In a nod to mining companies in general, and gold miners in particular, UBS AG (NYSE:UBS) increased their price targets on a number of miners today, including Iamgold (NYSE:IAG), Barrick Gold (NYSE:ABX), Newmont Mining (NYSE:NEM).
They lifted their target on Barrick from $53.50 to $57.50, and on Iamgold from $21.50 to $23.00.
Other miners having their price targets increased were Eldorado Gold (NYSE:EGO), Goldcorp (NYSE:GG), Agnico-Eagle (NYSE:AEM), Silver Wheaton (NYSE:SLW) and Pan American Silver (NasdaqPAAS).
Wednesday, June 30, 2010
Florida Tourism Industry Already Spends $25 Million of BP (NYSE:BP) Money
As we've mentioned before at Dripping Oil, when the decision was made to create an escrow fund, which BP (NYSE:BP) would be forced to pay into, there would be an extraordinary amount of potential abuses made, and that is predictably the case with the government, which only knows how to take and spend money.
BP recently provided Florida with $25 million for the state to use to advertise to supposedly combat the negative "perception" potential tourists had of the state.
The alleged use of the funds was to counter the negative press which could cause people to visit elsewhere.
Now the CEO of a Florida public-private marketing corporation is whining to Charlie Crist's Gulf Oil Spill Economic Recovery Task Force that not only the $25 million running low, but they need an additional $500 million from BP to continue their positive marketing campaign (which would include other states in the Gulf).
I think this person also said this with a straight face. A great acting job if that was the case.
This is an obvious abuse of the purpose of the escrow fund, which is what they're attempting to tap into. Could you imagine Gulf states being awarded $500 million of the $5 billion allocated in the fund this year for advertising?
It's also unclear how much the private sector participants in this "public-private" marketing corporation would get from it, but it's sure to be a lot, as would the government entities involved on the state and local levels.
This continued idiocy must be stopped in its tracks in order for the idea that BP has the ability to pay unlimited liability in these circumstances to be arrested. It doesn't. And if these types of requests continue to be made, it's sure to lead them to declare bankruptcy in order to manage and limit the payouts.
It also smells of governments trying to take advantage of the situation and use BP as a form of tax revenue to prop up their government programs they can't afford; such as the tourism unit.
BP executive Darryl Willis, vice president of resources at the company, said states should contact BP's chief operating officer of exploration and production, Doug Suttles, concerning the issue, and not attempt to go through the claims process to attempt to secure advertising money.
The hangover from the recession and mortgage crisis is a large part of what is driving these politicians and businesses, and these types of attempts to be opportunists to extract more money from BP will backfire, as they simply don't have the money to continue on meeting these types of requests.
BP recently provided Florida with $25 million for the state to use to advertise to supposedly combat the negative "perception" potential tourists had of the state.
The alleged use of the funds was to counter the negative press which could cause people to visit elsewhere.
Now the CEO of a Florida public-private marketing corporation is whining to Charlie Crist's Gulf Oil Spill Economic Recovery Task Force that not only the $25 million running low, but they need an additional $500 million from BP to continue their positive marketing campaign (which would include other states in the Gulf).
I think this person also said this with a straight face. A great acting job if that was the case.
This is an obvious abuse of the purpose of the escrow fund, which is what they're attempting to tap into. Could you imagine Gulf states being awarded $500 million of the $5 billion allocated in the fund this year for advertising?
It's also unclear how much the private sector participants in this "public-private" marketing corporation would get from it, but it's sure to be a lot, as would the government entities involved on the state and local levels.
This continued idiocy must be stopped in its tracks in order for the idea that BP has the ability to pay unlimited liability in these circumstances to be arrested. It doesn't. And if these types of requests continue to be made, it's sure to lead them to declare bankruptcy in order to manage and limit the payouts.
It also smells of governments trying to take advantage of the situation and use BP as a form of tax revenue to prop up their government programs they can't afford; such as the tourism unit.
BP executive Darryl Willis, vice president of resources at the company, said states should contact BP's chief operating officer of exploration and production, Doug Suttles, concerning the issue, and not attempt to go through the claims process to attempt to secure advertising money.
The hangover from the recession and mortgage crisis is a large part of what is driving these politicians and businesses, and these types of attempts to be opportunists to extract more money from BP will backfire, as they simply don't have the money to continue on meeting these types of requests.
BP (NYSE:BP) Gets $10 Million Request to Pay for Mental Health
The Louisiana's Department of Health and Hospitals is pressing BP (NYSE:BP) to pay out $10 million for people in the Gulf coast region in order to get services from the impact of the oil spill.
Alan Levine, head of the department, sent a letter to BP's Chief Operating Officer Doug Suttles, saying this about the matter, "There exists anger, anxiety and uncertainty among the families and communities affected by the spill, which will easily manifest into addiction and various forms of mental health crisis if not confronted."
BP is said to be reviewing this request, which seems to be bogus to me. You could make the same claim about any situation in life that causes stress, and the recession over the last couple of years, along with the mortgage crisis associated with it was another.
Should the government, businesses and other institutions pay for every situation in life that causes some type of stress?
This all sounds like an underfunded government agency looking for any place to get some funding in order to keep their jobs, not a legitimate request for victims.
Alan Levine, head of the department, sent a letter to BP's Chief Operating Officer Doug Suttles, saying this about the matter, "There exists anger, anxiety and uncertainty among the families and communities affected by the spill, which will easily manifest into addiction and various forms of mental health crisis if not confronted."
BP is said to be reviewing this request, which seems to be bogus to me. You could make the same claim about any situation in life that causes stress, and the recession over the last couple of years, along with the mortgage crisis associated with it was another.
Should the government, businesses and other institutions pay for every situation in life that causes some type of stress?
This all sounds like an underfunded government agency looking for any place to get some funding in order to keep their jobs, not a legitimate request for victims.
Freeport McMoRan (NYSE:FCX) Getting Closer Look from Moody's (NYSE:MCO)
Freeport McMoRan (NYSE:FCX) hasn't had a lot of good news on the macroeconomic level lately, and that has caused it to plummet from a 52-week high of $90.55 in January to closing at $61.07 a share on Tuesday.
Consequently, they've had their credit ratings lowered during that time, and word is Moody's (NYSE:MCO) is now reviewing a variety of their ratings to see if any merit being upwardly revised.
Freeport ended Tuesday down $3.59, or 5.55 percent, as the global economic picture seems to be getting bleaker all the time, and consumer confidence is plunging as a result.
Add to this the slowing U.S. housing starts, the Chinese battling inflation in their urban property markets, and the chaos in Europe, and copper doesn't look like it has anything out there to offer it support.
Consequently, they've had their credit ratings lowered during that time, and word is Moody's (NYSE:MCO) is now reviewing a variety of their ratings to see if any merit being upwardly revised.
Freeport ended Tuesday down $3.59, or 5.55 percent, as the global economic picture seems to be getting bleaker all the time, and consumer confidence is plunging as a result.
Add to this the slowing U.S. housing starts, the Chinese battling inflation in their urban property markets, and the chaos in Europe, and copper doesn't look like it has anything out there to offer it support.
Gold Fields (NYSE:GFI) Gold Production at Upper End of Guidance
Although Gold Fields (NYSE:GFI) struggled some in New York today, with prices dropping $0.28, or 2.03%, the good news is their guidance for gold production for the fourth quarter is on the upper end of the estimate.
Production levels should come in a 895,000 ounces, as production was 13 percent higher than it was in the third quarter.
The company added that all their projects and regions were doing well for the quarter.
Earnings report for the fourth quarter is scheduled on August 5.
Production levels should come in a 895,000 ounces, as production was 13 percent higher than it was in the third quarter.
The company added that all their projects and regions were doing well for the quarter.
Earnings report for the fourth quarter is scheduled on August 5.
BP (NYSE:BP) Offers Station Owners Help
After the misguided steps to boycott BP (NYSE:BP) gas stations across the country, some of them began to feel the pain, and BP is stepping in to help them through the tough times.
According to BP, they're offering cash back to their distributors for every gallon of gas they sell at the stations. Along the Gulf coast it's set at 2 cents a gallon and in the Midwest and East it's 1 cent a gallon.
Other help will come in the form of increased national advertising and a reduction in fees for credit card use.
The program for cash to distributors will operate from June through August. Costs for BP will be from about $50 million to $70 million over that time. Distributors are allowed to use the additional cash for whatever use they want.
BP said they're reevaluate the program as events change over time. For sure it'll go through August though.
According to BP, they're offering cash back to their distributors for every gallon of gas they sell at the stations. Along the Gulf coast it's set at 2 cents a gallon and in the Midwest and East it's 1 cent a gallon.
Other help will come in the form of increased national advertising and a reduction in fees for credit card use.
The program for cash to distributors will operate from June through August. Costs for BP will be from about $50 million to $70 million over that time. Distributors are allowed to use the additional cash for whatever use they want.
BP said they're reevaluate the program as events change over time. For sure it'll go through August though.
Tuesday, June 29, 2010
Gold Prices Should be Volatile Over Next Week
With the end of the six-month trading period here, and a long weekend ahead for American traders with 4th of July coming up, it looks like a period of volatility for gold prices are on hand, as they have been since records were broken two weeks ago.
Gold prices today did allow for a little momentum, as on the Comex division of the New York Mercantile Exchange, gold for August delivery settled at $1,242.30 an ounce, a gain of $3.80.
Highs for gold prices on Tuesday were $1,246, while swinging a low as $1,230. Spot gold also finished higher by over $2 an ounce.
Some traders may sell their position in gold because of weak equity markets as the end of June arrives, and that could put downward pressure on gold for the short term.
Depending on how traders interpret the market, they could do the opposite as well, investing in some gold to add it to their portfolio to begin the second half.
There is a lot of uncertainty going forward, and that adds to the volatility of gold prices, but also to its attraction.
It's a nod toward gold that it has been holding up so well since the sell off after gold records were set the week before last, and that seems to bode well for the second half of the year, which could be tougher on the first for equities, and investors continue to look for a safe haven for their money.
Gold prices today did allow for a little momentum, as on the Comex division of the New York Mercantile Exchange, gold for August delivery settled at $1,242.30 an ounce, a gain of $3.80.
Highs for gold prices on Tuesday were $1,246, while swinging a low as $1,230. Spot gold also finished higher by over $2 an ounce.
Some traders may sell their position in gold because of weak equity markets as the end of June arrives, and that could put downward pressure on gold for the short term.
Depending on how traders interpret the market, they could do the opposite as well, investing in some gold to add it to their portfolio to begin the second half.
There is a lot of uncertainty going forward, and that adds to the volatility of gold prices, but also to its attraction.
It's a nod toward gold that it has been holding up so well since the sell off after gold records were set the week before last, and that seems to bode well for the second half of the year, which could be tougher on the first for equities, and investors continue to look for a safe haven for their money.
Chevron (NYSE:CVX) Gets First Bill From Oil Spill
Chevron (NYSE:CVX) has received their first bill from the city of Utah for their oil spill in Red Butte Creek, the total of which is $125,000 for the first 48 hours. Most of this cost was from the initial police officers, firefighters, and utility crews who were on the scene June 12th and June 13th.
This bill is just for the basics, it does not include any of the long term estimates for the fuel cleanup, equipment costs, or the cost of the city's environmental consultant. This is just the first of many more bills to come. The breakdown of the expenses is, $53,000 for water cleanup teams, $12,000 for police security, $9,000 was added on by the Mayor's office, as well as $33,000 for firefighter efforts to contain the oil.
Chevron has maintained from the beginning that they would pay for all costs associated with the oil spill. Oil skimming is continuing along the Jordon River. The effects to aquatic wildlife seems to be minimal although the long term effects are still unknown. There have been several hundred waterfowl, the majority being geese who have been cleaned of the oil and released into Clear Lake. Officials said that less than 10 of the treated birds have died.
So far, crews have gotten about 610 barrels of the 800 barrels that were spilled by Chevron's pipeline. The cause of the break is still unknown but under investigation. The oil pipeline has been repaired and is fully operational again.
This bill is just for the basics, it does not include any of the long term estimates for the fuel cleanup, equipment costs, or the cost of the city's environmental consultant. This is just the first of many more bills to come. The breakdown of the expenses is, $53,000 for water cleanup teams, $12,000 for police security, $9,000 was added on by the Mayor's office, as well as $33,000 for firefighter efforts to contain the oil.
