Friday, August 27, 2010

Exxon (NYSE:XOM) Shutting 3 Units at Chalmette

Exxon Mobil Corp. (NYSE:XOM) will reportedly shut down 3 of its units at their Chalmette, Louisiana, which they joint venture with Venezuelan oil company PDVSA.

Units being shut down will be a coking unit, distillate hydrocracker and a gasoline reformer.

The refinery is a 50-50 joint venture, with Exxon being the managing partner in the deal. Exxon confirmed there would be units shut down, but declined to say which ones, as sources close to the decision released the information.

Savings by shutting down the units will be from $8 million and $9 million monthly.

BP (NYSE:BP) Being Shorted by Bill Ackman

Bill Ackman, manager of the Pershing Square Capital Management fund, said he's shorting the debt of BP (NYSE:BP) using credit default swaps.

According to Ackman, he believes the damage BP has done to its reputation in the U.S. keeps them from being able to "operate effectively" in the U.S., where they have their largest presence.

Ackman also said acquiring the credit default swaps was cheap, especially because of the huge legal liabilities they face, and the uncertainty as to how much they'll end up costing the oil giant.

Credit default swaps are a type of insurance used to protect a company against defaulting on its debt.

Thursday, August 26, 2010

James Cameron Using BP (NYSE:BP) Disaster for Self-Promotion

Playing the role of being a rejected suitor, while at the same time promoting his "Avatar" film, James Cameron continues to take the opportunity to us BP (NYSE:BP) to promote himself and the movie, which is being re-released this weekend with additional footage.

This time around he expressed outrage that his proposals in the early part of the oil spill were rejected.

BP spokesman Robert Wine responded saying, "Lots of technologies were offered to us. They were thoroughly evaluate by a team of industry engineers. We did have some contact with James Cameron. His technologies were not suitable."

Cameron even tried to make a connection between his film and the oil spill, as if his film was based in any type of reality. Maybe too many deep sea dives Jim.

This is just another celebrity using the tragic circumstances as a chance to promote his film and make a ton more money, while positioning himself as a champion of a cause.

Futures Trading Rises Slightly, Oil Stock Prices Falling

Oil futures trading prices saw a slight increase, taking it right above $73 a barrel. Crude oil has been on the decline, losing almost 11.5 percent from $82 a barrel since the beginning of the month. It's become clear that the U.S. economy is slowing, suggesting the oil and gas demand will remain sluggish.

The rebound in the prices of crude was a result of natural gas prices falling. Some analysts said that there is a vast majority of traders who thought natural gas wouldn't go below $4 per cubic foot, and that crude oil would fall below $70 a barrel. As the gas started dropping below that level, traders started buying crude to avoid losses and cover their bets.

"Given the future prospects for economic recovery, the oil market is considered to have fallen to much, to fast. We are seeing some uptake in oil pricing, and the low 70's seem to be the near term bottom," said Victor Shum, energy analyst for Pervin & Gertz.

Loews (NYSE:L) CEO Tisch Recommends Exxon Mobil (NYSE:XOM)

Loews Corp. (NYSE:L) CEO James Tisch, said in light of the plunge in yields of municipal bonds and Treasuries, investors should look at stocks like Exxon Mobil (NYSE:XOM) in the near term.

In a Bloomberg interview, Tisch said, “There are equities that are rather intriguing, especially when compared to fixed income. When I look at what we’re earning on T bills and round it to the closest whole number, it’s zero.”

“We’re actually investing in stocks, in large cap, good dividend-paying stocks,” added Tisch. “Who would have thought five or 10 years ago that a 3 percent yield on a stock would be a good yield? But actually today it’s a very good yield.”

The dividend yield for Exxon Mobil is 3 percent as of Tuesday's closing at $58.94, along with a payout of 54 cents a share.

Wednesday, August 25, 2010

Transocean (NYSE:RIG) Survivor: No Idea Rig Wasn't Safe

Daun Winslow, Transocean (NYSE:RIG) performance division manager, who was on the Deepwater Horizon oil rig when it exploded, testified before an investigative panel entailing the Coast Guard and Bureau of Ocean Energy Management, Regulation and Enforcement, saying there was no clue that the oil rig had problems before it exploded.

When queried on the conditions before the blast, Winslow said, "I wouldn't have been down in the smoke area, having a cup of coffee" if it had been known.

After surviving the original blast which killed eleven workers, Winslow ended up being in charge of the battle to extinguish the fire and figure out a way to shut down the damaged well.

When asked about worker concerns over the pressure, Winslow said if that was the case, they should have shut it down.

"Whatever you do you don't continue forward until you understand that," said Winslow.

Inquiries continue into the cause and circumstances surrounding the explosion and what caused it and why precautions in place didn't protect it from further damage.

BP (NYSE:BP) Stock Trading, Shares Fall 18.4%

Despite the optimism over BP's (NYSE:BP) success with the Macondo well, amid the company's stock trading, share prices continues to fall. There was a rebound of BP's stock prices at the end of July into August, but investors are now cashing in their profits.

In the last 12 trading days, the company has taken a nose dive of 18.4 percent. Yesterday the shares declined $1.20 or 3.3 percent to $34.92. During the same time frame, the Amex Oil & Gas Index slid 8.7 percent, that of which BP is a component. While BP led the oil stock drop yesterday, other companies including Exxon Mobil, Chevron, Anadarko, and Conoco Philips all lost over a percent.

There is still much uncertainty with BP, and analysts are saying they are very concerned over what will come next for the company. If Federal Investigators decide the company was negligent, the company's expenses could see a considerable jump. BP has already paid out over $6 billion.

It would also bump up the Federal fine from $4.9 billion to $17.6 billion. As well as let the company's partners, Anadarko and Mitsui off the hook from their 25 percent and 10 percent stakes in the well.

Tuesday, August 24, 2010

Oil Futures Trading Plummets: Investors Ditching Oil Stocks

"Concerns over the strength of the global recovery, combined with a stronger dollar, have placed downward pressure on oil," according to analysts at Action Economics. Crude Oil Futures continue to plummet, today falling below $72 a barrel. The cause, mounting worry and concern about the global recovery pace.

In morning trading, The Dow Jones Industrial Average dropped over 100 points. While broader Indexes also saw a decline of over 1 percent. Investors are ditching oil stocks and going back into the safety of the Treasury bond market. The looming concern is that because of the slow recovery, which could push the economy back into a recession.

The Dow Jones slid 103.83 or 1 percent to 10,074.06. While The Standard and Poor 500 Index also declined to 11.60 or 1.1. percent to 1,055.76. The Nasdaq Composite Index dropped 25.52 or 1.2 percent bringing it to 1,786.79. For every one stock that rose on the New York Stock exchange, 10 fell.

Phil Flynn, PFG Best analyst said, "Just when it seems oil is going to rally on strong economic optimism, it gets crushed with the realty of gluttonous supply. When it gets ready to fall apart, like in the emergence of the latest chapter in the economic crisis, some central bank supports it with a flood of printed money."

Wrongful Death Lawsuit Against BP (NYSE:BP) For $10 Billion

A wrongful death lawsuit has been filed against BP (NYSE:BP) for the death on an infant. The Texas woman is claiming that her son was exposed to the deadly chemicals that were coming from BP's refinery in Texas. She is asking for $10 billion in compensation.

The suit was filed August 19th by The Buzbee Law firm on behalf of the Mother, Sharon Champion. The six month old boy died June 23 with symptoms having to do with pneumonia. Champion is claiming that the symptoms worsened by continuous exposure to the chemicals released by the refinery from April 6th to May 16th.

While the Mother worked, the boy was taken care of by an Aunt who lives about a mile from the refinery. She is claiming that once the release of chemicals started, the boy started having a runny nose, mucus in his eyes, and a violent cough. After taking him to three hospitals, the cause of the sickness could not be determined.

The cause of death was ruled undetermined.

BP (NYSE:BP) Legal Hearing, Criminal Lawyers Lash Out

Today marked the beginning of the fourth hearing for BP (NYSE:BP) as well as other companies holding a stake in the Macondo well. The Federal investigators and criminal lawyers are saying that BP was fully aware of the fact that there were extreme technical problems, but did not take any action leading to the April 20th explosion of the Deepwater Horizon.

There is a joint panel combining The Department of Interior and the U.S. Coast Guard. It is the responsibility of this panel to come to a conclusion as to cause of the massive oil spill. One of the main lines of questioning focused on whether there were major equipment failures on the rig, which would have played a part in the disaster.

A shot of natural gas catapulted to the surface from under the seabed, causing the rig to explode. Despite many precautions that are in place and designed to prevent this, the explosion still happened.

In a September 2009 audit done on BP, there were numerous problem found aboard the Deepwater Horizon. Panel member Jason Mathews, questioned BP's top official for maritime safety in the Gulf Neil Cramond, "With all these flaws identified within this audit, do you think it is a fundamental flaw for BP to pay [Transocean, the rigs owner] $500,000 a day knowing that there are all these problems with the rig." Cramond said he was comfortable with how the safety issues were handled.

Exxon (NYSE:XOM) Helps Hold Dow, S&P from Further Decline

Investors continue to think in terms of safety and conservative investments, and other than gold, the blue-chips like Exxon Mobil (NYSE:XOM) have drawn attention, and on Monday helped the Dow Jones Industrial Average and the S&P 500 from dropping even further.

The Dow ended the trading session down 39.21 points, or 0.4 percent, ending at 10,174.41, while the S&P 500 ended the day at 1,067.36, dropping 0.4 percent as well.

Exxon Mobil closed Monday at $59.50, gaining $0.61, or 1.04 percent. Their market cap remains over $300 billion, at $302.96 billion at the end of the session.

Even though gas prices seem poised to fall, a number of investors believe Exxon is undervalued, and will draw a lot more attention as the weakness of the economy becomes apparent to more people and institutions.

Monday, August 23, 2010

Oil Futures Trading Taking A Nose Dive: Not Expected To Rebound

There has been much concern about the slowing demand and rising inventory of crude oil. Despite this concern, crude oil futures saw a slight gain today. It's going to become more difficult for these gains to continue though, because the U.S. demand is beginning its yearly decline.

On the New York Merchantile Exchange, the crude has traded for October delivery at 24 cents, or 0.3 percent to $74.06 a barrel. There were numerous traders who had hoped to see an incline in gasoline consumption, but that did not happen. Investors fear continues to mount as it's becoming clear that the annual Fall decline will be even more pronounced.

Earlier this month, several money managers including Hedge funds, took speculative positions on the increasing oil prices which topped almost $80 a barrel. According to the Commodity Futures Trading Commission, these money managers have now changed their tune and are leading the way out of the oil market all together.

Analysts from Societe Generale wrote, "The bottom line is that even though recent actual demand figures from key countries such as the U.S. and China remain healthy, high inventories are unambiguously bearish."

