Gas is trading up slightly early this morning, again, moving with oil.
MMS Watch: 2 weeks after Ike struck, percent of production still shuttered in the Gulf:
Stuff We Care About Today:
SLB Analyst Day.
- The stock fell 14.3% yesterday, slightly worse than the OIH’s abysmal 11.7% drop.
- Conference starts at 9:45 EST
- Not always the most bullish of management teams, this time around I would look for them to try and bolster the view point that the offshore market is still quite healthy and that the U.S. onshore market is not falling apart. However, I would not look for them to provide much in the way of 2009 guidance which may disappoint some attendees.
- Valuation: if you can trust the 2009 estimates then they are
Question From Tom Regarding What Works In This Environment - I’ve been thinking about that all weekend and here are some random thoughts.
- Lower valuation is somewhat better but not a guarantee of safety
- Lines of credit may get get squashed soon so look out little E&P names that outspend cash flow…I suspect this why HK is taking it in the shorts so much of late.
- EOG is very underleveraged by the way, even with the shelf filing.
- "Safety" looks like cash to me because its hard to tell just how far crude is going fall and that will govern natural gas to some extent and activity in the space.
- So E&P and oil service, while cheap on current numbers aren’t exactly "safe" right now.
- In the medium term I think bigger will be better in the E&P space although we should see some consolidation as some names
- Coal and solar are getting slaughtered and will provide good opportunities once things settle down.
Refining Watch: Note the table showing 3Q08 margins in many regions topping those of 3Q07. This is the first quarter since 3Q07 that will have outperformed the year ago quarter on a year over year basis. The stocks are still near their lows and I hold (TSO) and may add a little (FTO) and or (SUN) but only once things settle down.
.
For Occam who asked for thoughts on this story.
Occam - I read that Piece by Chris Cook. I’ve read pieces by him before on establishing new exchanges for oil to avoid market manipulation and price dollars in barrels instead of barrels in dollars. Smart guy. Seems to play on the financial and trading angles of the game and not fundamental supply demand although he does point out that he understands those too.