Chevron has maintained from the beginning that they would pay for all costs associated with the oil spill. Oil skimming is continuing along the Jordon River. The effects to aquatic wildlife seems to be minimal although the long term effects are still unknown. There have been several hundred waterfowl, the majority being geese who have been cleaned of the oil and released into Clear Lake. Officials said that less than 10 of the treated birds have died.
So far, crews have gotten about 610 barrels of the 800 barrels that were spilled by Chevron's pipeline. The cause of the break is still unknown but under investigation. The oil pipeline has been repaired and is fully operational again.
Crude Oil Trading, Stock Shares: Shell (LSE:RDSA), Exxon Mobil (NYSE:XOM) and BP (NYSE:BP)
While BP (NYSE:BP) finally saw an increase, other U.S. stock shares and crude oil trading continues to fall, including Royal Dutch Shell (LSE:RDSA) and Exxon Mobil (NYSE:XOM), sliding from a prior seven week high. Causing the Standard and Poors 500 to drop again, this is the fifth time in six days.
The S&P saw another decline of 0.1 percent to 1,074.57, while the energy shares among S&P tumbled 1.3 percent as a group - this being the highest loss among 10 industries. While the Dow Jones Industrial average also slide losing 0.1 percent or 5.29 point to 10,138.52. Crude oil fell below $78 a barrel in New York, this is due to slow economic growth concerns that this may reduce demand.
Exxon Mobil dropped 1.39 percent to $57.65. While Royal Dutch Shell saw a decline of 2.9 percent to $49.56, and BP saw a gain of 0.96 percent to 27.31.
Meanwhile, many are watching with worry and anticipation as Alex continues it's course towards the Gulf as swells are already reaching it. It is expected to turn into a hurricane and the force of the storm is already causing evacuations on several of the oil rigs. Air Logistics, an offshore helicopter company has been evacuating Gulf workers in the Western Gulf of Mexico.
Shell is planning on shutting down production today on their rigs in the central and Western Gulf. Exxon has also started the process of evacuation from the offshore facilities that are expected to be in the path of Alex.
The S&P saw another decline of 0.1 percent to 1,074.57, while the energy shares among S&P tumbled 1.3 percent as a group - this being the highest loss among 10 industries. While the Dow Jones Industrial average also slide losing 0.1 percent or 5.29 point to 10,138.52. Crude oil fell below $78 a barrel in New York, this is due to slow economic growth concerns that this may reduce demand.
Exxon Mobil dropped 1.39 percent to $57.65. While Royal Dutch Shell saw a decline of 2.9 percent to $49.56, and BP saw a gain of 0.96 percent to 27.31.
Meanwhile, many are watching with worry and anticipation as Alex continues it's course towards the Gulf as swells are already reaching it. It is expected to turn into a hurricane and the force of the storm is already causing evacuations on several of the oil rigs. Air Logistics, an offshore helicopter company has been evacuating Gulf workers in the Western Gulf of Mexico.
Shell is planning on shutting down production today on their rigs in the central and Western Gulf. Exxon has also started the process of evacuation from the offshore facilities that are expected to be in the path of Alex.
Freeport-McMoRan (NYSE:FCX) Follows Gold Prices Down
Freeport-McMoRan Copper & Gold (FCX) has mostly suffered from the low price of copper because of slow global demand, but when it doesn't get help from gold, it can get hit even harder, and that was the case Monday, as gold plunged $17.10, falling to $1.238.60.
In the early part of the trading session it got a nice jump, falling just a couple of dollars off its all-time high, but plummeting around 11:00 AM EDT.
Recent behavior in those cases has been for gold to usually recover after 12:00 PM EDT, but that wasn't the case today, as it never regained traction.
Freeport move jointly with the price of gold, ending at $64.66, a drop of $1.91, or 2.87 percent.
In the early part of the trading session it got a nice jump, falling just a couple of dollars off its all-time high, but plummeting around 11:00 AM EDT.
Recent behavior in those cases has been for gold to usually recover after 12:00 PM EDT, but that wasn't the case today, as it never regained traction.
Freeport move jointly with the price of gold, ending at $64.66, a drop of $1.91, or 2.87 percent.
Monday, June 28, 2010
Oil Company Executives Leave Meeting With Salazar Disappointed: BP (NYSE:BP), Exxon (NYSE:XOM), Transocean (NYSE:RIG), Chevron (NYSE:CVX),
Executives from several oil and gas companies including BP (NYSE:BP), Exxon Mobil (NYSE:XOM), Transocean (NYSE:RIG), Chevron (NYSE:CVX), Noble Energy, Hercules Offshore Inc., Rowan Cos. Inc. (NYSE:RDC), Diamond Offshore Drilling, and Seahawk Drilling, attended an hour long meeting with Ken Salazar, U.S. Interior Secretary today. Also present were the heads of the trade groups for the industry.
The purpose of this meeting was to lift the moratorium imposed by President Obama. Everybody left disappointed as Salazar refused to make any promises that the government would lift the Deep water drilling ban. Kendra Barkoff, Interior spokeswoman confirmed the meeting took place but refused to comment on the contents of the meeting itself.
"Numerous operators told Secretary Salazar that they were in the final stages of moving rigs, deepwater rigs out of the Gulf of Mexico and to West Africa or the Middle East. We were frankly disappointed at the lack of serious attention that was paid by the department of the Interior on the horrible economic impact that the Department of Interior's policies are having on the industry and on communities along the Gulf Coast, " said a source close to the matter.
In letters to the executives of these oil and gas companies, House Democrats questioned if their oil response plans "were adequate to protect the Gulf region from the consequences of a sub sea blowout similar to the blowout" that BP experienced at the Macondo well.
The purpose of this meeting was to lift the moratorium imposed by President Obama. Everybody left disappointed as Salazar refused to make any promises that the government would lift the Deep water drilling ban. Kendra Barkoff, Interior spokeswoman confirmed the meeting took place but refused to comment on the contents of the meeting itself.
"Numerous operators told Secretary Salazar that they were in the final stages of moving rigs, deepwater rigs out of the Gulf of Mexico and to West Africa or the Middle East. We were frankly disappointed at the lack of serious attention that was paid by the department of the Interior on the horrible economic impact that the Department of Interior's policies are having on the industry and on communities along the Gulf Coast, " said a source close to the matter.
In letters to the executives of these oil and gas companies, House Democrats questioned if their oil response plans "were adequate to protect the Gulf region from the consequences of a sub sea blowout similar to the blowout" that BP experienced at the Macondo well.
Shell Oil (LSE:RDSA) Reaches Gulf Deal With Noble
Shell Oil (LSA:RDSA) has reached a deal with Noble Corp. that gives them $4 billion of new contracts. Noble is also purchasing Frontier Drilling, a privately held company for $2.16 billion in cash.
Shell will be paying reduced fees for the leasing of Noble's rigs in the Gulf of Mexico. They have also given Shell the full right to cancel any contracts between the two rigs currently in the Gulf. Due to President Obama's six month moratorium on deepwater drilling.
The agreements are contingent upon Noble closing the deal with Frontier. Upon doing so, Shell will have the go ahead for the two ultra deepwater projects according to the terms of the contract. Anadarko pulled out of their contract with Noble in the beginning of June from drilling contracts due to the moratorium.
John Breed, a Noble spokesman said the purpose of the Shell purchase is to hopefully ease concerns and prevent oil companies from fully abandoning agreements in the Gulf. " We're working with our customers to find a resolution that would allow them to keep rigs under contract," said Breed.
Shell will be paying reduced fees for the leasing of Noble's rigs in the Gulf of Mexico. They have also given Shell the full right to cancel any contracts between the two rigs currently in the Gulf. Due to President Obama's six month moratorium on deepwater drilling.
The agreements are contingent upon Noble closing the deal with Frontier. Upon doing so, Shell will have the go ahead for the two ultra deepwater projects according to the terms of the contract. Anadarko pulled out of their contract with Noble in the beginning of June from drilling contracts due to the moratorium.
John Breed, a Noble spokesman said the purpose of the Shell purchase is to hopefully ease concerns and prevent oil companies from fully abandoning agreements in the Gulf. " We're working with our customers to find a resolution that would allow them to keep rigs under contract," said Breed.
BP (NYSE:BP) UPDATE: Containment Costs, Stock Prices, and Tony Hayward
BP's (NYSE:BP) oil cleanup and containment costs continues to rise, reaching $2.65 billion according to BP on Monday. That pushes the companies expenses to over $100 million a day since the sinking of the Deepwater Horizon rig. This cost includes relief well drilling, grants to Gulf states, claims already paid out, spill response, containment efforts, as well as federal costs incurred.
After watching BP's stock plummet 6 percent, a 14 year low on Friday, today BP's shares saw an increase in premarket oil trading of 2 percent. That's a total loss in market value of over $100 billion dollars. BP was adamant in denying the fact that Tony Hayward, their chief executive was resigning. This rumor stemmed from a Russia state RIA Novositi news agency reported that a senior Russian Cabinet official said that Hayward was going to be resigning from his position at BP.
"Hayward is leaving his post, he will introduce his successor," said Sechin quoted by RIA Novosti. There is denial all around, from BP spokeswoman Carolyn Copland in London said it, "is definitely not correct." Also of London, Sheila Williams stated, " Tony Hayward remains chief executive." Mark Proegler, the U.S. BP spokesman said, "they are mistaken."
"I'm sure there has been a misunderstanding. Hayward's resignation at this time and in this place lacks logic. It would make sense that Hayward would finish his job tackling the oil spill and step down afterwards so the new CEO wouldn't have his burden on his shoulders, " said Konstantin Cherepanov oil analyst from the Swiss Investment Bank UBS.
After watching BP's stock plummet 6 percent, a 14 year low on Friday, today BP's shares saw an increase in premarket oil trading of 2 percent. That's a total loss in market value of over $100 billion dollars. BP was adamant in denying the fact that Tony Hayward, their chief executive was resigning. This rumor stemmed from a Russia state RIA Novositi news agency reported that a senior Russian Cabinet official said that Hayward was going to be resigning from his position at BP.
"Hayward is leaving his post, he will introduce his successor," said Sechin quoted by RIA Novosti. There is denial all around, from BP spokeswoman Carolyn Copland in London said it, "is definitely not correct." Also of London, Sheila Williams stated, " Tony Hayward remains chief executive." Mark Proegler, the U.S. BP spokesman said, "they are mistaken."
"I'm sure there has been a misunderstanding. Hayward's resignation at this time and in this place lacks logic. It would make sense that Hayward would finish his job tackling the oil spill and step down afterwards so the new CEO wouldn't have his burden on his shoulders, " said Konstantin Cherepanov oil analyst from the Swiss Investment Bank UBS.
Goldman Sachs (NYSE:GS) Lowers EPS for EXxonMobil (NYSE:XOM)
Citing their recent acquisition of XTO Energy (NYSE:XTO), Goldman Sachs (NYSE:GS) has lowered their earnings per share estimates for EXxonMobil (NYSE:XOM) through 2012.
The reasoning is the extensive dilution of earnings the company should experience as a result of buying XTO.
Goldman maintains a "Neutral" rating on ExxonMobil, along with a $65 price target.
The reasoning is the extensive dilution of earnings the company should experience as a result of buying XTO.
Goldman maintains a "Neutral" rating on ExxonMobil, along with a $65 price target.
How Peter Schiff is Investing in Gold
In a recent interview, Peter Schiff revealed how he has been investing in gold, along with some tips on what to avoid.
First of all, through his brokerage firm Euro Pacific Capital, he has been investing in physical gold for himself and his clients and storing it in Australia.
Concerning physical gold, Schiff recommends staying away from collectible gold like you see advertised on television a lot, as it's highly overpriced.
Schiff recommends buying real gold, and not a coin with only a little actual gold in it.
Finally, Schiff invests in a large number of mining stocks around the world, with many of them in the usual hot mining areas of Canada, Australia, South Africa and South America. He said he also has some in the United States, which among them, I presume, would be Newmont Mining (NYSE:NEM), which has been doing very well among the large gold mining companies.
First of all, through his brokerage firm Euro Pacific Capital, he has been investing in physical gold for himself and his clients and storing it in Australia.
Concerning physical gold, Schiff recommends staying away from collectible gold like you see advertised on television a lot, as it's highly overpriced.
