it WOULD be at something like 3x current stock price.

    Wouldn’t that be nice??

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  98. Yes it would.

    Seeing bears cover SPY shorts. Probably string into sell the news territory re a budget deal

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  99. Re 96

    Not sure they got a terrific deal. I think they had to offer the shares at $23. It was available for 23-23.50 for a day or two then it suddenly got discovered and jumped to 25.75 today.

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  101. #100-I’m sure I’m not smart enough to fully appreciate what this article describes but it certainly makes me very uncomfortable-some of the comments from software “engineers” were equally unsettling. The really disturbing thought is, however, is that the guberment could shut down this insane algo trading in an instant if it had the will, the guts, and the wish to do so-makes you wonder if more flash crashes are just an algo away.

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  103. RB #99 Didn’t see that but it underscores the inherent risk of the instrument. So not interested at par (unless there is an embedded special situation)and not so sure at 23 unless I can make a case to get paid.

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  105. EPM: Of course no sooner do I utter #103 above then I run across this from GHS:

    Louisiana Light – less filling, tastes great.
    Summary: Evolution Petroleum (EPM) finds itself in an enviable situation. The company’s
    primary asset, the Delhi field in Louisiana, produces a lighter sweeter crude, (Louisiana Light
    Sweet – LLS) than West Texas Intermediate (WTI). With recent geopolitical turmoil in regions that
    supply lighter sweeter crude, the world’s thirst for this product has resulted in LLS pricing at
    a 10%+ premium to WTI. EPM owns a 7.4% royalty interest and 24% back-in working interest
    in the Denbury (DNR) operated Delhi field. We estimate that EPM’s dual interests using a flat
    $90.00 oil deck is currently worth $13.56 per share on a net present value discounted at 10%.

    So, full circle, is there is special sit behind the name? Donno

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  106. Econ Report in 10 minutes..NFP
    of all government data releases, nonfarm payrolls has the greatest market impact – ISM is 2nd, Consumer Confidence is 3rd, Retail Sales 4th

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  109. That is one FUGLY “Jobs” number… wow. Europe reversed it’s gains and US futures “plunged.”

    OTOH… makes an argument for “more taxes!” a tough sell in budget negotiations. Or should, anyway. sheesh.

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  110. When will the pols learn? You can not “make” companies hire when you are threatening more taxation, regulation, EPA control, healthcare costs, minimum wage requirements, paid leave, and the whole grab-bag of do-gooder wishes… The benefits sound good (and are well intended, for sure). But they kill jobs. And that is the Goose that lays all those golden benefit eggs. No goose, no eggs.

    Won’t see that on the front of the NYT, tho.

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