BP (NYSE:BP) Has Begun Removing Drill Pipe

BP (NYSE:BP) has begun the process of removing the 3,500 feet of drilling pipe from the Gulf of Mexico. This could not start until the completion of an ambient pressure test. The test assured that no oil or gas would escape if the blowout preventer and sealing cap are removed from the top of the well.

Thad Allen, retired U.S. Coast Guard Admiral, told BP that they had to put together a plan to get out the blowout preventer. They had until Sunday to turn over the plans to the U.S. government. The question remains, how they will successfully remove the pipe while managing to keep the cap and blowout preventer in place and preventing damage.

U.S. officials said that it is necessary to replace the blowout preventer prior to the final "bottom kill" attempt because there are concerns that the sealing cap could come loose. If the cement and mud mixture is forced into the bottom of the well prematurely, it ultimately could blow the cap off all together and the trapped oil would leak into the Gulf.

Gulf Legal Claims Chief: No Sue Rule My Idea Not BP's (NYSE:BP)

Ken Feinberg, the new administrator handling legal claims from the victims of the Gulf said on Sunday that the no sue rule was his idea not BP's (NYSE:BP). Anyone receiving a settlement payout from the compensation fund, gives up their right to sue the company individually.

Feinberg was very clear that he would be far more generous in payments of funds than any court would be. "It is not in your interest to tie up you and the courts in years of uncertain protracted litigation when there is an alternative that has been created," said Feinberg. He continued, "I take the position, if I don't find you eligible no court will find you eligible."

Some of the guidelines have changed, like now the closer you are geographically to the oil spill location, the more likely you are to receive compensation. "I'm going to have to draw some tough lines," said Feinberg. He added that the most "problematic" claims will be from those in the tourism business.

Federal Investigation Hearing Today, Confronting BP (NYSE:BP) and Transocean (NYSE:RIG)

Today there is a Federal investigation hearing where Federal investigators will be questioning BP (NYSE:BP) executives and managers, as well as rig owner Transocean's (NYSE:RIG) Ltd. There is a panel set to hold the hearings, and each company will be explaining disabled safety systems as well as failures of the well design, causing the worst oil spill in U.S. history.

The combined Interior Department - U.S. Coast Guard investigation has already had three hearings. The prior hearings have taken place in Louisiana where a massive amount of testimony has already been heard. This time, the hearing moves to Houston, where there are several offices of companies involved with the disaster, including BP.

There is much significance to these hearings and the federal investigation. If criminal misconduct is found to have been a factor by any or all of the oil companies that played a part, the panel can turn over its findings to the U.S. Department of Justice. Who is currently doing their own criminal investigation.

It is possible that a fifth hearing will take place. If so, it won't be until several key pieces are recovered from the bottom of the Gulf, including the blowout preventer. The hearings are very similar to that of a trial. Exhibits are presented, witnesses testify under oath, and there is cross examinations. The finding will be reported in January.

BP (NYSE:BP) Compensation Fund Launches Today, Feinberg Ready

The new compensation or escrow fund, now officially named the Gulf Coast Claims Facility, has launched today, and parameters are in place for claimants to make a decision on whether to accept or decline what is offered them.

Fund administrator Kenneth Feinberg said, "These guidelines are the result of many town hall meetings throughout the Gulf, listening to the people affected by this disaster."

The only ones really making any significant noise about the fund going forward are trial lawyers who see their 30 percent of the money going to the claimants instead of them.

President of the American Association for Justice, Gibson Vance said on Friday, " would be detrimental to claimants if they are forced to accept final payments before the full impact of the spill is realized."

In reality, they would come out ahead. Take away the 30 percent the lawyers would get, and why would claimants extend things out to make BP pay the utmost (assuming that even happens) when they can get their payment now when they need it.

The only people it would really be detrimental to would be the lawyers who have had their greedy eyes lowered because the majority of businesses and people will realize it makes little sense to wait longer to get a higher payment that will only benefit the lawyers and not them.

There could possibly be a few cases which that would be different, but it would have to be unique for it to overcome the 30 percent fee the lawyers will enjoy.

Feinberg has already said he's going to be generous with the fund, and probably will be, so there's very little incentive for victims of the oil spill to wait for a bigger pay day that in the vast majority of cases will never come, and if it does, will make the wallets of the lawyers fatter, not theirs.

Friday, August 20, 2010

Transocean (NYSE:RIG) Noble (NYSE:NE) Diamond (NYSE:DO) ENSCO (NYSE:ESV) All Down with Broader Market

Offshore drillers Transocean LTD (NYSE:RIG), Diamond Offshore Drilling, Inc. (NYSE:DO), Noble Corporation (NYSE:NE) and ENSCO PLC (NYSE:ESV) are all down today, as the broader market takes a hit before the weekend on weak economic data.

The reality of the ongoing recession has investors selling off, and offshore drillers aren't exactly considered a positive industry at the moment because of the consequences of the BP oil spill.

As of 2:00 PM EDT, all these offshore drillers are down from over 2 percent to over 3 percent.

Of course this could be positive for investors, who have been happy with the undervaluation of the industry, which gives them numerous buying opportunities in the sector.

FL. Asking BP (NYSE:BP) Oil For Another $1 Billion

Florida is currently figuring out the exact amount of damages caused by BP's (NYSE:BP) oil spill. In the mean time, they want an "interim" payment from the company in the amount of $1 billion. The reasoning being to help offset a looming budget deficit for the state.

Some of the losses being claimed are tax revenues, oil cleanup, among other damages. Governor Charlie Christ, Florida's governor, has already secured $32 million for the state since April 20th. The money was used for advertising through various media outlets, including TV and Internet to promote tourism and the safety of their beaches.

"Florida's damages as a state could easily be in the billions of dollars. We just don't know and its going to be years before we know the long term impact from the spill. But in the meantime we'd like reparations to get relief, so we don't have budget shortfalls directly from BP's wrong doing," said Tampa lawyer C. Steve Yerrid.

Barclays (NYSE:BCS) Lowers EPS Estimate on Transocean (NYSE:RIG)

Transocean (NYSE:RIG) had its earnings per share estimate lowered by Barclays (NYSE:BCS) through 2011.

Barclays cited the declining rig utilization rates as the reason behind lowering the estimates for Transocean.

Even so, they did maintain their "Overweight" rating on the stock, along with their previous price target of $70 a share.

Transocean dropped on the lowered estimate Thursday, closing at $52.31, a loss of $1.77, or 3.27 percent.

BP (NYSE:BP) Fuel Leaking, Could Last Days - Weeks

In the Northwest Indiana city Hammond, there is a break in a BP (NYSE:BP) pipeline that has already leaked a minimum of 1,700 gallons of petroleum into the sewers. Officials are saying it could take days or even weeks to find the source and repair it.

The first signs showed up over the weekend when area residents noticed a smell of fumes. As of yet, there are not any signs that any has reached the waterways. It's to soon to know the full extent of soil and groundwater pollution.

Sam Borris, the on sight Environmental Protection Agency coordinator said, it's to early to determine the total amount that has leaked. "We can't put a number on it, but its not a super large spill. It seems to be rather manageable and contained currently," said Borris.

Thursday, August 19, 2010

Scientist: BP (NYSE:BP) Oil Report Misleading and Incomplete

Professor Ian MacDonald, a nationally renowned Scientist at Florida State said, the governments report on where the BP (NYSE:BP) oil has gone is misleading and incomplete. He is extremely disappointed because the report doesn't give any details on the process scientists used to compile data and came to their conclusions.

MacDonald feels the report is public relations, having nothing to do with actual science. The total amount of oil that was deposited into the Gulf is 4.9 million barrels. According to the governments estimates, 25 percent of the oil was skimmed, burned, or recovered. An additional 25 percent dissolved or evaporated, while 24 percent was dispersed through chemicals or naturally. That leaves only 26 percent remaining in the environment.

"That residual oil at the 26 percent level represents five Exxon Valdez quantities of oil released into the Gulf of Mexico, still there these many months later and likely to stay there for years to come," said MacDonald. He does believe that the 26 percent is an extremely low estimate, but even that number is staggering.

Oil Futures Trading Plummets: BP (NYSE:BP)

After watching the oil futures trading market rise over the last few weeks, it has once again plummeted as BP (NYSE:BP) is still uncertain on their final bottom kill attempt. This once again leads to much uncertainty for oil futures.

Oil futures traded at their lowest in a month. The primary concern is that the recovery isn't durable enough to bring down the excessive fuel inventories in the U.S. Yesterday in New York, oil futures dropped 35 cents or 0.5 percent to $75.42, this is the lowest since August 16th.

Crude oil for September delivery declined 29 cents or 0.9 percent to $75.13 a barrel.

The crude oil stockpiles lost 818,000 barrels to 354.2 million barrels, according to the Energy Department. A Bloomsberg News Survey showed it was expected to lose almost 1 million barrels.

Hussein Allidina, head of commodities research at Morgan Stanley said, that the economic growth in China as well as other emerging markets will push crude up to over $100 a barrel by next year.

ExxonMobil (NYSE:XOM) Loses Out on Ghana's Jubilee Field

The attempt by Kosmos to sell its stake in Ghana's Jubilee oil field to energy giant ExxonMobil (NYSE:XOM) has been droped, as the government of Ghana continued to oppose the deal in order to allow state-run Ghana National Petroleum Corporation the first chance at acquiring it.

Ghana officials said in a statement, "Kosmos Energy announces that the agreement with ExxonMobil related to the acquisition of our Ghana business has been terminated."

The state-operated company said the deal with Exxon broke the laws of the country, leading to the abandonment of the deal.

Concerns the government of Ghana was interfering in the market were pushed aside by President John Atta-Mills, who said the priority was to be sure residents of Ghana received the benefits of the oil field.

He evidently doesn't realize his very statement confirms the government interfered in the private sector, and could and should be a warning to those looking to do business in the West African nation.

BP (NYSE:BP) Oil Orders A New Blowout Preventer

BP (NYSE:BP) oil is bringing in a new blowout preventer for the well. The company is waiting to hear from U.S. officials for instructions on how to proceed. Thad Allen, National Incident Commander is the one who ordered the new piece.

U.S. officials put a halt to the bottom kill procedure. The primary concern is that the 1,000 barrels of oil currently trapped in the well could leak. The well was finally sealed July 15th, but not before spewing 4.9 million barrels of crude oil into the Gulf region.

Meanwhile, tests and talks continue between the Obama administration and BP. They have not yet decided how to move forward with the completion of the final 50 feet of the relief well. Allen said that the new blowout preventer will be replacing existing equipment. Although it's unclear whether it will be before or after the bottom kill.

Transocean's (NYSE:RIG) Rating Cut to "Baa3" by Moody's (NYSE:MCO)

Moody's (NYSE:MCO) cut the senior unsecured rating of Transocean (NYSE:RIG) from Baa2 to Baa3.