Schiff recommends buying real gold, and not a coin with only a little actual gold in it.
Finally, Schiff invests in a large number of mining stocks around the world, with many of them in the usual hot mining areas of Canada, Australia, South Africa and South America. He said he also has some in the United States, which among them, I presume, would be Newmont Mining (NYSE:NEM), which has been doing very well among the large gold mining companies.
Royal Gold (Nasdaq:RGLD) Public Offering Closed
Royal Gold (Nasdaq:RGLD) said today it has closed its public offering of 5,980,000 shares of common stock.
The public offering was made pursuant to the Company’s shelf registration statement filed with the Securities and Exchange Commission and a shelf prospectus filed with certain Canadian securities regulatory authorities. The offering was priced at $48.50, and proceeds to the Company from the offering, net of commission and expenses, are estimated to be about $276.4 million.
Joint book-runners for the offering were Goldman Sachs (NYSE:GS) and HBSB Securities. HSBC was also the global coordinator for the offering.
Royal Gold has stated they will use the capital for the funding of acquisitions for additional royalty interests, paying down its debt, and other general corporate purposes.
The public offering was made pursuant to the Company’s shelf registration statement filed with the Securities and Exchange Commission and a shelf prospectus filed with certain Canadian securities regulatory authorities. The offering was priced at $48.50, and proceeds to the Company from the offering, net of commission and expenses, are estimated to be about $276.4 million.
Joint book-runners for the offering were Goldman Sachs (NYSE:GS) and HBSB Securities. HSBC was also the global coordinator for the offering.
Royal Gold has stated they will use the capital for the funding of acquisitions for additional royalty interests, paying down its debt, and other general corporate purposes.
Gold Prices Near Record, Pull Back Before Noon
In typical fashion at the beginning of a day when gold prices move upward quickly, as it approaches about 11:00 or a little after, they always plunge, as traders sell their investments quickly to get a quick profit.
Normal behavior is prices will usually start to rise again right after 12:00 PM EDT.
Prices reached as high as $1,259.40 an ounce on the Comex division of the New York Mercantile Exchange before pulling back. It'll be interesting to see if it can overcome the plunge below $1,249 an ounce a test out record levels again.
After a level performance last week, as gold prices plunged on Monday after record prices, they were flat until they rebounded on Friday. It seems they could be poised for another run after their lackluster performance last week.
Normal behavior is prices will usually start to rise again right after 12:00 PM EDT.
Prices reached as high as $1,259.40 an ounce on the Comex division of the New York Mercantile Exchange before pulling back. It'll be interesting to see if it can overcome the plunge below $1,249 an ounce a test out record levels again.
After a level performance last week, as gold prices plunged on Monday after record prices, they were flat until they rebounded on Friday. It seems they could be poised for another run after their lackluster performance last week.
Allied Nevada Gold's (AMEX:ANV) Relentless Upward Run Continues
Allied Nevada Gold (AMEX:ANV) over the last year is up almost 300 percent, and they continue on their upward move, finishing an otherwise lackluster week in a big way.
Like most gold miners, they plunged last Monday as traders took their profits from the record-breaking gold prices the week before, and were level through Thursday before the big rebound on Friday, where gold prices were testing record levels once again, although falling short.
Most miners weren't able to recover after the huge hit they took on Monday, and some continued that into Tuesday, although not nearly as bad.
Even so, the continued strength of Allied was able to push them to the positive to end the week, finishing at $22.38 a share.
The 52-week range for Allied Nevada has been $7.27 - $22.92 a share.
Like most gold miners, they plunged last Monday as traders took their profits from the record-breaking gold prices the week before, and were level through Thursday before the big rebound on Friday, where gold prices were testing record levels once again, although falling short.
Most miners weren't able to recover after the huge hit they took on Monday, and some continued that into Tuesday, although not nearly as bad.
Even so, the continued strength of Allied was able to push them to the positive to end the week, finishing at $22.38 a share.
The 52-week range for Allied Nevada has been $7.27 - $22.92 a share.
Largest Gold Coin in World Sold for over $4 Million
Credit: REUTERS/Heinz-Peter Bader
The largest gold coin was put on the auction block in Vienna on Friday, and sold for an astounding $4.02 million.
Acquiring the gold coin was Spanish precious metals trading company ORO, who bid on it unopposed. The coin weighs in at 220.5 pounds.
Investment firm AVW Invest had owned the coin, but was ordered to sell it by the administrator of the bankruptcy proceedings of the company, whose CEO and owner was arrested on a number of charges related to the company.
AVW owned the coin since 2007, which was struck by the Royal Canadian Mint, and one of only five in existence.
The coin is also 21 inches in diameter and is made of the purest gold on the market - 99.999 percent.
Anatolia Minerals (TSE:ANO) Continues Strong Performance
Anatolia Minerals (TSE:ANO) has been one of the best performing gold stocks so far in 2010, and they continue to soar, being among one of the leading gold stocks on Friday, surging by $0.42 for a 7.66 percent gain, ending the session at $5.90 a share.
The share price of Anatolia has almost tripled since November 2009, when it hit its 52-week low of $2.01 a share.
The flagship of Anatolia is its Çöpler project in Turkey, where they recently received titles to all the private land within the Life-of-Mine footprint for the Phase I Oxide Project at the mine.
These swap agreements entail the trading of common land held by hte village for home in a new village where construction will begin in June.
There's more to it, but the point is everyone is happy, and that bodes well for the mining company going forward.
Full production capacity is expected to be reached in 2011, and estimates of 500,000 gold equivalent ounces to be mined annually by 2014, with gold ounces expected to come in at about 300,000.
The share price of Anatolia has almost tripled since November 2009, when it hit its 52-week low of $2.01 a share.
The flagship of Anatolia is its Çöpler project in Turkey, where they recently received titles to all the private land within the Life-of-Mine footprint for the Phase I Oxide Project at the mine.
These swap agreements entail the trading of common land held by hte village for home in a new village where construction will begin in June.
There's more to it, but the point is everyone is happy, and that bodes well for the mining company going forward.
Full production capacity is expected to be reached in 2011, and estimates of 500,000 gold equivalent ounces to be mined annually by 2014, with gold ounces expected to come in at about 300,000.
ConocoPhillips' (NYSE:COP) Syncrude Deal Completed
ConocoPhillips' (NYSE:COP) has finished its divestation of Syncrude, selling their 9.03 percent stake in the Canadian oil sands project to Sinopec International Petroleum and Production Co.
This is the largest deal made by a Chinese company in the Canadian sands, and was acquired for $4.65 billion.
This accounts for almost half of the strategy of ConocoPhillips to sell off assets worth close to $10 billion by 2011.
"I have approved the application by Sinopec ... to acquire control of the ConocoPhillips Partnership because I am satisfied that the investment is likely to be of net benefit to Canada," Canadian Industry Minister Tony Clement said in a statement Friday.
Sinopec is the top refiner in China, as well as the second largest producer of oil.
This is the largest deal made by a Chinese company in the Canadian sands, and was acquired for $4.65 billion.
This accounts for almost half of the strategy of ConocoPhillips to sell off assets worth close to $10 billion by 2011.
"I have approved the application by Sinopec ... to acquire control of the ConocoPhillips Partnership because I am satisfied that the investment is likely to be of net benefit to Canada," Canadian Industry Minister Tony Clement said in a statement Friday.
Sinopec is the top refiner in China, as well as the second largest producer of oil.
Sunday, June 27, 2010
BP (NYSE:BP) Oil Boycotts, Gas Station Owners Want BP's Help
There are many people in the Southern states as well as the East Coast that are boycotting BP's (NYSE:BP) gas stations. This is there attempt to punish BP, but in reality they're only hurting local business people who other than having a signed contract to purchase oil from BP and this giving them the right to use BP's logo, there is no tie between the two. Many of these gas station owners are turning to BP for help.
There are over 11,000 gas stations across the U.S. that sell the fuel under BP's name like Amoco and Arco. BP owns a very minute amount of these. Gas station owners in Illinois and Georgia are saying that over that last several weeks they've seen sales decrease 10 percent to 40 percent.
John Kleine, the executive director of the independent BP Amoco Marketers Association who represent hundreds of distributors said, gas distributors and gas station owners requested to BP officials that they get help with the cost of more advertising geared towards motorist. As well as giving them a cost break on the purchasing of gas.
Bob Junkniess, an owner of a BP gas station said, " They have got to be more competitive on their fuel costs to the retailers so we can be competitive on the street, and bring back customers that we've lost." He said he's seen a decline in sales of 20 percent, he has 10 BP stations he owns.
There are over 11,000 gas stations across the U.S. that sell the fuel under BP's name like Amoco and Arco. BP owns a very minute amount of these. Gas station owners in Illinois and Georgia are saying that over that last several weeks they've seen sales decrease 10 percent to 40 percent.
John Kleine, the executive director of the independent BP Amoco Marketers Association who represent hundreds of distributors said, gas distributors and gas station owners requested to BP officials that they get help with the cost of more advertising geared towards motorist. As well as giving them a cost break on the purchasing of gas.
Bob Junkniess, an owner of a BP gas station said, " They have got to be more competitive on their fuel costs to the retailers so we can be competitive on the street, and bring back customers that we've lost." He said he's seen a decline in sales of 20 percent, he has 10 BP stations he owns.
BP (NYSE:BP) Class Action Lawsuit: Class Action Attorney
One of New Orleans highly regarded and prominent chefs Susan Spicer, is suing BP (NYSE:BP) claiming that restaurants in the area have seen a decline in seafood supplies due to the negligence of the Gulf oil spill. She runs a restaurant called Bayone in the French Quarter of New Orleans.
The class action lawsuit is on behalf of all restaurants in the seafood industry that have experienced losses and damage caused by the explosion of the Deepwater Horizon Rig on April 20th. The 18 page complaint was filed in Federal Court on Friday.
Serena Pollace, Spicer's lawyer said that due to the oil spill they are expecting to lose customers because of contamination fears, higher prices, lower tourism, and the lack of availability of local seafood. " Much of the plaintiffs business is based on the unique quality of Louisiana seafood as well as the chain of delivery of that resource from the initial harvester. Because this chain of delivery cannot be maintained, plaintiffs business has been and continues to be, materially damaged," said Pollace.
The lawsuit also names as defendants, Transocean who operated the rig, Cameron who provided the blowout preventer, and Halliburton that provided the cementing services. The lawsuit is seeking compensatory and punitive damages from BP.
The class action lawsuit is on behalf of all restaurants in the seafood industry that have experienced losses and damage caused by the explosion of the Deepwater Horizon Rig on April 20th. The 18 page complaint was filed in Federal Court on Friday.
Serena Pollace, Spicer's lawyer said that due to the oil spill they are expecting to lose customers because of contamination fears, higher prices, lower tourism, and the lack of availability of local seafood. " Much of the plaintiffs business is based on the unique quality of Louisiana seafood as well as the chain of delivery of that resource from the initial harvester. Because this chain of delivery cannot be maintained, plaintiffs business has been and continues to be, materially damaged," said Pollace.
The lawsuit also names as defendants, Transocean who operated the rig, Cameron who provided the blowout preventer, and Halliburton that provided the cementing services. The lawsuit is seeking compensatory and punitive damages from BP.
Shell (LSE:RDSA): We Must Keep Deep Water Drilling For Oil
Peter Voser, the chief executive of Royal Dutch Shell (LSE:RDSA) said even though there's been a massive oil spill due to BP, lack of resources and ability to contain the crude oil, deep water drilling is still an absolute necessary to be able to meet the growing energy demands the industry is facing. He was sure to add though that the disaster readiness must be properly evaluated and corrected.
"My expectation is that we will go forward with it but it needs some changes. It's clear, now some of the findings are coming out, that the oil response side has got some weaknesses and we as an industry have to come together in order to actually be better prepared in the future," said Voser.
Due to the worst oil spill in history, President Obama put into play a six month moratorium on all deep water drilling. This was put into place in May and was only supposed to last through that month and be effective on any new deep water drilling. As the month of May came to a close, that is when Obama extended the moratorium to six months and made it effective on all drilling rigs in the Gulf.
Voser said, "we have got other safety procedures across the globe. But I think again that for some companies, there will be some learning in this that needs to be adapted. Safety and design features need to be constantly improved. By doing so we can actually prevent these kinds of things from happening much more and I think that's where we need to drive it even further on the global scale."