Moody's vice president Ken Austin, said in a statement, "The downgrade to Baa3 reflects Moody's view that Transocean potentially faces significant liability exposure due to its involvement in the blowout and subsequent oil spill from the Macondo well and a concern as to whether it will be fully protected under its indemnification from BP."

The short-term rating of the company was also downgraded from "Prime-2" to "Prime-3."

As of June 30, Transocean had close to $2.88 billion in cash on hand, and Moody's said with that, they could handle up to $6 billion in obligations if they had to.

If the obligations of Transocean exceed $6 billion, they would have to take on new debt to meet them, and that would hurt the company in relationship to retaining its investment-grade rating.

Canada Says "Yes" to Offshore Drilling for Chevron (NYSE:CVX), Others

A Canadian Senate committee wisely said there is no reason not to allow oil companies like Chevron (NYSE:CVX) to continue to drill for crude and gas off the coasts of Canada, contrary to the misguided oil moratorium implemented by the Obama administration.

According to a report from the Senate committee on energy, the environment and natural resources, after listening to 26 witnesses, "No evidence was adduced to justify any such ban or suspension and the committee is recommending that the said Chevron operation continue as planned, under close scrutiny and supervision by the regulators."

There had been a few calls to impose an Obama-like moratorium in Canadian waters, but ignoring the hysteria generated from the mainstream press, the committee, as they said, found no reason not to continue with deep offshore drilling.

Committee chair David Angus said the senators felt the safety precautions now in place should be more than enough to prevent a similar accident like the one in the Gulf of Mexico by BP (NYSE:BP) from happening in Canadian waters.

After BP (NYSE:BP) Oil Spill Almost 50 Percent of Americans Want Offshore Drilling to Continue

A recent AP poll shows almost 50 percent of Americans want drilling to continue on its coastal waters, with only 36 percent opposing it. The other 26 percent didn't even have an opinion on the matter.

When you think of the hype and fear-mongering espoused by the mainstream media, it's incredible that 64 percent of Americans think it's either a good idea to drill for oil off our coasts, or don't care one way or the other.

The actual percentage supporting offshore drilling was 48 percent.

I wouldn't doubt if a poll two or three weeks from now, after the permanent sealing of the oil well, show those numbers increasing by as high as 10 percent more.

While some progressives mocked the "Drill, Baby Drill" mantra of some people during the oil spill, that's essentially what Americans are telling its leaders and businesses it wants to see.

The strength of that conviction is shown in the numbers of the polls above, only a very short time after the type of media coverage the oil spill received. It's an amazing story to be sure.

Wednesday, August 18, 2010

Marathon (NYSE:MRO) Rating Maintained by Fitch Ratings

Marathon (NYSE:MRO) had its long-term Issuer Default Rating maintained and affirmed by Fitch Ratings, keeping it at 'BBB+' and its short-term IDR and commercial paper were kept at "F2".

Here are the data on Fitch's Marathon ratings: - IDR 'BBB+'; - Senior unsecured credit facility 'BBB+'; - Senior unsecured notes 'BBB+'; - Industrial revenue bonds 'BBB+'; - Commercial paper 'F2'; - Short-term IDR 'F2'.

In a press release, Fitch said, "Approximately $7.9 billion in debt is affected by this ratings action. Marathon's ratings are supported by the company's high liquids exposure in the upstream (>60%); strong downstream presence in the Midwest including a high quality portfolio of midstream transportation and storage assets; and adequate near-term liquidity, generated in part by the completion of its asset sale program, including its 20% stake in block 32 Angola in the first quarter. Key credit concerns center on the potential for high future capex to jump start the growth of the upstream, especially following recent asset sales; the risk of M&A or divestments to change the asset footprint of the company; and the potential impacts of a longer-term moratorium in the deepwater Gulf of Mexico, where Marathon has a modest but growing presence."

Fitch added that under their current commodity price assumptions, Marathon should have a "modestly free cash flow negative in 2010."

Any shortfalls in near term funding should be able to be handled by current cash balances, as Fitch doesn't believe Marathon will increase their debt levels in any significant manner.

Oil Prices Drop as Crude Inventory Soars

The release of a report from the American Petroleum Institute on late Tuesday revealed a strong increase in crude inventories in the U.S., rising by 5.87 million barrels last week.

The market had been operating under the assumption there would be a decline in oil inventory.

Concerns over demand from consumers and others continues to weigh on the oil sector, as economic conditions continue to be weak and consumers remain in an austerity mode.

The API added that distillates and gasoline inventories also increased in the same period.

"The API numbers were bearish, showing inventory builds in both refined products and in crude oil stocks, and showing weaker demand," said Cameron Hanover. "The big question for Wednesday is whether the DOE report will in any way mirror the API numbers."

That report for the Energy Information Administration will be released later today revealing data concerning the weekly supply.

Texas Bills BP (NYSE:BP) And They Paid In Full

Instead of hearing whining and complaining from states who feel they haven't been adequately compensated by BP (NYSE:BP), Texas billed the company and got paid in full. Something to note also, the bill wasn't excessive and lacked the greed that some of the other states seem to have with the astronomical amounts being asked for.

The bill was for $174,295, according to Jim Suydam, Texas General Land Office spokesman. The charges include personnel and vehicle expenses related to the oil spill. A check was received Monday by the agency. The amount included the amount of $77,500 which was the amount used for fire boom that had been used during the initial oil spill cleanup.

Testing in July proved tar bars that were found on McFadden Beach were from BP's oil spill. Suydam stated that Texas will usually bill a party if scientifically identified. While expenses from an unknown source are covered by a tax in a fund on imported oil barrels.

Anadarko (NYSE:APC) Finds Oil Off Shores of Mozambique

Anadarko Petroleum Corp. (NYSE:APC) announced it has made its first discovery of oil off the coast of Mozambique at its Rovuma Basin. The oil company has already discovered gas in Rovuma Basin.

Along with the crude oil there was also natural gas found, with approximately 125 feet of sand drenched with the fuels.

Anadarko spokesman John Christiansen, said it's unlikely the find will be able to be developed commercially, as it seems to have low porosity and permeability.

What's more important is it can be used as a guide for further, more successful exploration of the area, said Christiansen.

The well was found in about 3,418 feet of water and was drilled to a depth of 17,400 feet.

BP (NYSE:BP) No Longer Accepting Negligence Claims

Jim Hood, Mississippi's Attorney General said that he has yet to decide either way if he will file a state lawsuit against BP (NYSE:BP), because of the damage they have suffered from the oil spill. Hood said, "We're in no hurry to file any litigation."

He said that he is taking the time to fully review potential claims. He is looking for damages caused by the spill. As well as the chemical dispersant used and it's possible long term effects. BP's statics show that Mississippi has filed a total of 9,600 "actionable" legal claims. Only 6,050 of these claims are still being reviewed, that's 63 percent.

On Wednesday August 23rd, BP will no longer be accepting new negligence claims. Kennith Feinberg, the administrator appointed by the government will be taking over and handling all legal claims from that point on.

While BP says they have received a total of 24,493 claims from Mississippi and paid out close to $29.5 million to the state. Hood said that according to the company's statistics, of the 1,062 from rental property owners, a total of 363 were paid. While 213 claims were made by restaurant owners and only 53 were paid out, and 30 of 695 claims were filled for boats.

Tuesday, August 17, 2010

Oppenheimer Reiterates Transocean's (NYSE:RIG) "Neutral" Rating

Saying they like some of their competitors better, as they have upside potential without the risk related to the explosion on the Deepwater Horizon oil rig which resulted in the BP (NYSE:BP) oil spill, Oppenheimer said they're maintaining their "Neutral" rating on Transocean (NYSE:RIG).

Oppenheimer analysts said, Though the stock has sold off 40 percent since the Deepwater Horizon explosion, we believe there remain better opportunities elsewhere in the offshore drilling space."

Analysts at Oppenheimer also cited the rejection of an application to register it first of four proposed dividend payments by the Commercial Register of canton of Zug in Switzerland as another concern, although Transocean has said they'll appeal the decision.

John Paulson Acquires 9.2 Million Exxon (NYSE:XOM) Shares in 2nd Quarter

John Paulson, who runs the Paulson & Co hedge fund, acquired 9.2 million shares of Exxon Mobil (NYSE:XOM) in the 2nd quarter, a new position for the fund.

After being extremely bullish for some time concerning the U.S. economy, Paulson told his investors at the end of the latest quarter the he is modestly less bullish than he has been in the recent past. Still, he believes it's going to rebound.

But continuing to hold strong positions in gold miners, and now investing big in Exxon Mobil, confirms he is definitely not as positive as he has been, and in fact could be expecting a slowdown in the U.S. economy, which is in reality already here, if it ever left in the first place.

Oil investments helped a number of investors and companies do far better than they otherwise would have during the harsher parts of the recession, and buying large stakes like Paulson has in the sector, shows he has real concerns going forward.

Even so, other actions like adding to his holdings in Beazer Homes USA (NYSE:BZH) seems to be schizophrenic with the Exxon strategy, so we'll see how that plays out for him in a week home market.

Paulson also added 1 million shares of Goldman Sachs to the portfolio in the second quarter (NYSE:GS).

BP (NYSE:BP) Gives LA. $15 Million For Mental Health Counseling

BP (NYSE:BP) is giving Louisiana $15 million to the health department. It is meant to be used to provide mental services for those people effected by the worst oil spill disaster in U.S. history.

Governor Bobby Jindal's office said the money will be used to help pay for clinical visits, counseling, support services, outreach, and medications if needed. This was announced Monday at an event with the governor.

A minimum of $6.6 million will be distributed throughout Catholic Charities and other various non-governmental organizations. The rest of the money will be used to pay for state related services, and the regional human services district.

Jindal had originally asked BP for $28 million to pay for mental health services. These services would be distributed over a 13 month time frame in the regions affected by the massive oil spill.

Texas Receives Full BP (NYSE:BP) Cleanup Check

In what will probably be one of the smallest checks BP (NYSE:BP) writes for a while, at least to companies or institutions, they sent a check to Texas for $175,000 to pay for the amount the Lone Star state billed them for the cleanup of Galveston beach, which was $174,295.

Tar balls proven to be from the Macondo oil spill washed up on the Galveston beach and had to be cleaned up during the Fourth of July weekend.

The tar balls ended up on McFaddin Beach, which when tested in July were confirmed to have come from the oil well leaking into the Gulf of Mexico.

The way the state of Texas works in situations like this, is if it is proven scientifically to be associated with a specific source, they will then bill the entity for the resources used.

If they are unable to identify the source, then payment comes from a tax they impose on oil barrels imported from other countries.

Monday, August 16, 2010

Icahn Invests Big in Anadarko (NYSE: APC), NRG Energy (NYSE:NRG)

Carl Icahn is back in the energy sector game, as he acquired a large number of shares in Anadarko Petroleum Corp. (NYSE:APC) and NRG Energy (NYSE:NRG), according to a required regulatory filing.

The billionaire investor bought 2.4 million shares of NRG Energy, and 2 million shares of Anadarko Petroleum last quarter.

Since last year in the same quarter, which Icahn had held no stake in energy companies at the time, has added over $900 million shares in several energy firms since then.

This isn't the first time Icahn has shown an interest in Anadarko, as in 2007 and 2008 he acquired a large stake in the company, which generated rumors he was going to shake things up there, as he has at other companies he's invested in in the past.

Anadarko owns a 25 percent stake in the same oil well which BP (NYSE:BP) had battle to contain and has billions in liabilities toward.

LA. Shrimpers Begin Harvesting, BP (NYSE:BP) Oil Still A Concern

Shrimpers have returned to Louisiana to begin their harvesting season, but there are still concerns about the BP (NYSE:BP) oil that may have effected the shrimp. They are not for sure the price they will get if consumers are concerned about contamination, among other possible effects.

The massive oil spill has effected fishing as a whole in a state that ranks first for its shrimp, oysters, blue crab, and craw fish. It's a $318 million industry in Louisiana annually. Fisherman have already seen the prices crash in the Summer by scared consumers who stopped purchasing their products.

The biggest fear is that fisherman may try and sell oily seafood. A shrimper from Buras, Dewayne Bayham said, "If you see oil shrimp you got to throw them back over. Go somewhere else. It's all you can do, and you hope everyone else does the same."

On Friday, several fisherman did a test run around Grand Isle and Barataria Bay. Several areas were tralled and than the nets were pulled up revealing shrimp, jellyfish, mud, and driftwood. None of which contained any smell of oil. To reopen harvesting, the Food and Drug Administration has set levels which have to test below 12 various potential cancer causing substances.

BP (NYSE:BP) Has Already Paid Alabama $240 Million

While BP (NYSE:BP) does not normally comment on individual legal claims against them. The company wanted to make sure that the public knows how much money they have already paid out to Alabama for oil spill recovery costs.

The company says they have already paid out $240 million to mitigate the impact in Alabama. The amount does not include costs directly related to the spill, such as the Unified command response, skimmers, boom, and removal operations.

BP spokeswoman, Dawn Patience stated that the amount does include $87 million that was paid to out of work fisherman to serve in spill response rolls. Another $81 million has went towards claims already paid out. While $50 million went to the state and $22 million to tourist grants.

Patience said that the company recently sent out almost $8,000 letters to people who had filed claims with the company but remained outstanding, most had no documentation. The recipients of the letters were invited to workshops held last week, only about 300 people attended.

BP (NYSE:BP) Ordered by Officials To Finish Relief Well

There has been much speculation, concern, and curiosity as to whether BP (NYSE:BP) is going to finish their relief well. Now it seems they don't have a choice, U.S. Officials have demanded the company finish it.

The reasoning of this order, was the failure of pressure testing that was done on the well. The tests failed to prove that there is no risk of oil leaking in the future, according to BP's Thad Allen, National Incident Commander. What is being determined now is how to proceed. The original plan, to pump cement and mud into the bottom of the well is now under scrutiny and may be abandoned all together.

The concern is that if the cement/mud mixture is injected into the bottom, there is a substantial risk that it could cause the seal to break and force oil out of the top. "How thick the cement barrier is between the annulus and the reservoir, we just don't know." said Allen "It might be very thin, and we go and put pressure on that and we have a problem."

The problem is a result of Allen's decision for BP to plug the well with cement from the top. According to some petroleum engineers, the better way would have been to leave the mud in place on top of the well and pump the cement in from the bottom. Rather then follow the mud with the cement on top like they did.

A retired petroleum engineer, Les Ply said "It would have been easier and safer to kill the well with the relief well. When it is cemented from the bottom, you can be assured the well is dead."

Friday, August 13, 2010

Anadarko (NYSE:APC) Relinquishes 61 Alaskan Leases

Anadarko Petroleum Corporation (NYSE:APC) has relinquished 61 Alaskan leases, which together add up to 296,375 acres.

The reason Anadarko let them go is it was improbable they would be able to begin exploration on the land before the leases ran out.

Even though the region was thought to have potential for natural gas, Anadarko had already drilled four exploration wells in the Gubik region, which is approximately 60 miles north of the land they relinquished.

The Gubic area has proven gas reserves, and so is the primary focus of Anadarko in that part of the state.

The Gubic region also has much better terrain to work with, and as mentioned, more proven possibility concerning gas.

Leases from the U.S. Bureau of Land Management, which is located in the National Petroleum Reserve-Alaska, have been retained by the company.

Alabama Lawyer Files Lawsuits Against BP (NYSE:BP) and Transocean (NYSE:RIG)

An Alabama lawyer has filed federal civil lawsuits against Transocean (NYSE:RIG) and BP (NYSE:BP). State Attorney, General Troy King said his clients are claiming safety oversights, which caused the disastrous oil spill in the Gulf of Mexico.

In the suit, the companies are being accused of violations of the Federal Oil Pollution Act and negligence. Among other allegations, although specific damages are not being specified.

"BP is now on notice. Alabama intents to hold you good to your word and to make you put our state back the way you found it," said King.

When asked for comment, a BP spokesman said they are preparing a statement which will be announced to the public. They will answer questions and respond to the allegations at that time.

As for Transocean's comment on the pending lawsuit, their spokesman Guy Cantwell said they have not seen the suits, therefore cannot comment at this time.

Chevron (NYSE:CVX), Conoco (NYSE:COP), Others Vying for Caspian Exploration Rights

ConocoPhillips (NYSE:COP), Chevron Corp. (NYSE:CVX), TX Oil Limited and Mubadala Development Co. are all in the running to acquire rights to explore the Caspian Sea blocks of Turkmenistan.

TX Oil Limited is a new company created this year to target Turkmenistan for development opportunities. It is chaired by the son of former President George H.W. Bush and brother former President George W. Bush, Neil Bush.

If I was a betting man, I would guess that company has an inside edge on bidding, as George H.W. Bush sent a letter with Neil on a trip in the early part of 2010 to communicate with the president of Turkmenistan, and made a personal visit in June. according to the country's website

There aren't many proven reserves in the offshore blocks, so this is probably more of a strategic move to gain assess to onshore exploration opportunities, where natural gas is in abundance, with Turkmenistan reportedly holding the fourth largest reserves in the world.

The government of Turkmenistan will make the final decision on who gets the two blocks being offered.

OSHA Compliance: BP (NYSE:BP) Refused, Now Paying $500 Million

BP (NYSE:BP) has agreed to pay $50.6 million for its 2005 Texas Oil city refinery explosion that killed 15 workers. This record payment is because of the company's failure to correct hazards.

There is another $30 million that The Occupational Safety and Health Administration is still seeking to collect from BP. The amount is for other penalties that the company is contesting. This is the largest penalty ever issued by OSHA.

Hilda Solis, Labor Secretary said, "The size of the penalty rightly reflects BP's disregard for workplace safety and shows that we will enforce the law so workers can return home safe at the end of their day." While Scott Dean, BP's spokesman adamantly denies that the company disregards safety in work conditions.

Between now and 2016, BP has agreed to invest $500 million in to upgrade safety conditions. Prior to this agreement, BP has contested the entire amount and only wanted to pay $50 million. Despite the hundreds of violations they were supposed to correct but didn't. OSHA said they gave the company ample time to complete the safety violations, but BP did not comply.

Goldman (NYSE:GS) Maintains "Neutral" Rating on Anadarko (NYSE:APC)

Citing less political risk now that the Macondo oil well has been plugged by BP (NYSE:BP), Goldman Sachs (NYSE:GS) analyst said they're maintaining their "Neutral" rating on Anadarko Petroleum Corp. (NYSE:APC).

Goldman analysts said, "We remain Neutral rated as we see balanced risk/reward after recent outperformance, reflecting in part apparent more benign Gulf of Mexico political risk and progress sealing the Macondo well."

Anadarko Petroleum owns a 25 percent stake in the oil well in the Gulf that had been spilling oil into the ocean, which is what Goldman was referring to when talking about less political risk.

BP owns 65 percent of the well, and MOEX, 70 percent owned by Mitsui (Nasdaq:MITSY), owns the other 10 percent.

Lukoil Receives Financing to Acquire Conoco (NYSE:COP) Shares in Company

The recent announcement that Conoco (NYSE:COP) would be selling 7.6 percent stake in Lukoil back to the company is a step closer to reality, as Lukoil secured $1.5 billion in financing from six banks.

Lukoil agreed with ConocoPhillips to buyback the 7.6 percent stake they held for $3.4 billion, and included in the terms of the deal are a 60-day option to acquire more stock in the company held by Conoco.

Unnamed people close to the deal said the banks involved in the financing are Citigroup Inc. (NYSE:C), Bank of Tokyo-Mitsubishi UFJ Ltd., ING Groep NV, Natixis, Royal Bank of Scotland Group Plc and WestLB AG.

The known terms of the loan are its a one-year deal

Chevron (NYSE:CVX) Discovers New Natural Gas Field off Australian Coast

Chevron Corp. (NYSE:CVX) said Thursday they've discovered a new field of natural gas off the coast of Western Australia.

This region has become increasingly important, as several gas fields have been discovered in the region lately.

There are a number of projects Chevron has going in the area already, and according to former CEO David O'Reilly, over the next 10 years it could generate as much profit for Chevron as operations in the U.S. do.

One thing that would have to happen for that to be the case will be an increase in the price of natural gas, which is being discovered in such large quantities as to ensure low prices as supply far exceeds demand at this time, and should for years to come.

This is the second discovery of natural gas in the Exmouth Plateau by Chevron, who also found another gas field last year in the same area.

Long term, natural gas has tremendous potential, but in the short term the low prices are an impediment to companies, who are allocating resources to oil in order to generate stronger earnings.

Did BP (NYSE:BP) Kill Well with 'Top Kill' on Purpose?

Some may wonder why it matters if BP (NYSE:BP) attempted to permanently kill the oil well on purpose with the 'top kill.' Technically it doesn't matter, as the goal is to permanently plug the well, not the methodology used.

But it does matter from the point of view of the purpose in doing it, as it could reveal there were intentions from the beginning by the Obama administration and BP to have an out if they want to extract oil from the well at a future date, or sell the oil assets to another company.

If the well were to be plugged with the top kill, and there was no need to use the relief well to do a bottom kill, there would be a perfect situation for BP or a company coming in to use the relief well for extracting oil and gas still in the well.

For about a week BP and the government have given indications permanently plugging the well may not be the way to go.

Pressure tests will be enacted to determine if the cement leaked into the annulus, which is the goal of the bottom kill, and the definition of permanently plugging it.

If that indeed did happen, or is even being tested as to possibly happened, it surely was planned that way for the purposes mentioned above.

Why would they do that? To lower public resistance to the well being accessed again for oil and gas; whether by BP or another corporation.

If cement "accidentally" seeped into the well and performed the bottom kill results, then there is a convenient relief well in place to extract the oil and gas.