"My expectation is that we will go forward with it but it needs some changes. It's clear, now some of the findings are coming out, that the oil response side has got some weaknesses and we as an industry have to come together in order to actually be better prepared in the future," said Voser.
Due to the worst oil spill in history, President Obama put into play a six month moratorium on all deep water drilling. This was put into place in May and was only supposed to last through that month and be effective on any new deep water drilling. As the month of May came to a close, that is when Obama extended the moratorium to six months and made it effective on all drilling rigs in the Gulf.
Voser said, "we have got other safety procedures across the globe. But I think again that for some companies, there will be some learning in this that needs to be adapted. Safety and design features need to be constantly improved. By doing so we can actually prevent these kinds of things from happening much more and I think that's where we need to drive it even further on the global scale."
Saturday, June 26, 2010
Oil Investments, Selling of Bonds, and Bond Debt: BP (NYSE:BP) and Shell (LSE:RDSA)
Oil and gas companies worldwide have borrowed a total of $83.3 billion already this year, due to BP's (NYSE:BP) oil spill disaster. This is a 41 percent increase from this time last year. The bulk of it, $53.3 billion has come in the second quarter. Traders and analysts are saying that oil companies are increasing their borrowing. This is in order to lock down funding to prevent further turmoil in the credit market and the industry as a whole.
Energy companies are also feeling the effects and worldwide have sold a total of $29.1 billion in bonds since April 20th when BP's leased rig blew up. On Monday, Royal Dutch Shell sold a total of $2.75 billion in bonds. Shell had no comment as to why or on the timing of their sale.
Andrew Karp, head of investment grade bond syndicate at the Bank of America Merrill Lynch, said that there was a high demand for the debt sales. According to Standard & Poors 500 the oil and gas sector credit spread has increased from 2.43 percent on April 28th to on Thursday reaching 3,35 percentage points.
This normally would put off borrowers until costs came down. Oil companies are borrowing while they can. Justin D'Ercole, head of America's Investment grade syndicate at the Barclays Capital said, "in late July if there's noise that the relief wells aren't working, the energy space could be a lot wider and oil companies will likely try to get ahead of that."
Energy companies are also feeling the effects and worldwide have sold a total of $29.1 billion in bonds since April 20th when BP's leased rig blew up. On Monday, Royal Dutch Shell sold a total of $2.75 billion in bonds. Shell had no comment as to why or on the timing of their sale.
Andrew Karp, head of investment grade bond syndicate at the Bank of America Merrill Lynch, said that there was a high demand for the debt sales. According to Standard & Poors 500 the oil and gas sector credit spread has increased from 2.43 percent on April 28th to on Thursday reaching 3,35 percentage points.
This normally would put off borrowers until costs came down. Oil companies are borrowing while they can. Justin D'Ercole, head of America's Investment grade syndicate at the Barclays Capital said, "in late July if there's noise that the relief wells aren't working, the energy space could be a lot wider and oil companies will likely try to get ahead of that."
Exxon Mobil (NYSE:XOM) Completes Purchase Of XTO Energy
Exxon Mobil (NYSE:XOM) has completed their purchase of XTO Energy Incorporated, a natural gas company, on Friday for $35 million. They named an Exxon executive Jack Williams President.
Williams was the vice president of Exxon Mobil Development Co. Keith Hutton, former chief executive will be the new vice president. XTO will keep their name as well as "nearly all" of the current 3,300 employees, said Exxon. The officials at Exxon are expecting there to be quite a substantial growth in the demand of natural gas.
Williams said, "with this agreement, we are combining XTO's skills, capabilities, and asset base with Exxon Mobil's advanced research and development, and operational capabilities global scale and financial capacity." Exxon is planning on developing XTO into a global company which will explore and develop "unconventional" resources.
Rex Tillerson, Exxon chief executive said, "Exxon Mobil's energy outlook indicates that gas will grow more rapidly than any other major energy source given its availability and relatively low carbon profile."
Williams was the vice president of Exxon Mobil Development Co. Keith Hutton, former chief executive will be the new vice president. XTO will keep their name as well as "nearly all" of the current 3,300 employees, said Exxon. The officials at Exxon are expecting there to be quite a substantial growth in the demand of natural gas.
Williams said, "with this agreement, we are combining XTO's skills, capabilities, and asset base with Exxon Mobil's advanced research and development, and operational capabilities global scale and financial capacity." Exxon is planning on developing XTO into a global company which will explore and develop "unconventional" resources.
Rex Tillerson, Exxon chief executive said, "Exxon Mobil's energy outlook indicates that gas will grow more rapidly than any other major energy source given its availability and relatively low carbon profile."
BP (NYSE:BP) UPDATE: Storm Tracking
Tropical Storm Alex, the name of the first storm of the 2010 hurricane season could cause damage to BP's (NYSE:BP) oil rig and well. It also has the potential to move the oil slick closer to the Florida Panhandle beaches.
Senator Bill Nelson of Florida stated, "the greatest nightmare with this storm approaching is that it takes this oil on the surface of the Gulf and blows it over the barrier islands into the bays and the estuaries. And that is where you really get the enormous destruction, because it's just very difficult to clean up those pristine bays."
Alex's current course is heading West-Northwest and has sustained winds of 40 miles per hour and is about 250 miles from Chetumal, Mexico. As of now it does not appear that Alex path will take it directly over the massive oil slick, but as with any storm there is no predictability and their paths can change from hour to hour.
Meteorologist Karen Magginis says the "preferred scenario" for Alex to head to Northern Florida. The reasoning for this is because the oil has been slowly rotating counterclockwise. If Alex goes towards the East of it, it would send the oil out to sea. If the storms path goes directly towards the Gulf and Louisiana, it will cause the oil slick to be pushed towards Florida.
Magginis said, "we've never seen an oil spill that encompassed the Gulf like this before, end up do close to shore. We've never been in this situation before."
Senator Bill Nelson of Florida stated, "the greatest nightmare with this storm approaching is that it takes this oil on the surface of the Gulf and blows it over the barrier islands into the bays and the estuaries. And that is where you really get the enormous destruction, because it's just very difficult to clean up those pristine bays."
Alex's current course is heading West-Northwest and has sustained winds of 40 miles per hour and is about 250 miles from Chetumal, Mexico. As of now it does not appear that Alex path will take it directly over the massive oil slick, but as with any storm there is no predictability and their paths can change from hour to hour.
Meteorologist Karen Magginis says the "preferred scenario" for Alex to head to Northern Florida. The reasoning for this is because the oil has been slowly rotating counterclockwise. If Alex goes towards the East of it, it would send the oil out to sea. If the storms path goes directly towards the Gulf and Louisiana, it will cause the oil slick to be pushed towards Florida.
Magginis said, "we've never seen an oil spill that encompassed the Gulf like this before, end up do close to shore. We've never been in this situation before."
Goldcorp (NYSE:GG) Struggles, Ending the Week Level
Even though Goldcorp (NYSE:GG) continues to be among the cost leaders in producing gold, they seemed to have lost some of their luster after Newmont Mining (NYSE:NEM) bypassed them in that distinction, and they've been struggling some since the middle of May, with their share price going nowhere during that time, even though gold prices have reached record levels.
They've of course had a great 12 months, and that isn't going to stop them from performing well. It just seems some of their former mojo has left them since Newmont became the cost leader, and by a huge amount. Newmont is able to produce at $241 an ounce, while Goldcorp stands at $325.
This isn't a negative toward Goldcorp, but rather a positive towards Newmont.
Gold prices ended the week with a strong push, they weren't able to move up like Barrick (NYSE:ABX) and Newmont were able to.
Goldcorp ended the week at $45.42, gaining $1.21, or 2.74 percent on the day.
They've of course had a great 12 months, and that isn't going to stop them from performing well. It just seems some of their former mojo has left them since Newmont became the cost leader, and by a huge amount. Newmont is able to produce at $241 an ounce, while Goldcorp stands at $325.
This isn't a negative toward Goldcorp, but rather a positive towards Newmont.
Gold prices ended the week with a strong push, they weren't able to move up like Barrick (NYSE:ABX) and Newmont were able to.
Goldcorp ended the week at $45.42, gaining $1.21, or 2.74 percent on the day.
Newmont Mining (NYSE:NEM) Surges on Strong Gold Prices
Newmont Mining (NYSE:NEM) performed during the week like the majority of their competitors, plunging on Monday, remaining level on Tuesday, Wednesday and Thursday, and then flying up in price on Friday.
They outperformed their major competitors for the week, Barrick Gold (NYSE:ABX) and Goldcorp (NYSE:GG), who had similar movements, just not as pronounced.
Goldcorp, even with their nice Friday move, was only able to get back to where they started with on Monday.
Newmont finished the week at $61.67, gaining $2.72 on the day, or 4.61 percent. They reached a 52-week high of $62.11 before pulling back slightly.
They outperformed their major competitors for the week, Barrick Gold (NYSE:ABX) and Goldcorp (NYSE:GG), who had similar movements, just not as pronounced.
Goldcorp, even with their nice Friday move, was only able to get back to where they started with on Monday.
Newmont finished the week at $61.67, gaining $2.72 on the day, or 4.61 percent. They reached a 52-week high of $62.11 before pulling back slightly.
Gold Price Closes Week at $1,255.10
Gold prices on Friday closed only about $3 below their all-time high, finishing the day at $1,255.10. The all-time closing high for gold is $1,258.30.
Crushing economic news during the week ensures gold will continue on its upward run in the near term, as news housing starts plummeted over 30 percent and the GDP in the u.S. was downwardly revised for the third time for the first quarter.
The news that jobless claims dropped some was being spun as a positive note, but the market knows that's a bogus claim, as the hiring of worthless census workers is all that's propping up that part of the market, and just like the tax break that increased housing sales, once that's gone the real health of the job market will be revealed, and it won't be pretty.
So while almost everyone agrees gold prices moving up in the long term is a surety, the data confirming the global and U.S. economy remain in shambles makes the short-term upward movement of gold prices a surety as well.
There will of course continue to be corrections and profit-taking in the gold sector, but overall support is there for gold and isn't going to go away any time soon.
Crushing economic news during the week ensures gold will continue on its upward run in the near term, as news housing starts plummeted over 30 percent and the GDP in the u.S. was downwardly revised for the third time for the first quarter.
The news that jobless claims dropped some was being spun as a positive note, but the market knows that's a bogus claim, as the hiring of worthless census workers is all that's propping up that part of the market, and just like the tax break that increased housing sales, once that's gone the real health of the job market will be revealed, and it won't be pretty.
So while almost everyone agrees gold prices moving up in the long term is a surety, the data confirming the global and U.S. economy remain in shambles makes the short-term upward movement of gold prices a surety as well.
There will of course continue to be corrections and profit-taking in the gold sector, but overall support is there for gold and isn't going to go away any time soon.
Iamgold (NYSE:IAG) Finishes Negative for the Week
Iamgold (NYSE:IAG), like all the gold miners, big or small, started the week by dropping in a big way as traders too profits after record-breaking gold prices the week before.
In the case of the mid-tier gold miners like Iamgold, they weren't ever able to recover, as gold prices struggled throughout the rest of the week until Friday, where while getting a nice upward push, wasn't enough to make up for the rest of the week, and finished down.
Competitors like Eldorado Gold (NYSE:EGO) and Yamana Gold (NYSE:AUY) performed in similar fashion, although majors Newmont Mining (NYSE:NEM) and Barrick (NYSE:ABX) were able to end the week in positive territory.
At the end of the session Friday Iamgold was at $18.57, gaining $0.84, or 4.74 percent.
In the case of the mid-tier gold miners like Iamgold, they weren't ever able to recover, as gold prices struggled throughout the rest of the week until Friday, where while getting a nice upward push, wasn't enough to make up for the rest of the week, and finished down.
Competitors like Eldorado Gold (NYSE:EGO) and Yamana Gold (NYSE:AUY) performed in similar fashion, although majors Newmont Mining (NYSE:NEM) and Barrick (NYSE:ABX) were able to end the week in positive territory.
At the end of the session Friday Iamgold was at $18.57, gaining $0.84, or 4.74 percent.