While this is not a surety as to whether it'll work or not, I do think it was attempted on purpose in an effort to give it a realistic chance of working.

There can be no doubt the Obama administration and BP are attempting to salvage the oil and gas under the Gulf floor. They're just attempting to do it in a way that's palatable to the public.

Thursday, August 12, 2010

Shell (NYSE:RDS-A), BP (NYSE:BP), Exxon (NYSE:XOM), Citgo, Marathon (NYSE:MRO) Have Class Action Against Them Denied

Shell (NYSE:RDS-A), BP North America (NYSE:BP), Exxon Mobil (NYSE:XOM), Citgo, Marathon Oil (NYSE:MRO) all had a class action against denied over gasoline prices.

The class action against the oil companies was already denied, but it was appealed and sent to the Seventh Circuit appeals judges, who upheld the ruling.

Claims of the suit were the companies had worked together since 2000 to increase prices and deceive consumers.

Circuit Judge William Bauer wrote the complaint "... does not contend that the defendants' conduct was deceptive, does not dispute that the price he paid was clearly advertised at the gasoline station, and does not argue that he had to purchase the defendants' branded gasoline."

"But absent proof that but for the defendants' conduct, he would not have purchased the defendants' gasoline, he is not entitled to relief," Bauer added.

The person filing the suit even admitted he had went to other gas outlets to buy gas that weren't among the defendants in the case, undermining the idea he had no opportunity to buy gas for less price elsewhere.

Exxon Mobil (NYSE:XOM) Launching Production at Odoptu in September

Exxon Mobil (NYSE:XOM) announced production will start at their Sakhalin-1 Odoptu field beginning in September.

Exxon is the operator of the partnership which includes OAO Rosneft, the biggest oil producer in Russia, ONGC Videsh Ltd., both of which own 20 percent. Japan’s Sakhalin Oil & Gas Development Co. and Exxon, each hold a 30 percent stake in the project.

A report from the International Energy Agency said Odoptu will add 30,000 barrels a day of oil to Russia's balance for the month.

Exxon is reportedly doing maintenance at the Chayvo field, which is already producing oil.

Wednesday, August 11, 2010

Silver Wheaton's (NYSE:SLW) Record Earnings Still Miss Expectations

Silver Wheaton Corp. (NYSE:SLW) (TSE:SLW) had record earnings for the second quarter, but it wasn't enough to meet analysts' expectations.

Earnings were led by an increase in production and higher silver prices, which generated $53.3 million, or 15 cents a share. That was in contrast to last year in the same quarter where they earning $18.4 million, or 7 cents a share.

Analysts had been looking for earnings of 16 cents a share for the quarter.

Revenue more than doubled from $41.4 million last year in the same period to $95.0 million this year. Analysts had expected $94.28 million in revenue.

Silver Wheaton chief executive officer Peter Barnes, said, "In the face of continued global economic uncertainty, the price of silver performed very well in the quarter, leading to record cash operating margins of US$14.45 per ounce, and clearly demonstrating the advantages of Silver Wheaton's business model of low fixed operating costs."

Concerning guidance, Barnes reiterated, "With Goldcorp's Penasquito mine in Mexico, the first of our cornerstone assets, continuing to ramp up silver production ahead of schedule, we look forward to an even stronger second half to the year and maintain our annual attributable silver equivalent production guidance of 23.5 million ounces."

Silver Wheaton closed in New York at $19.20, losing $0.67, or 3.37 percent.

Great Basin Gold (Amex:GBG) Narrows Earnings Loss, Burnstone Mine Close to Generating Revenue

Great Basin Gold (TSE:GBG) (Amex:GBG) reported earnings today, and while still suffering a earnings loss, was able to improve to a C$5 million loss in the second quarter, compared with a C$14 million loss in the same quarter last year.

Revenue also increased, rising to C$38 million, up from C$22 million in the second quarter of 2009.

After a long period of time, the permanent grid power connection to its Burnstone mine in South Africa is now in place, and according to chief executive officer Ferdi Dippenaar, should allow the mine to start generating revenue for the company in the next couple of months.

“It is clear that the situation has already improved on site...gone are the days of power outages and the subsequent impact on production and infrastructure development,” said Dippenaar to analysts.

Production estimates at the Burnstone mine are for 254,000 ounces of gold to be produced annually as a low cash cost of $319 an ounce.

Great Basin is still in the middle of its regulatory process at its Hollister gold mine in Nevada for approval to launch commercial operations.

IAMGOLD (NYSE:IAG) Earnings Fall in Second Quarter

IAMGOLD (NYSE:IAG) has followed the path of a number of gold miners this quarter, falling in earnings even though gold prices had soared during the quarter, pointing to higher costs.

Net earnings came in at $35.7 million, or $0.10 a share, down from the same quarter last year, when they earned $44.1 million, or $0.12 a share.

Adjusted net earnings reached $39.1 million, or $0.11 a share, a gain of 24 percent over last year when they had adjusted net earnings of $31.5 million, or $0.09 a share.

Most of the drop in earnings came from closing its Doyon mine in December 2009. Other major factors were the lower quality of ore grade at Yatela, Rosebel, Sadiola and Mupane, which lowered production but raised costs.

Gold production for the quarter was 190,000 attributable ounces at an average cash cost of $623 an ounce. That was down 24 percent from last year.

Guidance for gold production was raised from 940,000 to 1,000,000 ounces at a cash cost between $490 and $510 an ounce to a range from 980,000 and 1,010,000 ounces at a cash cost between $530 and $550 an ounce.

Niobium production estimates were also increased to a range of 4.5 million to 4.7 million kilograms.

Revenue for the quarter dropped to $214 million, a 5 percent decline from last year as gold sales fell.

IAMGOLD closed at $17.32 in New York, dropping $0.57, or 3.19 percent.

Anglo American (LON:AAL), Kinross Gold (NYSE:KGC) and AngloGold Ashanti (NYSE:AU) All Drop As Gold Prices Fall

Gold miners have been taking a hit today, especially right before noon, when traders tend to make their moves, and gold prices along with it. Anglo American (LON:AAL) (AAUKF:PK), Kinross Gold Corp (TSE:K) (NYSE:KGC) and AngloGold Ashanti (NYSE:AU) all dropped in unison with gold prices during that time.

Anglo American was down to 2,358.00 in London, shedding $115.50, or 4.67 percent, as of 11:35 AM EDT. In New York there were no trades, and it stands at $38.90 in the pink sheets.

AngloGold Ashanti fell to $42.61, a loss of $0.53, or 1.23 percent, as of
12:44 PM EDT.

Kinross Gold (NYSE:KGC) lost $0.51 to drop to $15.16, a loss of 3.25 percent at 12:46 PM EDT.

After a quick start today, spot gold prices started to fall a little before 11:00 AM, an are now at $1,193.50, a loss of $10.50.

BP (NYSE:BP): Lawsuit Settlements, Judge Panel Says No Way

In New Orleans federal court, BP (NYSE:BP) is facing hundreds of lawsuits. BP was wanting to consolidate all of the lawsuits. A panel of judges said no, this is a victory for the plaintiffs who are seeking billions in damages. There will be no lawsuit settlements.

The judge presiding over these cases is U.S. District Judge Carl Barbier. The cases include wrongful death claims, submitted by the families of the deceased workers who lost their lives caused by the explosion of the Deepwater Horizon rig. Other claims are those submitted by BP investors, Gulf Coast businesses and for environmental damage.

During the decision the panel said, "Without discounting the spills effects on other states, if there is a geographic and physiological 'center of gravity' in this docket, then the Eastern District of Louisiana is closest to it."

Anadarko (NYSE:APC) in $2 Billion Bond Issue

Anadarko Petroleum (NYSE:APC), who is a 25 percent partner in the Macondo oil well with BP (NYSE:BP), issued $2 billion in bonds on Monday. Arranging the sell were JPMorgan (NYSE:JPM) and Barclays Capital (NYSE:BCS).

Anadarko said the capital will be used to refinance existing bank debt, which is at about $1.3 billion.

The energy company will also drop a prior commitment to a $1.5 billion senior secured term loan facility.

The bonds will mature in seven years, with a yield of 6.375 percent, down from the asking price of $6.5 percent.

Moody's (NYSE:MCO) maintains a “Ba1" rating on Anadarko debt, which is considered to be speculative.

BP (NYSE:BP): "To Kill" or Not "To Kill"

With BP (NYSE:BP) being so close to reaching the relief well, they now have to stop drilling due to approaching storms. Thad Allen, retired Coast Guard Adm. said they are expecting a delay of two or three days in completing the relief well.

There has been no oil spilled since the placement of the temporary cap was placed on top of the well in mid July. The crews will put into place a temporary plug to protect what they've already drilled. They are only lacking another 30 feet until they'll be done. Workers won't be going back to land.

Allen has been insisting for days that BP go ahead and start the bottom kill. On Tuesday he changed his tune, and stated that more testing needed to be completed before a decision could be made.

Allen said, "I'm not sure we know that. I don't want to prejudge whether we are going to do it or not going to do it. It will be conditioned based." He did state that there's a "very low probability"
of the bottom kill not being done. "We will let everyone know" if it changes.

ConocoPhillips (NYSE:COP), PetroChina (NYSE:PTR) Negotiating on Shale Gas Projects

ConocoPhillips (NYSE:COP) and PetroChina (NYSE:PTR) have been quietly negotiating on a joint venture in China which would target shale gas projects in the middle kingdom.

Operations would initially be pursued in the Sichuan province, where Conoco would explore an approximate 3,000 kilometer area of Sichuan.

This would a first for China, which has no proof of having had began shale gas production in the country.

As in many cases, the benefit to China would be the expertise of a western company like Conoco, which would have far more advanced technology to perform exploration and testing at a higher level.

China is desperate for natural resources, and a competing world makes their own land the best place to get it if the resources are there.

With the discovery of enormous shale natural gas reserves in America, China is hoping their country may have significant reserves as well, which could last them for many decades, and more.

Tuesday, August 10, 2010

Ivanhoe Australia Raising $211 Million for Osborne, Merlin Acquisitions

Ivanhoe Australia, whose biggest stakeholder is Ivanhoe Mines (NYSE:IVN), will via an institutional placement raise $211 million for acquisitions and expansion.

The particular acquisition they're looking at is the Osborne gold project, and the development side is the Merlin molybdenum project. Part of the capital will also be used to pay down some of the debt Ivanhoe Australia owes to Ivanhoe Mines.

After the completion of the deal, Ivanhoe Mine's stake in the company will decrease to 65 percent.

Chief executive Peter Reeve said, “The equity raising will facilitate Ivanhoe Australia’s development plan, including first production of molybdenum and rhenium ore from Little Wizard in 2011, and Merlin during 2012.”

Ivanhoe Australia is buying Osborne from Barrick Gold (NYSE:ABX) for close to A$18 million and the Merlin development in Queensland for A$55 million.

Current shareholders of Ivanhoe Australia will be able to acquire new shares in the company for A$2.88 via a one-for-four offer. That is a 10 percent discount from the closing price on August 9.

Jaguar Mining (NYSE:JAG) Struggles on Controlling Costs

An interesting story is emerging as gold miners release their earnings. This quarter there seems to be the haves and have nots, and the have nots, like Jaguar Mining (NYSE:JAG), who recorded a loss in the latest quarter, are going to get punished by investors because of the high expectations accompanying record high gold prices.

The thinking seems to be if a gold miner can't make it at these gold prices, when will they make it. Those who fail will have to answer that question in order to be taken seriously.

With Jaguar Mining, they lost $5.9 million in their latest quarter, after generating a profit last year in the same period, where they earned $9.7 million, or 12 cents a share.

Revenue did experience a 12.5 percent increase, coming in at $36.9 million, up from last year's $32.8 million.

Rather than being a positive though, it highlights the inability to control costs. Having 12.5 percent more revenue and far less earnings points to major problems.

The reason for the increase in operating costs was "a significant decrease in run-of-mine grades, primarily caused by abnormally high dilution," according to the company.

That just means they didn't find as much gold in the ore as they thought they would, and it cost more to extract it, and also added to decreased gold production.

Jaguar isn't the only gold miner to experience this, as Northgate Minerals (AMEX:NXG) (TSE:NGX) had a very similar experience, with increased operational costs the major factor, with lower production the result as well.

Lower grades mean lower production, which means higher costs.

Gold miners will have to work on lowering operational costs in these types of situations if they want to thrive, or even survive. Again, if a company can't succeed in record gold price environment, when will a company succeed?

The number for cost per ounce of gold soared to $746 an ounce for Jaguar, surging from $447 an ounce last year. Production consequently fell to 30,586 ounces.

As investors absorb the data and results, they're pummeling the company, which in New York has plunged to $6.26 a share, losing $1.84, or 22.72 percent, as of 3:23 PM EDT.

Northgate Minerals (AMEX:NXG) Crushed on Costs, Production

You know a gold miner is in trouble when they can't produce in the type of rising gold price environment we've been in, and that doesn't bode well for Northgate Minerals (AMEX:NXG) (TSE:NGX), which did just that in the latest quarter.

Higher gold prices couldn't overcome the production problems at two of the company's mines, or the rising costs associated with them.

Their Kemess mine in British Columbia, Canada and the Stawell mine in Australia fell in production during the quarter, causing gold sales to plummet 34 percent to 65,943 ounces.

Earnings plunged from $5.4 million, or 2 cents a share last year, to $4.3 million, or 1 cent a share in the latest quarter

Not including an unrealized gain, the company loast $7.1 million, or 2 cents a share. Last year Northgate had a profit of $10.1 million, or 4 cents a share excluding items.

Revenue in the quarter also dropped, falling to $122.7 million, a decline of 5.8 percent.

The real story for the latest quarter for Northgate was its inability to manage costs, which skyrocketed to $693 an ounce, an almost 50 percent gain over last year.

This is the primary reason why they couldn't grow in about as good as a gold price environment a gold mining company could ask for.

Gammon (NYSE:GRS) Earnings Rise on Increased Gold Prices and Production

Higher gold prices continue to be the story for most gold miners during the earnings reporting season, and Gammon Gold (NYSE:GRS) (TSE:GAM) also had earnings increases from higher gold prices, and from higher production as well.

Earnings from the quarter rose to $11.4 million, or 8 cents a share, an increase over the $3.4 million, or 3 cents a share last year in the same period.

Revenue for the quarter increased from $57 million, a gain of 32 percent. That was driven by the average price of silver and gold for the quarter.

Gold price averaged $1,201 an ounce, while silver had an average price of $18.47 an ounce.

Gold production in the quarter increased to 52,506 gold equivalent ounces, in contrast to 50,814 ounces in the same quarter last year.

The company did take a big hit from the suspension of their El Cubo mine in Mexico, taking a net loss of $180.3 million, or $1.30 a share on that.

FDA Now Saying BP's (NYSE:BP) Corexit Use Safe

The FDA has raised such a public outcry to BP's (NYSE:BP) use of the chemical Corexit. Now they've changed their tune saying there's very little contamination from the massive use of the dispersant. Something seems a little "fishy" here.

The FDA says that they have determined that Corexit has a low potential for bioconcentration in seafood species. "Although seafood is exposed to the dispersant, the inherent properties of the dispersants minimize the possibility of their being present in food. There is no information at this time to indicate that they pose a public health threat from exposure through the consumption of seafood," said Ed Markey who sits on the House Energy and Environment subcommittee.

The United States Food and Drug administration is also jumping on board saying the dispersants should not show up in seafood and effect humans. It seems hard to believe that with close to 2 million gallons of the toxic dispersant Corexit deposited into our oceans, that everybody is now taking a passive stance on the issue.

BP (NYSE:BP) Relief Well Should Impact Oil Trading

The relief well that BP (NYSE:BP) has been working towards over the last few months, is only 100 feet away from reaching their target. The completion of this process will insure no more crude oil is ever released into the ocean by the Macondo well. It should also have a big impact on oil trading.

John Wright is the man who will be guiding the drill over three miles from the surface and two miles below the sea floor. The target he will be attempting to hit is less than half the size of a dartboard. If Wright misses the target, BP's engineers will pull the drill up and pour concrete into the hole, and then try it again.

Wright has helped companies for over four decades cap wells all over the world. His track record is 40 for 40, hoping to make it 41 for 41 with his completion of the Macondo well. After watching a video from BP in June, he said he is quite confident that he can do it.

"Out of forty relief wells that I've drilled, we've never missed yet. I've got high confidence we will take care of this problem as soon as we can get there," said Wright.

BP (NYSE:BP): Escrow Solutions To Be Discussed at Meeting

Ken Feinberg, in charge of BP's (NYSE:BP) escrow fund has planned a public meeting in Pensacola, Florida to discuss escrow solutions. Many residents as well as business owners are planning on attending, with many questions on exactly how the fund will be handled. Even though it is open to the public a reservation is required.

One of the business owners planning on attending is Mike Pinzone. He says he's already lost over $250,000 from the lack of Summer business. BP has reimbursed him for only about 20 percent. If they don't get some sort of relief soon, around 60 to 70 percent of boardwalk businesses will have to shut down and won't be around next year.

"I just would like the opportunity to speak face to face with him. To get an appointment with him when he's ready, sit down, finish this thing. Stroke me a check and I'll be done. I don't want to beg for money every week, every month," said Pinzone.

This is Feinberg's second visit to Pensacola.

Monday, August 9, 2010

Ivanhoe's (NYSE:IVN) Friedland Marketing Up the Company

It's no secret Ivanhoe (NYSE:IVN) is looking for even more financing for its Oyu Tolgoi mine in Mongolia, and Ivanhoe Chairman Robert Friedland has been seen a lot in the news lately letting people know about the incredible project they have in Oyu.

He's been making some interesting comments a la Richard Branson to get the Ivanhoe brand stuck in the minds of potential investors.

Even though he was joking, and in reality probably marketing, Friedland made a comment which made the Oyu Tolgoi mine look like it was valued at trillions of dollars, rather than the approximate $16 billion it is known to be worth.

He also mentioned copper outperforming gold recently, citing the dubious claim that 20 years from now cars are going to be electric, and those cars will need copper for the batteries. That was the hook though, the reality is copper will continue to be in high demand over the next 20 years, and that will have nothing to do with electric cars.

Friedland of course knows this, but he is doing the stir the imagination thing in order to have people associate that with Ivanhoe.

But as far as copper outperforming gold, that would have be on enormous volume, as gold prices will shoot up as soon as the U.S. government or Federal Reserve start do their quantitative easing thing, or printing of money. Rumors are they're moving closer and closer to that in light of the economy stalling and elections coming soon.

Seeing that hasn't worked in the past, and we've never left the recession, unless you think the government throwing money into the economy is a real recovery.

That's why there haven't been any jobs created, the private sector is for the most part doing little or no hiring, and then we hear the news reports of the "unexpected" this and "unexpected" that, when talking about economic news that didn't meat expectations.

For Ivanhoe, once production begins at Oyu Tolgoi, you'll see their stock price shoot up even more, as much of this is in anticipation of the money generating real revenue and profits, and not just potential. They're already up over double the last twelve months, and I think Friedland is trying to create interest in order to land the needed partners to forge ahead and work the extraordinary mine.

Goldcorp (NYSE:GG) Declares Another Monthly Dividend

Goldcorp (NYSE:GG) declared its eight monthly dividend for 2010, the latest being $0.015 a share.

For the last seven years Goldcorp has paid a dividend to its shareholders.

Shareholders of record as of August 19, 2010 will qualify to receive the dividend payment on August 27, 2010.

Residents from Canada are allowed an gross-up and dividend tax credit on the dividend.

Goldcorp closed in New York today at $40.24, losing $0.24, or 0.59 percent.

Peter Schiff Says Price of Gold Unlimited

In a recent interview which focused on being in the early stages of an inflationary depression, Peter Schiff also responded to a question on how high he felt gold prices were going to go.

His take is he's shocked that it's still at only $1,200 an ounce, and sees no limit to the upside potential in the current economic climate.

Schiff said in responding to how high he felt gold would go:

"There's no limit to how high gold prices will go. They will rise many times from here --thousands and thousands of dollars per ounce higher. People will be shocked.

"It's surprising to me that gold is still as cheap as it is. I just know it's going higher, and eventually it's going to go ballistic."

Other places to look to put your money in Schiff's view are precious metals, commodities and emerging markets. He advises no one to have their money in U.S. Dollar assets like bonds and Treasuries.

Jefferies & Co. Reaffirms Barrick (NYSE:ABX) Price Target on Gold and Silver

Jefferies & Co. said today they recommend investors to add to their positions in Barrick Gold (NYSE:ABX), as they said they don't see gold and silver prices dropping anytime soon.

The price target on gold remains $1,300, while the silver prices target continues at $20 an ounce.

Jefferies said in a note to clients, "We highlight metal company participation at next week's Industrials and Aerospace & Defense Conference as we reaffirm our 2010 gold price target of $1,300 and silver price target of $20 per ounce. As the dollar-based commodities reassert traditional relative dynamics versus the US dollar, we expect prices and metal equities to trade higher heading into the fall. We would continue to add to positions in our recommended names - ABX, AEM, CDE, HL and NEM."

Barrick traded down slightly today, falling to $43.31, a loss of $0.08, or 0.18 percent as of 3:36 PM EDT.

Allied Nevada (AMEX:ANV) Net Income Reaches $20.8 Million in Second Quarter

Allied Nevada Gold (TSX:ANV) (AMEX:ANV) turned things around in the second quarter over last year, generate net income of $20.8 million, far better than the $6.9 million loss they suffered last year in the same quarter.