Hecla Mining (NYSE:HL) Among Top Movers
Hecla Mining (NYSE:HL), which along with Silver Wheaton (NYSE:SLW), was among the top movers on Friday, as after absorbing economic data, skyrocketed along with other silver and gold mining stocks.
For silver miners, Hecla did something most others didn't, and that was after falling with the others on Monday's sell-off, they continued on up gradually for the rest of the week, while the rest remained level before the big upward movement.
Most never recovered from the huge hit they took to start the week, and so were down even after the great Friday.
Hecla finished the day and week at $5.78, a gain of $0.29 for the day, or 5.28 percent.
That made them one of the few silver stocks to end the week in positive territory.
For silver miners, Hecla did something most others didn't, and that was after falling with the others on Monday's sell-off, they continued on up gradually for the rest of the week, while the rest remained level before the big upward movement.
Most never recovered from the huge hit they took to start the week, and so were down even after the great Friday.
Hecla finished the day and week at $5.78, a gain of $0.29 for the day, or 5.28 percent.
That made them one of the few silver stocks to end the week in positive territory.
Barrick Gold (NYSE:ABX) Finishes Week Strong
After investors took profits on Monday, the rest of the week was poor for gold in general, but all the action was saved for Friday, and gold prices rebounded nicely, and Barrick Gold (NYSE:ABX) ended the week positive, after a lackluster performance over the last four days before that.
Gold prices finished at $1,255.80 on Friday, reaching as high as $1,258 and ounce.
Barrick ended the week at $46.33, gaining $1.74 on the day, a 3.90 percent rise in share price.
The stock is still close to its 52-week high of $48.02, and could be poised to pass it after the uneventful week.
Also the economic news that the GDP of the U.S. had to be downwardly revised again could be a strong catalyst for a good start on Monday.
Gold prices finished at $1,255.80 on Friday, reaching as high as $1,258 and ounce.
Barrick ended the week at $46.33, gaining $1.74 on the day, a 3.90 percent rise in share price.
The stock is still close to its 52-week high of $48.02, and could be poised to pass it after the uneventful week.
Also the economic news that the GDP of the U.S. had to be downwardly revised again could be a strong catalyst for a good start on Monday.
Yamana Gold (NYSE:AUY) Can't Overcome Slow Start for Week
Mid-size gold miners like Yamana Gold (NYSE:AUY) weren't able to keep up with their larger counterparts this week, especially Newmont Mining (NYSE:NEM) and Barrick Gold (NYSE:ABX), who in spite of a slow week, were able to end in a flourish, finishing in positive territory in New York.
Even with their strong performance on Friday, Yamana wasn't able to overcome the Monday sell-off in gold as investors took profits, and finished the week in negative territory.
They ended Friday and the week at $18.57 a share, a gain of $0.35 on the day, or 3.37 percent. They closed on Thursday at $17.73.
Even with their strong performance on Friday, Yamana wasn't able to overcome the Monday sell-off in gold as investors took profits, and finished the week in negative territory.
They ended Friday and the week at $18.57 a share, a gain of $0.35 on the day, or 3.37 percent. They closed on Thursday at $17.73.
Eldorado Gold (NYSE:EGO) Down on the Week
The story for gold miners this week, including Eldorado Gold (NYSE:EGO), was a big downswing on Monday, as traders took profits, the next three days trading at level ranges, and finally finishing the week up with a burst.
Others weren't quite so fortunate, as the plunge on Monday for some, such as Eldorado was huge, and the Friday rebound wasn't as strong as some of their competitors.
Along with Eldorado, another gold miner performing this way was Goldcorp (NYSE:GG), who also wasn't able to reach on Friday where they started the week at.
The week for Eldorado brought their share price to $18.38 at the close, a gain on the day of $0.69, or 3.90 percent. Volume was also down from 3-month averages.
Others weren't quite so fortunate, as the plunge on Monday for some, such as Eldorado was huge, and the Friday rebound wasn't as strong as some of their competitors.
Along with Eldorado, another gold miner performing this way was Goldcorp (NYSE:GG), who also wasn't able to reach on Friday where they started the week at.
The week for Eldorado brought their share price to $18.38 at the close, a gain on the day of $0.69, or 3.90 percent. Volume was also down from 3-month averages.
Friday, June 25, 2010
Oil Funds, Oil Options: Oil Companies Falling Short Exxon (NYSE:XOM), Shell (LSE:RDSA), Chevron (NYSE:CVX), ConocoPhillips (NYSE:COP), BP (NYSE:BP)
Edward Markey, a Democrat from Massachusetts criticized BP (NYSE:BP), Exxon Mobil (NYSE:XOM), Shell (LSE:RDSA), Chevron (NYSE:CVX), and Conoco Phillips (NYSE:COP) for not funding any new response and safety tools.
The tools being used in the BP oil cleanup in the Gulf of Mexico are pretty much the same tools that were used in the Exxon Valdez oil cleanup effort. Skimmers to collect the oil, booms to contain it, and the main weapon being used chemical dispersant's. Markey is proposing a bill that will broden oil options by using oil funds to the tune of $50 million being used to develop deep water drilling, and put it towards funding research for better oil spill clean up tools as well as new oil spill prevention methods.
Markey said, "the oil companies have been lying when they said they had the capacity to handle an emergency like the Deepwater Horizon spill. We can't afford to get stuck again without the tools to respond to a spill like the one we're seeing in the Gulf. It is clear that the oil companies have not created new solutions to keep their new drilling technologies safe."
The tools being used in the BP oil cleanup in the Gulf of Mexico are pretty much the same tools that were used in the Exxon Valdez oil cleanup effort. Skimmers to collect the oil, booms to contain it, and the main weapon being used chemical dispersant's. Markey is proposing a bill that will broden oil options by using oil funds to the tune of $50 million being used to develop deep water drilling, and put it towards funding research for better oil spill clean up tools as well as new oil spill prevention methods.
Markey said, "the oil companies have been lying when they said they had the capacity to handle an emergency like the Deepwater Horizon spill. We can't afford to get stuck again without the tools to respond to a spill like the one we're seeing in the Gulf. It is clear that the oil companies have not created new solutions to keep their new drilling technologies safe."
BP (NYSE:BP) Stock Price Reaches All Time Low
Due to concerns continuing to mount about BP's (NYSE:BP) future, there is added pressure on oil and gas stocks by the New York stock oil futures. These losses came after BP announced that it has to date spent $2.35 billion. This money has went to various things including the oil cleanup efforts, legal claims that have been paid, and grants to the states on the Gulf that have seen the biggest impact since the April 20th rig disaster.
The other thing that is causing renewed concern and placing pressure on BP stocks, is the pending development of a tropical storm. If this storm hits the Gulf of Mexico as predicted, it will cause possible large delays in the fuel containment efforts. Broker Nomura cut it projected BP price target from 593p to 465p.
Nomura said, "a heavy inversion of both credit yield and equity volatility suggests the market is concerned about a near term credit event around BP." BP stock fell to $26.96 a share losing another 6.1 percent. This beating their prior day low of $28.56, losing a total market value of almost 53 percent since April 20th.
"BP's market cap is eroding and its ability to finance itself in the capital market is impaired. It's anybodies guess what can happen but the fear of the market is that that liability could be so enormous that BP may have to seek bankruptcy protection," said Orr.
The other thing that is causing renewed concern and placing pressure on BP stocks, is the pending development of a tropical storm. If this storm hits the Gulf of Mexico as predicted, it will cause possible large delays in the fuel containment efforts. Broker Nomura cut it projected BP price target from 593p to 465p.
Nomura said, "a heavy inversion of both credit yield and equity volatility suggests the market is concerned about a near term credit event around BP." BP stock fell to $26.96 a share losing another 6.1 percent. This beating their prior day low of $28.56, losing a total market value of almost 53 percent since April 20th.
"BP's market cap is eroding and its ability to finance itself in the capital market is impaired. It's anybodies guess what can happen but the fear of the market is that that liability could be so enormous that BP may have to seek bankruptcy protection," said Orr.
Gold Prices Surge as US Economy Crawls
Gold prices pushed higher on Friday as confirmation the US economy is wobbly at best caused investors again to flee to gold for safety.
On the Comex division of the New York Mercantile Exchange, gold prices went as high as $1,255.80 an ounce for August delivery.
Gold prices on Friday traded as high as $1,258 and ounce. The all-time high for gold is $1,264 an ounce.
Although those of us who follow the markets and economy weren't surprised, the U.S. government GDP was downwardly revised again, confirming the US economy is crawling, and reinforces my belief we've never had a recovery, and are still in the midst of a recession.
The first-quarter GDP number was downwardly revised to 2.7 percent.
On the Comex division of the New York Mercantile Exchange, gold prices went as high as $1,255.80 an ounce for August delivery.
Gold prices on Friday traded as high as $1,258 and ounce. The all-time high for gold is $1,264 an ounce.
Although those of us who follow the markets and economy weren't surprised, the U.S. government GDP was downwardly revised again, confirming the US economy is crawling, and reinforces my belief we've never had a recovery, and are still in the midst of a recession.
The first-quarter GDP number was downwardly revised to 2.7 percent.
Exxon Mobil (NYSE:XOM) Moves Closer to Compensation from Venezuela
Exxon Mobil (NYSE:XOM) was happy with the decision from an international arbitration panel which moved them a step closer to being compensated from the theft of their assets by Venezuelan President Hugo Chavez, who nationalized them.
At this stage, what was decided was that the process was valid and Exxon could go forward with the claims process. In other words, it dealt solely with issues of jurisdiction in the matter and nothing else.
"The message to companies facing host-state interference with their assets is clear: cases associated with foreign investors like Exxon can gain the protection of international treaty law," said James Loftis, a partner in the international litigation practice at Vinson & Elkins.
In going forward, the amount of damages, along with the merit of the claims of Exxon are still to be determined, and the next part of the process will be to determine whether or not Venezuela will have to pay Exxon for confiscating their assets held in the country.
At this stage, what was decided was that the process was valid and Exxon could go forward with the claims process. In other words, it dealt solely with issues of jurisdiction in the matter and nothing else.
"The message to companies facing host-state interference with their assets is clear: cases associated with foreign investors like Exxon can gain the protection of international treaty law," said James Loftis, a partner in the international litigation practice at Vinson & Elkins.
In going forward, the amount of damages, along with the merit of the claims of Exxon are still to be determined, and the next part of the process will be to determine whether or not Venezuela will have to pay Exxon for confiscating their assets held in the country.
BHP (NYSE:BHP): Resist Gillard and Super Tax
BHP (NYSE:BHP) (ASX:BHP) - Continue your resistance!
It took only a few hours for the new Prime Minister of Australia, Julia Gillard, to dampen hopes there might be change in the country, especially concerning the hated super tax on mining companies, which ultimately brought the downfall of Kevin Rudd.
While Gillard made some overtures to the mining companies, she didn't change the narrative, already assuming the tax will be an inevitability, and sounding arrogant in communicating that.
The only concession Gillard made was to open up talks on the super tax. What would have won companies and people over would have been to start off with saying she would eliminate the 40 percent tax on profits.
If BHP and other miners would stick together and just wait this out, while continuing the offensive, Gillard and her ilk will be chased out of town, and business and people-friendly people voted in.
what is needed in Australian government and other governments around the world are lawmakers who'll shrink spending and make government smaller and efficient.
The reason for the outrageous super tax is because Rudd, and now Gillard, refuse to make the types of cuts in government spending which would eliminate the need for siphoning off productive money and waste it on unproductive government programs.
The political and popular winds are blowing this way, and even the idea of sitting down with Gillard by the mining companies blows your mind when you see they've already won the battle.
It took only a few hours for the new Prime Minister of Australia, Julia Gillard, to dampen hopes there might be change in the country, especially concerning the hated super tax on mining companies, which ultimately brought the downfall of Kevin Rudd.
While Gillard made some overtures to the mining companies, she didn't change the narrative, already assuming the tax will be an inevitability, and sounding arrogant in communicating that.
The only concession Gillard made was to open up talks on the super tax. What would have won companies and people over would have been to start off with saying she would eliminate the 40 percent tax on profits.
If BHP and other miners would stick together and just wait this out, while continuing the offensive, Gillard and her ilk will be chased out of town, and business and people-friendly people voted in.
what is needed in Australian government and other governments around the world are lawmakers who'll shrink spending and make government smaller and efficient.
The reason for the outrageous super tax is because Rudd, and now Gillard, refuse to make the types of cuts in government spending which would eliminate the need for siphoning off productive money and waste it on unproductive government programs.
The political and popular winds are blowing this way, and even the idea of sitting down with Gillard by the mining companies blows your mind when you see they've already won the battle.
Freeport-McMoRan (NYSE:FCX) Declares Dividend
Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) declared a quarterly dividend on Thursday of $0.30 a share, which will be payable to common stock holders of record as of July 15, 2010, and will be distributed on August 1, 2010.
The Freeport Board of Directors originally announced an annual dividend of $1.20 a share in April, payable in $0.30 increments on a quarterly basis.
The 52-week range of Freeport has been $43.19 to $90.55, closing today at $63.44, a drop of $1.62, or 2.49 percent.
While copper prices have risen over the last three days, demand has plunged along with new housing starts in America, along with China cooling off their hot urban property markets as well.
The Freeport Board of Directors originally announced an annual dividend of $1.20 a share in April, payable in $0.30 increments on a quarterly basis.
The 52-week range of Freeport has been $43.19 to $90.55, closing today at $63.44, a drop of $1.62, or 2.49 percent.
While copper prices have risen over the last three days, demand has plunged along with new housing starts in America, along with China cooling off their hot urban property markets as well.
BP (NYSE:BP) Bankruptcy and Increasing Focus on Anadarko (NYSE:APC) and Mitsui (Nasdaq:MITSY)
Over the last week or so, there's been an increasing focus on BP's (NYSE:BP) partners in the leaking oil well: Anadarko Petroleum (NYSE:APC) and Mitsui Oil (Nasdaq:MITSY).
At the outset it looks like it's a nod toward fairness and sharing the costs in the project, but so many things have been admitted by BP, that it's questionable as to whether or not the two companies could be made to contribute.
Lawmakers of course know this. So why the new interest in them? It's the growing awareness that the mounting costs related to the spill could bring BP to its knees and force them to declare bankruptcy to protect itself from creditors and liabilities.
If BP is forced to go bankrupt, there is no one else left to pay, and if government officials attempted to push that on taxpayers, their already tenuous political futures would be in even more jeopardy. It isn't going to happen!
Even though this is a genuine disaster, there was too much political posturing in response to outrage over the situation, and in attempts to appease the people. Things were put into place too quickly without thinking it through clearly and thoroughly.
What that essentially means is it's all on BP, and the issue of payment and liability is completely on them alone. Although there are ancillary lawsuits the other companies will face, it isn't near the liability faced by BP.
The other problem is BP is the only one out of the three with the type of capital and insurance to handle the lawsuits and claims; or at least with a legitimate shot at it.
Concerning the $20 billion escrow fund, some politicians are looking at the four-year length of it, and are aware BP could end up not having enough to pay out into it over that period of time. That's where the interest in Anadarko and Mitsui come in.
Then take the liability of BP with the Clean Water Act, which if they are deemed as being grossly negligent in the accident, could pay as much as $4,300 a barrel of oil that's emptied into the Gulf.
Depending on that outcome, and also finding out what the actual amount of oil that has escaped into the Gulf is, the costs would be astronomical, with the potential to come in at $142 million a day. How long could BP handle that on top of all its other liabilities? They couldn't is the answer.
Whether people like it or not, if all they try to do is destroy this company, and if any type of lawsuit is allowed to go forward against them, it is highly unlikely they'll continue going on without going bankrupt.
Even adding the two co-owner oil companies to the liability list won't help much, as what they could pay would be a relative drop in the bucket in contrast to BP.
Like it or not, this is another one of those too big to fail moments, which no one has the guts to say concerning the disaster.
Unfortunately, it is the legitimate pursuit of BP in the circumstances which is bringing it all about, and laws which will penalize them beyond what any company could probably pay. All this and we've barely scratched the surface of overall liabilities, although we've touched on the larger ones.
Bottom line as the growing costs are revealed, are there is no way this company will be able to survive without going bankrupt, unless there are actions taken to alleviate their liability, which isn't going to happen, as it would be political suicide.
It looks like taxpayers will end up paying for some of this, as there is simply no way BP will be able to.
At the outset it looks like it's a nod toward fairness and sharing the costs in the project, but so many things have been admitted by BP, that it's questionable as to whether or not the two companies could be made to contribute.
Lawmakers of course know this. So why the new interest in them? It's the growing awareness that the mounting costs related to the spill could bring BP to its knees and force them to declare bankruptcy to protect itself from creditors and liabilities.
If BP is forced to go bankrupt, there is no one else left to pay, and if government officials attempted to push that on taxpayers, their already tenuous political futures would be in even more jeopardy. It isn't going to happen!
Even though this is a genuine disaster, there was too much political posturing in response to outrage over the situation, and in attempts to appease the people. Things were put into place too quickly without thinking it through clearly and thoroughly.
What that essentially means is it's all on BP, and the issue of payment and liability is completely on them alone. Although there are ancillary lawsuits the other companies will face, it isn't near the liability faced by BP.
The other problem is BP is the only one out of the three with the type of capital and insurance to handle the lawsuits and claims; or at least with a legitimate shot at it.
Concerning the $20 billion escrow fund, some politicians are looking at the four-year length of it, and are aware BP could end up not having enough to pay out into it over that period of time. That's where the interest in Anadarko and Mitsui come in.
Then take the liability of BP with the Clean Water Act, which if they are deemed as being grossly negligent in the accident, could pay as much as $4,300 a barrel of oil that's emptied into the Gulf.
Depending on that outcome, and also finding out what the actual amount of oil that has escaped into the Gulf is, the costs would be astronomical, with the potential to come in at $142 million a day. How long could BP handle that on top of all its other liabilities? They couldn't is the answer.
Whether people like it or not, if all they try to do is destroy this company, and if any type of lawsuit is allowed to go forward against them, it is highly unlikely they'll continue going on without going bankrupt.
Even adding the two co-owner oil companies to the liability list won't help much, as what they could pay would be a relative drop in the bucket in contrast to BP.
Like it or not, this is another one of those too big to fail moments, which no one has the guts to say concerning the disaster.
Unfortunately, it is the legitimate pursuit of BP in the circumstances which is bringing it all about, and laws which will penalize them beyond what any company could probably pay. All this and we've barely scratched the surface of overall liabilities, although we've touched on the larger ones.
Bottom line as the growing costs are revealed, are there is no way this company will be able to survive without going bankrupt, unless there are actions taken to alleviate their liability, which isn't going to happen, as it would be political suicide.
It looks like taxpayers will end up paying for some of this, as there is simply no way BP will be able to.
Thursday, June 24, 2010
Barrick Gold (NYSE:ABX) Upgraded by Credit Suisse (NYSE:CS)
Large gold miners have been doing well so far in 2010, and Barrick Gold (NYSE:ABX) has steadily moved up, capturing the attention of Credit Suisse (NYSE:CS), who upgraded the giant gold miner from "Neutral" to "Outperform."
The price target for Barrick was also raised at Credit Suisse, from $47 to $54.
Barrick has had a 52-week range of $30.67 to $48.02, and as of 2:07 PM EDT, was at $45.24, a $0.50 gain, or 1.12 percent increase.
The price target for Barrick was also raised at Credit Suisse, from $47 to $54.
Barrick has had a 52-week range of $30.67 to $48.02, and as of 2:07 PM EDT, was at $45.24, a $0.50 gain, or 1.12 percent increase.
BP's (NYSE:BP) Spill Containment Cap Back In Place
BP (NYSE:BP) said they have been successful in putting the spill containment cap back onto the Macondo well. Oil and gas has resumed being taken to the drillship Discoverer Enterprise at the surface.
Thad Allen, Coast Guard Admiral said the containment cap was removed by Transocean after an ROV hit the cap. The drillship Discoverer Enterprise was then moved off the site so that repair could begin. What happened was the ROV accidentally closed a vent which regulates the gas and oil flow and prevents pressure from building.
The vent closure than caused the pressure to build and hydrocarbons started bubbling up through the line which purpose is to inject warm water as oil is being brought to the surface. This water prevents hydrate crystals from forming and clogging the line.
Thad Allen, Coast Guard Admiral said the containment cap was removed by Transocean after an ROV hit the cap. The drillship Discoverer Enterprise was then moved off the site so that repair could begin. What happened was the ROV accidentally closed a vent which regulates the gas and oil flow and prevents pressure from building.
The vent closure than caused the pressure to build and hydrocarbons started bubbling up through the line which purpose is to inject warm water as oil is being brought to the surface. This water prevents hydrate crystals from forming and clogging the line.
New York Pension Fund Suing BP (NYSE:BP) For Losses
The New York Pension Fund is saying they are suing BP (NYSE:BP) for investment losses. They are hoping to recover some of their losses from the drop that they have experienced with their stocks. Due to BP's negligence that caused the worst oil spill in U.S. history.
When the Deepwater Rig exploded April 20th, the fund held over 19 million shares according to state Comptroller Thomas DiNopoli. DiNopoli has hired the law firm Cohen Milstein Sellers and Toll, he is the sole trustee of the $132.6 billion in the fund.
"BP mislead investors about its safety procedures and its ability to respond to events like the ongoing oil spill and we're going to hold it accountable," said DiNopoli.
One of the largest state pension funds is in Florida and holds $104 billion according to spokesman Dennis Mackee. "We're monitoring the lawsuit and all developments but we have not come to any decisions," said Mackee. The Florida pension fund covers close to 1 million active workers and retirees. They've seen a loss of almost $65 million on their BP investments.
When the Deepwater Rig exploded April 20th, the fund held over 19 million shares according to state Comptroller Thomas DiNopoli. DiNopoli has hired the law firm Cohen Milstein Sellers and Toll, he is the sole trustee of the $132.6 billion in the fund.
"BP mislead investors about its safety procedures and its ability to respond to events like the ongoing oil spill and we're going to hold it accountable," said DiNopoli.
One of the largest state pension funds is in Florida and holds $104 billion according to spokesman Dennis Mackee. "We're monitoring the lawsuit and all developments but we have not come to any decisions," said Mackee. The Florida pension fund covers close to 1 million active workers and retirees. They've seen a loss of almost $65 million on their BP investments.
Is Gold Getting Too Popular?
Some gold investors are getting a little jittery, as the growing popularity of gold, especially as it becomes increasingly reported on by the mainstream press, has them wondering if we're approaching gold bubble status.
Taking the housing market and Tech stocks of the last ten years or so as examples of bubble markets bursting, we're far from that happening with gold, for several reason.
First is the lag time from information reaching someone, to their digesting it, and finally acting on it. That can take years in some cases to come about; the reasons bubble emerge, as everyone suddenly embraces the herd mentality and bypasses their thinking and go straight to making decisions based on emotion.
That aside, from a practical point of view, the other things related to housing and take was people borrowing to feed the frenzy, which hasn't began to happen yet by ordinary investors, who in general really haven't started putting money into gold.
When the gold investing mania truly begins, we'll see the loss of rational in people, and then their doing almost anything to get their hands on gold, just like they did with tech stocks and homes.
Until the ordinary person on the street starts talking gold and investing in gold, and then going beyond that to looking for ways to borrow even more in order to secure more of the yellow metal, I don't think we'll have to worry about a bubble.
A bubble doesn't exist because gold prices, or any other investment goes up, it exists because the prices of something go up for no reason whatsoever, which what investing mania leads to.
We can't be afraid of gold prices going up, as the underlying fundamentals are there to justify it. We also can't be afraid of temporary corrections, which falsely imply a bubble could be ready to burst, when there is no bubble in the first place.
Now that the mainstream media has finally picked up the gold story, we do have to watch closer, but we still don't see that many ordinary people buying into gold yet. Only then should our ears perk of and our eyes stay open concerning a potential bubble.
And then we need to look to how people are going about buying gold. Once leverage comes into play, we're probably getting close to a bubble, and the bursting of that bubble. Until that happens, we should be safe.
The bottom line is still the fundamentals, and everything happening in the macroeconomic world today justifies the price of gold and it continuing to go up.
Even if it goes beyond where it is expected it should be, we still need to pay attention to whether or not the fundamentals are still in play. If they are, there will still be price support at some point.
And that is what we need to pay attention to more than anything else if and when a gold bubble emerges. We need to know where he entered the gold market, as far as the price of gold, and how long we want to or are able to stay in if it in fact looks like a bubble is forming.