Production for gold and silver at their Hycroft mine soared in contrast to 2009 as well, with gold production reaching 31,400 ounces and silver growing to 62,000 ounces. Last year only 14,500 ounces were produced at the mine and 15,400 of silver.

During the quarter 29,560 ounces of gold were sold and 63,859 ounces of silver, both records for the company, at a cost of $408 an ounce gold

"I am proud to report that we have achieved a number of milestones and new operating and financial records in the first half of 2010. Hycroft is running well and we have begun the first stage of the oxide expansion ahead of schedule. Exploration drilling continues to define what management believes to be a very large system and ongoing metallurgical testing continues to provide confidence for both oxide and sulfide mineralization," said Scott Caldwell, President and CEO of Allied Nevada.

Allied said it is still on schedule to meet its guidance of gold sales of about 100,000 ounces, sold in a range of $400-$500.

BP (NYSE:BP) Getting $308 Million Government Grant Money

As unbelievable as it may sound, BP (NYSE:BP) is getting a $308 million grant from the federal government. The money is to be used to build a power plant on cotton and alfalfa fields in California's farmland. Part of the money is coming from federal programs while the other part is coming from stimulus funds.

The part coming from the stimulus funds alone is the second largest amount given to a corporation, and the largest in the country benefiting private interests. The grant was announced last year by The U.S. Department of Energy to Hydrogen Energy California, a joint partnership with BP.

Tom Frantz, a local environmental advocate said, "If you're trying to get money out of them, why are you giving them money? If I was the government right now, I would not give BP $300 million to do anything."

When questioned, BP declined comment, but CEO Tony Hayward in 2007 said during the announcement of this venture that, "projects such as these have the potential to help deliver the carbon emission reductions which companies and countries around the world are now seeking."

BP (NYSE:BP) Cement Hardens, on to "Bottom Kill"

BP (NYSE:BP) said that the sealing cement has hardened. Work crews are now preparing for the final stage of drilling a relief well, called "bottom kill." After oil was spewing into the ocean for 84 days.

The pressure tests that were done on the cement plug that was forced down the throat of the well, have shown the seal is securely in place. Which means, BP can start drilling on the last 100 feet to permanently seal the damaged well. The crews must drill very carefully and very slowly, only progressing at a rate of about 30 feet at a time.

The company is expecting to not be completed until next weekend. They will use the same process of drilling cement and mud, this time into the bottom of the well. At that time, they are confident the two relief wells will meet, thus completing the process and "killing" the well.

BP's (NYSE:BP) Financial Compliance, Will They Pay

The top energy advisor for President Obama stated that BP (NYSE:BP) will be paying a "large financial penalty" for the oil spill in the Gulf of Mexico. The question remains if the company will take on their responsibilities and show financial compliance. He would not say as to whether criminal negligence charges were going to be taken against the company.

BP is now in the process of shifting from stopping the oil leak, to cleaning the oil that has polluted beaches and restoring economic health to the region. Director of The White House Office of Energy and Climate Change Policy, Carol Browner stressed that BP is anything but off the hook for the billions of dollars of penalties they will incur.

"BP will be held absolutely accountable. There will be a large financial penalty," said Browner. There has been over 205 million gallons, or 4.9 million barrels of the toxic crude oil released into the Gulf region. While about 800,000 barrels were able to be collected, contained, and funneled to ships on the waters surface.

Saturday, August 7, 2010

India Wheat Spoils on Lack of Warehouses

Crop storage has been a problem in India for some time, and this year its hitting hard, as wheat that could have fed up to 210 million people annually is beginning to rot because of lack of warehouses to put it in.

According to estimates by the Indian government, about 17.8 million metric tons of wheat is at risk, where it is stored outdoors under tarps, while the monsoon season begins to hit.

Unfortunately, the price of food and inflation has risen in the double digits for months, and to export the wheat to generate income which could be used in helpful ways, could result in large protests, and possibly riots.

So the grain continues to mount up rather than be used for some good. The only ones being helped by it at this time is the dogs ... literally.

The other hard place the government finds itself in is it is unable to buy wheat because it would increase the growing deficit in the country, as it would have to do it at subsidized prices.

But Biraj Patnaik, a key adviser to the Supreme Court of India, said, "The government is acting like the biggest hoarder. It's unconscionable and unacceptable."

"You're going to end up losing as much money on food grains that go bad than the subsidies would incur if they distributed it to the poor," he added. "It's completely irrational and illogical not to distribute it right away.

A growing number of people are pushing for the privatization of the market in order to increase investment in the sector and drive down prices, and create a better storage and supply channel.

Weather Driving US Corn Crop Quality Down

The weather continues to be the story for crops across the world, as the U.S. continues to be hit by hot, dry weather for the last couple of weeks, raising questions as to where it'll be at harvest.

Weather patterns aren't expected to change any time soon either, as the outlook is for the same weather conditions to continue.

Quality is the highest concern, as bad weather could lower the level of starch the plants send to the kernal.

Corn futures for December delivery increased 2 cents, or 0.5 percent, to finish at $4.20 a bushel in Chicago, ending the week at a gain of 3.3 percent.

On Thursday corn reached its highest levels since June 15, 2009, going as high as $4.39 on the most-active contract.

The USDA said this week the amount of corn planted this year is lower than projected.

Friday, August 6, 2010

Are China's Corn Imports Short- or Long-Term?

For the first time in well over a decade, China has acquired large quantities of corn from U.S. farmers, importing close to 1.2 million metric tons.

Every time something like this happens, the media catches it and offer the possible narrative of a new age arriving for corn and other grain exports.

There will be only one way to find out, and that is time. China is close-mouthed about the circumstances surrounding the unusual actions they've taken, and part of that is for obvious competitive reasons, but also political ones.

Although China hasn't experienced near the extent of droughts Russia has in relationship to wheat, it has still had a number of them in the nation, which has apparently caused them to be short this year.

The other scenario is whether or not the Chinese population, which is growing wealthier, is increasing its demand for corn through its acquisition of meat.

One final element could be concern over the response of its people if they find out there is a shortage of corn. A couple of years ago riots broke out over higher food prices, and panics are easy to start if people begin to think they may not get food at all.

The official word from Beijing is the imports are based on higher domestic corn prices, adding the grain reserves in the country are enough for the people.

Gold Soars for 8th Straight Day, Payrolls Down, Recession Worries Up

News outlets reporting on the "disappointing" and "unexpected" results of the U.S. payroll data, somehow find themselves using those words every time the economic data confirms the frailty of the U.S. economy, which when you remove the government props, at best show they've only slowed down the economic crisis, and at worst, and most probable, exasperated it.

Now we're almost surely going to enter into a period of more quantitative easing, which is just another way of saying the Federal Reserve is going to resume it endless printing of money.

Peter Schiff concurs, saying in a report, “It is now widely accepted that the continued domestic weakness will cause the Fed to significantly expand stimulus efforts through so-called quantitative easing. It’s a strong signal for traders to flee the dollar.”

Now that the historical inverse relationship between gold and the U.S. dollar seems to have returned, after a period of time it moved off that to a euro/gold inverse relationship, we should see gold start to rise again as the reality of the weak American economy again sinks into the minds of investors.

Gold is already responding, as it has ended in positive territory for the eight trading day in a row, moving up to $1,205.30 for December delivery on the Comex division of the New York Mercantile Exchange. That was for the most actively traded contract.

It's incredible to hear the mainstream media outlets focus on the release of census workers, which they attempt to paint as a temporary situation. Unfortunately they, in general, weren't near as aggressive in saying that when the census workers were hired and propped up the jobs market as if was on a solid foundation months ago.

There is nothing really new in these numbers, other than confirming what any discerning person already knew, and that is the private sector hasn't been hiring, and the hiring by the government for needless jobs (even without the census workers included), have created the illusion of at least a level situation. That fallacy has been destroyed with the removal of the government props and we see the American economy naked as it actually is.

I don't believe there has ever been an economic recovery in the United States, only the selling out of the future of our children and grandchildren as the Obama administration and the Federal Reserve attempt to print and spend money in order to buy time until a real recovery begins.

Unfortunately, their Keynesian strategy is backfiring, and future generations will have to pay for the outrageous stimulus programs which have done absolutely nothing to help the economy, but rather are only extending the recession longer.

Not only that, but now an increased tax burden has been added to the problem for the American people, and that should cause an even deeper rebellion and resentment from those Americans, who are increasingly discovering what these actions are doing to their country.

As far as how this affects the relationship between gold and the euro, that has started to revert to the former relationship of moving in tandem with one another, although there is little reason for that to happen, as nothing has really happened to change the sovereign debt crisis in Europe, other than the media's decision to report the crisis is relatively over.

The market is acting like there has been a real change, so while they believe it, the euro/gold relationship looks like it'll act like it has in the past.

If and when that changes, all bets are off as to how high gold prices will go, as there is really nothing in the way any longer to keep it down.

Those with discernment understand the enormous economic challenges ahead, and will invest or hold their money accordingly. Gold will remain one of the best places for safety and returns for some time to come.

Goldman Sachs (NYSE:GS) Raises Price Target on Murphy Oil (NYSE:MUR)

Goldman Sachs (NYSE:GS) raised their price target on Murphy Oil (NYSE:MUR) from $61 to a hefty $67 a share, while maintaining their "Buy' rating on the energy company.

Murphy Oil was upgraded from "Neutral" to "Buy" on July 16.

Goldman's continued support of Murphy comes from their belief they'll become the first integrated oil business to be acknowledged for their expansion strategy in North America.

Murphy was down to $56.02 a share, a loss of $1.22, or 2.13 percent, as of 3:17 PM EDT.

10 Billion Class Action Lawsuit Against BP (NYSE:BP), Thousands Joining

There are thousands of people in Galveston, TX. who have signed up to be part of a class action lawsuit against BP (NYSE:BP). They are afraid that they have been exposed and will suffer long term effects caused by a benzene leak at a BP facility.

In papers filed in court, the lawsuit alleges the release of over 500,000 pounds of chemicals, 17,000 pounds of which was benzene. It's being said the chemicals have harmed property values in the area as well as putting the health of citizens at risk.

This incident happened April 6th, when the company was having problems with a hydrogen compressor in their Texas City plant. There was a fire which compromised the seal of the compressor which made BP have to burn off the gases. The company worked to fix the problem over the following 40 day, there was 583,000 pounds of toxic chemicals released into the air.

Seabridge Gold (AMEX:SA) to Get Huge Cash Infusion?

The recent announcement by China they're looking for strong mining and gold mining companies to invest in has brought attention to a number of mining firms, with one of them being Seabridge Gold (AMEX:SA), which is sitting on enormous reserves via their Kerr-Sulphurets-Mitchell project, with the need of an estimated $3.4 billion to develop the resource.