For those buying gold at different price points, we can afford to be more patient in finding out where the support level is, and whether or not to sell, or how much to sell.
Taking the housing market and Tech stocks of the last ten years or so as examples of bubble markets bursting, we're far from that happening with gold, for several reason.
First is the lag time from information reaching someone, to their digesting it, and finally acting on it. That can take years in some cases to come about; the reasons bubble emerge, as everyone suddenly embraces the herd mentality and bypasses their thinking and go straight to making decisions based on emotion.
That aside, from a practical point of view, the other things related to housing and take was people borrowing to feed the frenzy, which hasn't began to happen yet by ordinary investors, who in general really haven't started putting money into gold.
When the gold investing mania truly begins, we'll see the loss of rational in people, and then their doing almost anything to get their hands on gold, just like they did with tech stocks and homes.
Until the ordinary person on the street starts talking gold and investing in gold, and then going beyond that to looking for ways to borrow even more in order to secure more of the yellow metal, I don't think we'll have to worry about a bubble.
A bubble doesn't exist because gold prices, or any other investment goes up, it exists because the prices of something go up for no reason whatsoever, which what investing mania leads to.
We can't be afraid of gold prices going up, as the underlying fundamentals are there to justify it. We also can't be afraid of temporary corrections, which falsely imply a bubble could be ready to burst, when there is no bubble in the first place.
Now that the mainstream media has finally picked up the gold story, we do have to watch closer, but we still don't see that many ordinary people buying into gold yet. Only then should our ears perk of and our eyes stay open concerning a potential bubble.
And then we need to look to how people are going about buying gold. Once leverage comes into play, we're probably getting close to a bubble, and the bursting of that bubble. Until that happens, we should be safe.
The bottom line is still the fundamentals, and everything happening in the macroeconomic world today justifies the price of gold and it continuing to go up.
Even if it goes beyond where it is expected it should be, we still need to pay attention to whether or not the fundamentals are still in play. If they are, there will still be price support at some point.
And that is what we need to pay attention to more than anything else if and when a gold bubble emerges. We need to know where he entered the gold market, as far as the price of gold, and how long we want to or are able to stay in if it in fact looks like a bubble is forming.
For those buying gold at different price points, we can afford to be more patient in finding out where the support level is, and whether or not to sell, or how much to sell.
Who Will Insure Offshore Drilling? Probably Oil Companies
The consequences of the explosion on the Deepwater Horizon, and the fallout from it, aren't only related to BP (NYSE:BP) as the overall offshore drilling industry, will be affected, as a variety of interrelated events which haven't even been brought into the public eye are still out there waiting for their chance to be brought to the light.
At this time there is just too much to digest, and it'll have to be revealed incrementally, or it won't be absorbed or understood.
One of these is the insurance industry, whose rates would either be raised so high by insurance companies as to make it impossible for only the largest of companies to operate in the Gulf, eliminating competition and probably resulting in higher oil prices.
The other option would be for oil companies to insure themselves, which some are already doing.
As Moody's (NYSE:MCO) vice president senior credit officer, James Eck said, “What insurer is going to want to put out $1 billion worth of deepwater insurance and only get paid $5 to $10 million after this? They may as well write a few more hurricane-insurance contracts.”
In the early part of June, the cost of insurance policies covering oil rigs had already surged by 50 percent, and it's thought it'll rise by as much as 100 percent going forward.
Taking into account the entire global market, there isn't a large enough one to be able to insure drillers. At this time the annual premiums insurance companies collectively receive from the industry is $3 billion.
If the cap on liability is raised from $75 million to $10 billion, there is no insurance out their that could or would cover them. And this is just in the United States.
Premiums of course could be raised, but they would be so prohibitive as to make them irrelevant, as they couldn't be afforded to buy, and the insurance companies wouldn't survive if another catastrophic event were to happen.
That's why it's more than likely only several large oil companies could continue to drill in the Gulf by insuring themselves.
The only companies analysts see as being able to self-insure are BP, Exxon Mobil (NYSE:XOM) and Royal Dutch Shell (NYSE:RDS-A).
These three already insure themselves on a partial basis, and BP says it is less expensive in the current circumstance to pay as they go rather than to acquire policies outside of the company.
Self-insurance comes through wholly-owned units within the oil giants.
As you can see, this will cause a domino of events, which would force smaller drillers to leave the region, and an unknown amount of secondary events related to that which won't be known until it happens. From there it'll spread.
And that's just in this one area.
For insurance, there will be less of it for companies in the Gulf, and depending on the decisions on liability caps, it will drive out all but the very largest of oil companies.
Nothing after this will be the same in the Gulf of Mexico, and even in that regard regulations and responses around the world could change the industry even more.
How much all of this will be passed on to consumers in the form of higher prices is a ways off, but there is something that tells me we're not going to like it.
At this time there is just too much to digest, and it'll have to be revealed incrementally, or it won't be absorbed or understood.
One of these is the insurance industry, whose rates would either be raised so high by insurance companies as to make it impossible for only the largest of companies to operate in the Gulf, eliminating competition and probably resulting in higher oil prices.
The other option would be for oil companies to insure themselves, which some are already doing.
As Moody's (NYSE:MCO) vice president senior credit officer, James Eck said, “What insurer is going to want to put out $1 billion worth of deepwater insurance and only get paid $5 to $10 million after this? They may as well write a few more hurricane-insurance contracts.”
In the early part of June, the cost of insurance policies covering oil rigs had already surged by 50 percent, and it's thought it'll rise by as much as 100 percent going forward.
Taking into account the entire global market, there isn't a large enough one to be able to insure drillers. At this time the annual premiums insurance companies collectively receive from the industry is $3 billion.
If the cap on liability is raised from $75 million to $10 billion, there is no insurance out their that could or would cover them. And this is just in the United States.
Premiums of course could be raised, but they would be so prohibitive as to make them irrelevant, as they couldn't be afforded to buy, and the insurance companies wouldn't survive if another catastrophic event were to happen.
That's why it's more than likely only several large oil companies could continue to drill in the Gulf by insuring themselves.
The only companies analysts see as being able to self-insure are BP, Exxon Mobil (NYSE:XOM) and Royal Dutch Shell (NYSE:RDS-A).
These three already insure themselves on a partial basis, and BP says it is less expensive in the current circumstance to pay as they go rather than to acquire policies outside of the company.
Self-insurance comes through wholly-owned units within the oil giants.
As you can see, this will cause a domino of events, which would force smaller drillers to leave the region, and an unknown amount of secondary events related to that which won't be known until it happens. From there it'll spread.
And that's just in this one area.
For insurance, there will be less of it for companies in the Gulf, and depending on the decisions on liability caps, it will drive out all but the very largest of oil companies.
Nothing after this will be the same in the Gulf of Mexico, and even in that regard regulations and responses around the world could change the industry even more.
How much all of this will be passed on to consumers in the form of higher prices is a ways off, but there is something that tells me we're not going to like it.
Freeport-McMoRan (NYSE:FCX) Issued "BBB" Rating by Morningstar
Freeport-McMoRan (NYSE:FCX) is now being covered by Morningstar, and their first credit rating for the company was a "BBB."
Morningstar said, "After retiring a sizable chunk of debt in 2009 and early 2010, Freeport reported pro forma total debt of $5.1 billion at April 1. With a significant cash hoard, only modest maturities over the next five years, and preferred dividend requirements ending with the mandatory conversion of $2.875 billion in convertible preferred stock in May, Freeport has a solid liquidity profile."
The credit rating would have been higher if not for asset risks associated high-risk countries, said Morningstar. They were referring to the Freeport Grasberg mining gem in Papua, with risks of social unrest and the government seeking higher rents.
Freeport has also invested billions in the Tenke project in Congo, where risk is even higher in regard to either a incremental expropriation, or possibly even an outright one.
In other words, the risks are outside of operational control, and while the rewards are potentially high, so are the potential losses.
Morningstar said, "After retiring a sizable chunk of debt in 2009 and early 2010, Freeport reported pro forma total debt of $5.1 billion at April 1. With a significant cash hoard, only modest maturities over the next five years, and preferred dividend requirements ending with the mandatory conversion of $2.875 billion in convertible preferred stock in May, Freeport has a solid liquidity profile."
The credit rating would have been higher if not for asset risks associated high-risk countries, said Morningstar. They were referring to the Freeport Grasberg mining gem in Papua, with risks of social unrest and the government seeking higher rents.
Freeport has also invested billions in the Tenke project in Congo, where risk is even higher in regard to either a incremental expropriation, or possibly even an outright one.
In other words, the risks are outside of operational control, and while the rewards are potentially high, so are the potential losses.
Is Newmont (NYSE:NEM) Best of the Biggest Gold Miners?
While most of the major gold miners have started moving up in response rising gold prices over the last year, Newmont Mining (NYSE:NEM) is among the top gold miners among the majors, and holds its own against a lot of their smaller competitors as well, even when measuring by percentage of moving up in price.
Gold miners in general had been slow to move up with gold prices, lagging the market significantly, but that all has changed, and Newmont has experienced that change as well as any of the majors, up by over 23 percent for 2010 so far, and way more when you take them back 12 months.
The giant gold mining company, and its shareholders, have enjoyed record cash flow and earnings this year, and isn't that far off from its record high of $62.72. A number of analysts believe over the next year they'll reach $70 a share, shattering the former high if they attain that level of price.
Newmont is a well run gold miner who has started to finally catch up with the price of gold, and with the economic conditions we face, should do very well for investors over the next couple of years.
Gold miners in general had been slow to move up with gold prices, lagging the market significantly, but that all has changed, and Newmont has experienced that change as well as any of the majors, up by over 23 percent for 2010 so far, and way more when you take them back 12 months.
The giant gold mining company, and its shareholders, have enjoyed record cash flow and earnings this year, and isn't that far off from its record high of $62.72. A number of analysts believe over the next year they'll reach $70 a share, shattering the former high if they attain that level of price.
Newmont is a well run gold miner who has started to finally catch up with the price of gold, and with the economic conditions we face, should do very well for investors over the next couple of years.
Ron Paul: Taxpayers Already Paying for BP (NYSE:BP) Oil Spill
Ron Paul states on his website that BP (NYSE:BP) should be held completely accountable for the cleanup costs related to the Gulf of Mexico oil spill, but evidently that's already not the case, as an "upcoming supplemental bill for Gulf cleanup costs" already has "a large sum of taxpayer money" slipped into it.
Paul says the costs should be born completely by BP, and taxpayers shouldn't have to foot any of the bill. Paul didn't comment on whether or not other oil companies should participate in the cleanup costs. The point he was making is those responsible should pay for it, and not the American people.
The Texas congressman also wants liability caps removed so there is no possibility more taxpayers will have to pay anything.
As far as slipping payouts into a bill, it's outrageous when you consider BP has already committed $5 billion on an annual basis for the next four years, and that's on top of the over $2 billion they've already paid for the cleanup and paying out of claims.
Paul says the costs should be born completely by BP, and taxpayers shouldn't have to foot any of the bill. Paul didn't comment on whether or not other oil companies should participate in the cleanup costs. The point he was making is those responsible should pay for it, and not the American people.
The Texas congressman also wants liability caps removed so there is no possibility more taxpayers will have to pay anything.
As far as slipping payouts into a bill, it's outrageous when you consider BP has already committed $5 billion on an annual basis for the next four years, and that's on top of the over $2 billion they've already paid for the cleanup and paying out of claims.
Wednesday, June 23, 2010
Robotic Accident Has BP (NYSE:BP) Oil Flowing into the Gulf
An underwater robot accidentally bumped a venting system in the Gulf, forcing BP (NYSE:BP) to remove a cap that had been capturing the oil, releasing more oil into the Gulf waters.
The reason for removing the cap after the robotic submarine hit it was because gas started rising through the vent, which carried warm water down to prevent the buildup of hardened crystals, which could form on the cap and disrupt the system.
While some reports said the oil was being released unabated into the Gulf, that's not true, as Coast Guard Adm. Thad Allen said the flow of oil has increased, but it's not a "totally unconstrained discharge."
The second system installed, which is used to burn off oil is reportedly still operating.
The system that is down does capture the most oil at this time.