With their attention elsewhere, gold mining giants Barrick Gold (NYSE:ABX) and Newmont Mining (NYSE:NEM) aren't showing any love to Seabridge, opening the door for investment from elsewhere, which should definitely be China, at least in part.

China is interested in investing in larger deposits, especially gold, so that narrows the companies they would obviously target to invest in.

To show the attraction of Seabridge's KSM project, it holds an estimated 30 million ounces of gold, 133 million ounces of silver, 7 billion pounds of copper, and 210 million pounds of molybdenum. What's not to like about it?

There are few resources like that available at this stage of development in the world, so it would be assumed they're in the running for Chinese investment sometime in the near future.

Few financial outlets would be willing to take a chance on this type of project, and even fewer companies have the resources to invest in them.

Will Teck Resources (NYSE:TCK), Seabridge Gold (AMEX:SA), NovaGold (AMEX:NG) Be Beneficiaries of China's Targeting Precious Metals and Gold?

Flush with capital, China has been eyeing mining properties and companies around the world for some time to invest in preparation for meeting their needs long into the future.

They recently have increased their scrutiny and commitment, noting the lack of capital available because of weakened credit markets.

Consequently, the central bank of China has instructed their banks to offer credit to Chinese companies attempting to make acquisitions around the world, as well as directly to non-Chinese companies producing gold and silver.

This could strongly benefit companies like Teck Resources (NYSE:TCK), Seabridge Gold (AMEX:SA) and NovaGold (AMEX:NG), who are sitting on large gold deposits, as those are the types of companies China is targeting to invest in.

Some have been castigating John Paulson for his investment in NovaGold, but in light of the direction China is taking, he's probably going to get the last laugh here, although it'll take a little time for it to take hold. This assumes China investing in NovaGold in some way, but the assets of NovaGold fit into the strategy of China perfectly. So the assumption is a healthy one.

China has already invested in Teck Resources, which has joint ventures with NovaGold, and are surely eyeing ways they can increase their stake in both companies.

For Seabridge, it's their Kerr-Sulphurets-Mitchell project which would be appealing to China, or anyone else interested in the sector that has the capital to invest.

There are of course many other possibilities, but the huge resources mentioned above are surely on the radar of China, and have a high probability of receiving the attention of the middle kingdom, along with a significant investment.

New Gold (AMEX:NGD) Turns it Around in Second Quarter

New Gold (AMEX:NGD) turned things around for the second quarter of 2009, where they has a net loss of $199.3 million, or $0.77 a share. This quarter they generated net earnings of $17.4 million, or $0.04 a share.

Included in the net earnings in the latest results was a pre-tax gain of $5.5 million in relationship to foreign exchange translation.

Revenue for the quarter was $112.4 million, almost double the $59.2 million last year in the same quarter.

Increases in revenue were attributed to the rising gold sales from the Mesquite mine, along with higher gold prices, which increased from $926 last year to $1,147 in the second quarter this year.

Gold sales for the quarter soared by 56 percent to 82,402 ounces, in comparison to 2009's 52,890 ounces.

Gold production increased t 89,919 ounces, an increase of 62 percent, up from 55,633 ounces last year.

BP (NYSE:BP) Stock Prices Rise While Energy Stocks Decline

There is a sense of much relief that BP (NYSE:BP) is seeing success in their static kill attempt, causing stock prices to continue to rise. While energy stocks are on the decline.

BP's shares rose another 0.7 percent to $40.95, after the completion of the cementing of the Macondo well. After drawing a downgrade from J.P. Morgan, Transocean plummeted 3 percent to %56.34, after soaring 8 percent in the prior session.

Crude oil futures slide 1.2 percent to $80.98.
The Dow Jones Industrial Average dropped 0.7 percent. With Exxon and Chevron decreasing 0.8 percent and 0.6 percent.

The NYSE Arca Oil Index dropped 0.9 percent to 1,020. The Philadelphia Oil Service Index fell 1.4 percent to 188. The NYSE Arca Natural Gas Index also saw a decrease of 1.4 percent bringing it to 531.

BP (NYSE:BP) Oil: Static Kill Success, On To Relief Wells

BP (NYSE:BP) engineers appear to be successful in their static kill attempt. Cement was poured in to the top of the well, which is supposed to hold down the mud at the bottom of the well. Now they must wait at least 24 hours for the cement to harden.

The static kill process started on Tuesday with crews pumping thick mud down the well to push the crude back underground. With that success, the next step was to pour in the cement. The final step once the cement hardens is for the engineers to inject more mud and cement into the bottom of the well, creating a permanent plug.

So while we are starting to shift from one aspect of BP's disastrous oil spill to another, there is still much to be done. According to a new report issued by the Interior Department and the National Oceanic and Atmospheric Administration, there is still almost 53 million gallons of the toxic oil polluting the Gulf shores.

"There is very little observable oil out there. We can't turn a blind eye, if we don't see oil, I'm not assuming it doesn't exist," said Rear Adm. Paul Zukunft.

Thursday, August 5, 2010

Randgold (Nasdaq:GOLD) Plunges on 39 Percent Increase in Costs

No matter how hard Randgold (Nasdaq:GOLD) Chief Executive Officer Mark Bristow tried to deflect attention away from the 39 percent increase in costs, he couldn't do it, and the gold miner took a beating, even though other numbers were decent in their last quarter.

The cost issue came from power outages at their Loulo mine in Mali. That resulted in the cost increases, and in dollars it came to $665 an ounce of gold. Gold price for immediate delivery for the quarter were at $1,196.53 an ounce.

Consequently, gold production in the next quarter had to be downwardly revised, and will come in at best, about 5 percent within the target range of 477,000 ounces.

Bristow said about the Mali situation, “We’re at a point where we have identified the issue. By the fourth quarter we should be settled.”

Net income rose from the $14.9 million last year in the same period, to $34.4 million in the second quarter this year.

Randgold dropped to $86.96, a decline of $3.54, or 3.91 percent.

Gold Fields' (NYSE:GFI) Nick Holland Says Company Not Relying On Gold Price

The CEO of Gold Fields (NYSE:GFI), Nick Holland, said in an interview that the company isn't going to rely on gold prices to "bail us out." Holland added that the company is actually going to budget a lower price than the spot price is today.

This isn't to say he believes gold prices are going to fall, but that the company needs to focus on streamlining their operations, and that's going to be the focus over the next year, said Holland.

Holland added the gold price will move where it moves, and that's outside the control of the company, he wants to focus on what the company can control, and he's going to do that by putting all aspects of the business processes under review.

The goal is to improve the profitability of the cash flow for each ounce of gold that comes out of the ground.

Holland's goal is to widen margins, which this year were 15 percent. He wants to bring that to 20 percent no matter what price gold ends up at.

I think this is what gold mining companies around the world should be doing, as some miners had much larger revenues but dropped the ball on costs and margins, which lowered earnings.

Agnico-Eagle (NYSE:AEM), Colossus Minerals (TSE:CSI), Tanzanian Royalty Exploration (AMEX:TRE) Mixed as Gold Struggles for Positive Territory

Spot gold prices have moved in and out of positive territory today, generating a mixed bag of results for miners, including Agnico-Eagle (NYSE:AEM), Colossus Minerals (TSE:CSI) and Tanzanian Royalty Exploration (AMEX:TRE).

Of the three, Colossus Minerals is the only one in negative territory, dropping to $6.73, a fall of $0.25, or 3.58 percent, as of 2:00 PM EDT. Volume was heading to its 3-month average of 396,847.

Agnico-Eagle on the other hand, has enjoyed a gain today, rising to $58.76, gaining $0.19, or 0.32 percent at 2:17 PM EDT. Volume was at about half the 3-month average of 2,644,410.

Tanzanian Royalty Exploration is also positive territory at 2:19 PM EDT, increasing to $5.29, a gain of $0.07, or 1.34 percent.

If gold hangs on, it'll be the seventh day in a row it finishes higher.

Ventana Gold (TSE:VEN), Barrick (NYSE:ABX), US Gold (AMEX:UXG) Mixed as Gold Fluctuates

As gold prices today struggle to finish in positive territory for the seventh trading session in a row, the up and down movement in the gold price, along with it remaining somewhat level has brought mixed results to gold miners like Ventana Gold (TSE:VEN), Barrick Gold (NYSE:ABX) (TSE:ABX) and US Gold (TSE:UXG)(AMEX:UXG).

Spot gold was at $1,197.50, a gain of $1.90 at about 2:00 PM EDT.

Barrick Gold hit $42.72, gaining $0.11, or 0.26 percent, at 1:58 PM EDT. Barrick has been moving up daily along with the price of gold over the last week. Trading volume is far below the 10,795,200 3-month average, standing at 3,344,683.

The smaller gold miners haven't fared as well today, with US Gold down to $5.08, a loss of $0.01, or 0.20 percent, as of 2:01 PM EDT. Trading volume was also below 3-month averages of 1,464,270, lagging at 441,176.

Ventana was down to $8.25, falling $0.05, or 0.60 percent. Trading volume was down from the 3-month average of 779,345, to 322,620.

As you can see, gold miners are moving somewhat in tandem with gold prices today, with most companies slightly up or down on either side.

Frontier Oil (NYSE:FTO) Misses Earnings, Meets Revenue Estimates

Even though they missed earnings estimates for the quarter, Frontier Oil (NYSE:FTO) had a decent quarter, with earnings reaching net income reaching $66.1 million, or 63 cents a share, up from the $57.9 million loss, or 56 cents a share, last year.

Frontier missed after excluding times, with adjusted earnings of 46 cents, whereas analysts had been looking for 47 cents a share.

Revenue in the quarter was $1.55 billion, an increase of 40 percent over the same quarter last year, which was exactly what analysts had expected for the quarter.

A hedging gain was a major factor in the performance of the company over last year, with a hedging gain of 17 cents a share against last year's 18-cent a share loss on hedges.

Like most energy companies in the last quarter, margins have been the story behind their increase in earnings, especially with refinery margins, which CEO Mike Jennings said should continue to widen incrementally going forward.

The differential in light/heavy crude also more than doubled during the quarter, increasing to an average of $9.33 a barrel, helping the margins of the company.

Alamos Gold (TSE:AGI) Earnings Down on Lower Production

Alamos Gold (TSE:AGI) earnings dropped about 7 percent on lower production in the quarter, missing analysts' estimates.

Earnings in the second quarter reached $12.1 million, or 10 cents a share, down from $13 million, or 12 cents a share last year in the same quarter.

Analysts had expected on average for Alamos to earn 12 cents a share, excluding one-time charges.

As expected, revenue increased 13 percent, coming in at $47.5 million. The higher revenue was from gold prices rising 30 percent in the quarter.

Alamos had to have had a margin and cost problem, as the higher gold prices should have pushed their earnings up, even with the lower production, which was primarily the result of delays and drought at their flagship Mulatos mine in Mexico.

Going forward, Alamos kept its full-year production estimates of 160,000 ounces to 175,000 ounces, saying production should increase in the second half.