The reason for removing the cap after the robotic submarine hit it was because gas started rising through the vent, which carried warm water down to prevent the buildup of hardened crystals, which could form on the cap and disrupt the system.
While some reports said the oil was being released unabated into the Gulf, that's not true, as Coast Guard Adm. Thad Allen said the flow of oil has increased, but it's not a "totally unconstrained discharge."
The second system installed, which is used to burn off oil is reportedly still operating.
The system that is down does capture the most oil at this time.
Royal Gold (NASDAQ:RGLD) Prices Offering at $48.50 a Share
In hopes of raising approximately $240.3 million, after expenses, Royal Gold (NASDAQ:RGLD) prices its public offering at $48.50 a share. The company is offering 5.2 million common shares at that price.
The price is a discount of 5 percent off the Tuesday close of the company, which was $51.28. The share price was trading in New York at $48.74, a decline of $2.54, or 4.95%, as of 1:09 PM EDT.
This was an expected result because of the dilution factor of the added shares out there.
An additional 780,000 shares are offered as an option to the underwriters in order to cover over-allotments (demand). The options are available for 30 days.
The capital is being raised to fund acquisitions, pay down debt, and for any other general corporate purposes.
The offering is scheduled to close on Monday, June 28,2010.
The price is a discount of 5 percent off the Tuesday close of the company, which was $51.28. The share price was trading in New York at $48.74, a decline of $2.54, or 4.95%, as of 1:09 PM EDT.
This was an expected result because of the dilution factor of the added shares out there.
An additional 780,000 shares are offered as an option to the underwriters in order to cover over-allotments (demand). The options are available for 30 days.
The capital is being raised to fund acquisitions, pay down debt, and for any other general corporate purposes.
The offering is scheduled to close on Monday, June 28,2010.
Paramount Gold and Silver (AMEX:PZG) Acquiring X-Cal Resources (TSE:XCL)
U.S. exploration company Paramount Gold and Silver (AMEX:PZG) (TSE:PZG) has been hunting for over a year for an acquisition that makes sense to them, and they have found it in Canadian-based gold exploration company X-Cal Resources (TSE:XCL), which they announced they have acquired in a straight stock deal for $30.4 million.
Paramount's existing projects are in Mexico, while the primary holding of X-Cal Resources is the Sleeper gold project in Nevada.
The newly merged company, assuming shareholder approval, will focus on getting the Sleeper project.
"They have a program to spend between $4 million and $10 million on that property over the next 18 months to bring it back to the point where it can be developed," said one source.
The Sleeper project has an estimated million ounces of gold in it.
Paramount's existing projects are in Mexico, while the primary holding of X-Cal Resources is the Sleeper gold project in Nevada.
The newly merged company, assuming shareholder approval, will focus on getting the Sleeper project.
"They have a program to spend between $4 million and $10 million on that property over the next 18 months to bring it back to the point where it can be developed," said one source.
The Sleeper project has an estimated million ounces of gold in it.
SPDR Gold Trust (NYSE:GLD) Continues Record Amount of Gold Held
The SPDR Gold Trust (NYSEArca:GLD) reached record levels of gold they hold again, as on their website they show they've increased their gold holdings to 1,313.13 metric tons as the close of the trading session on Tuesday. It rose slightly to 1,313.14 metric tons about 12:30 PM EDT on Wednesday.
So far in 2010, the gold ETF has increased by 13.2 percent, and is valued at $52.2 billion, while holding assets worth $38.54 billion.
Since the latter part of 2009, the fund has added close to 180 metric tons of gold to its holdings.
So far in 2010, the gold ETF has increased by 13.2 percent, and is valued at $52.2 billion, while holding assets worth $38.54 billion.
Since the latter part of 2009, the fund has added close to 180 metric tons of gold to its holdings.
Stock Prices, Crude Oil Futures: Chevron (NYSE:CVX), Halliburton (NYSE:HAL), Exxon (NYSE:XOM),
Stock prices in energy see a dramatic decline in Chevron (NYSE:CVX), Halliburton (NYSE:HAL), and Exxon (NYSE:XOM). This drop was seen after the White House stated they planned to immediately appeal a decision made by a judge in Louisiana to stop the moratorium banning any new drilling for six months.
Exxon Mobil dropped 1.9 percent to 61.94. While Chevron seen a decline of 2.3 percent taking them to 74. Then there Halliburton which slid 3.9 percent to 25.99.
Ben Halliburton, chief investment officer at Tradition Capital Management said, "it's a big negative for the industry if the moratorium is not lifted. Clearly, the companies impacted are going to have negative revisions on their earnings and their cash flows if they're involved in the deepwater Gulf."
The Nasdaq dropped 1.19 percent to 2261.80. While the Standard and Poors 500 saw a decline of 1.61 percent to 1095.31. All sectors of the S&P ended in the red lead by energy. The Dow Jones fell 1.43 percent to 10293.52, there largest one day loss since June 4th.
Exxon Mobil dropped 1.9 percent to 61.94. While Chevron seen a decline of 2.3 percent taking them to 74. Then there Halliburton which slid 3.9 percent to 25.99.
Ben Halliburton, chief investment officer at Tradition Capital Management said, "it's a big negative for the industry if the moratorium is not lifted. Clearly, the companies impacted are going to have negative revisions on their earnings and their cash flows if they're involved in the deepwater Gulf."
The Nasdaq dropped 1.19 percent to 2261.80. While the Standard and Poors 500 saw a decline of 1.61 percent to 1095.31. All sectors of the S&P ended in the red lead by energy. The Dow Jones fell 1.43 percent to 10293.52, there largest one day loss since June 4th.
Chevron (NYSE:CVX) and BP (NYSE:BP) Agree On Deal
Chevron (NYSE:CVX) and BP (NYSE:BP) have agreed to join together on the bidding of a South China Sea exploration block. Although the financial terms haven't been made public, the deal is waiting for approval by China's Ministry of Commerce.
If the deal is given approval, Chevron will hold a 60 percent stake as well as being the operator. With BP's stake being the other 40 percent. Although if they were to find commercial oil and gas that would give China National Offshore Oil Corporation the right to take 51 percent stake.
Nobody would comment on the deal when spokesmen were contacted. Steve Westwell, BP's Global Chief of Staff said of course the oil spill will have a "profound effect" on the industry. He continued, despite the current situation they are dealing with it should not "stop all further deepwater production." Not to mention the fact that drilling in the Gulf of Mexico has had an impeccable safety record for the past 20 years.
Chevron is also currently bidding on two other blocks in South China.
If the deal is given approval, Chevron will hold a 60 percent stake as well as being the operator. With BP's stake being the other 40 percent. Although if they were to find commercial oil and gas that would give China National Offshore Oil Corporation the right to take 51 percent stake.
Nobody would comment on the deal when spokesmen were contacted. Steve Westwell, BP's Global Chief of Staff said of course the oil spill will have a "profound effect" on the industry. He continued, despite the current situation they are dealing with it should not "stop all further deepwater production." Not to mention the fact that drilling in the Gulf of Mexico has had an impeccable safety record for the past 20 years.
Chevron is also currently bidding on two other blocks in South China.
Anadarko (NYSE:APC) Bonds Hit Hard
Anadarko Petroleum's (NYSE:APC) bond market have been hit hard. This drop happened after Moody decreased its credit rating of Anadarko one level to Bb1. This is one step below investment grade.
The securities due in 2016 were at 5.95 percent, the decline of 2.7 cents brought it to 88.1 cents on the dollar, yielding 8.45 percent. The day before the spill April 19th, the notes traded at 110.9 cents and then fell to 87.5 cents on the dollar.
Robert Gwin, chief financial advisor for Anadarko said the downgrade, "is very disappointing and surprising in light of Anadarko's limited role as a non-operating investor in the Macondo well."
Brookfield's Levington said, "I think the credit markets have downgraded all of the spill companies by several notches. The ratings agencies are trying to catch up with what the markets have already done."
Growing Outrage over Obama's Oil Moratorium
Other than his radical environmental pals, and his Democrat buddies, very few people or businesses support the overreaction of Obama to impose a six-month moratorium on drilling for oil in over 500 feet of water in the Gulf of Mexico, as businesses serving the industry, as well as the industry itself, get financially crushed from Obama's misguided decision.
A judge lifted the moratorium, saying it was unprecedented in history, with no parameters or guidelines other than completely shutting everything down involved in the decision of Obama.
The arrogant president of the United States doesn't care, and immediately went on the offense against the people and businesses in the Gulf region by appealing the ruling of the federal judge.
A number of people say it could do more damage than the disaster itself to the people of the Gulf.
A judge lifted the moratorium, saying it was unprecedented in history, with no parameters or guidelines other than completely shutting everything down involved in the decision of Obama.
The arrogant president of the United States doesn't care, and immediately went on the offense against the people and businesses in the Gulf region by appealing the ruling of the federal judge.
A number of people say it could do more damage than the disaster itself to the people of the Gulf.
Tuesday, June 22, 2010
Judge Overturns Obama's Moratorium Due To BP (NYSE:BP)
In a surprising move, Martin Feldman, U.S. District Judge from New Orleans has blocked President Obama's six month moratorium, originating because of BP's (NYSE:BP) worst oil spill in U.S. history. The moratorium was at first going to just be for any new deepwater drilling and for only the month of May, but then it turned into a suspension of all Gulf coast drilling. Shutting down 33 of the Gulf's exploratory wells.
The complaint was submitted to the Judge by several businesses who provided many different services who are arguing the moratorium was arbitrarily imposed. In his ruling Feldman agreed, stating in his ruling that the Interior Department is assuming because one rig failed all rigs and companies involved with deepwater drilling are posing an imminent danger.
Feldman wrote, "an invalid agency decision to suspend drilling of wells in depths of over 500 feet simply cannot justify the immeasurable effect on the plaintiffs, the local economy, the Gulf region, and the critical present day aspect of the availability of domestic energy in this country."
The Interior Department's response to the lawsuit is simply, the moratorium is necessary while the continued attempts go on in the Gulf to stop the crude oil and cleanup the oil spill. "A second deepwater blowout could overwhelm the efforts to respond to the current disaster," said the Interior Department.
The White House said there will be an immediate appeal.
The complaint was submitted to the Judge by several businesses who provided many different services who are arguing the moratorium was arbitrarily imposed. In his ruling Feldman agreed, stating in his ruling that the Interior Department is assuming because one rig failed all rigs and companies involved with deepwater drilling are posing an imminent danger.
Feldman wrote, "an invalid agency decision to suspend drilling of wells in depths of over 500 feet simply cannot justify the immeasurable effect on the plaintiffs, the local economy, the Gulf region, and the critical present day aspect of the availability of domestic energy in this country."
The Interior Department's response to the lawsuit is simply, the moratorium is necessary while the continued attempts go on in the Gulf to stop the crude oil and cleanup the oil spill. "A second deepwater blowout could overwhelm the efforts to respond to the current disaster," said the Interior Department.
The White House said there will be an immediate appeal.
Barrick (NYSE:ABX), Newmont (NYSE:NEM), Goldcorp (NYSE:GG) Push Their Way Back as Gold Continues Up
After the expected profit-taking following the record-breaking gold week, Barrick Gold (NYSE:ABX) (TSE:ABX), Newmont Mining (NYSE:NEM) and Goldcorp (NYSE:GG) (TSE:G) followed the market down, but are starting to climb back up as gold prices continue their upward run.
Barrick and Newmont continue to outperform Goldcorp, but they have continued a more consistent upward trend since February 2010.
Newmont has been strong today, reaching $60.21 a share, a gain of $0.73, or 1.22 percent, as of 1:38 PM EDT.
Barrick Gold is next, standing at $45.25 a share, a $0.45 increase, or 1.00 percent.
Goldcorp has struggled to remain positive throughout the trading session today, although as of 1:39 PM EDT, they were still up $0.11, or 0.25 percent, hitting $44.46 a share.
Barrick and Newmont continue to outperform Goldcorp, but they have continued a more consistent upward trend since February 2010.
Newmont has been strong today, reaching $60.21 a share, a gain of $0.73, or 1.22 percent, as of 1:38 PM EDT.
Barrick Gold is next, standing at $45.25 a share, a $0.45 increase, or 1.00 percent.
Goldcorp has struggled to remain positive throughout the trading session today, although as of 1:39 PM EDT, they were still up $0.11, or 0.25 percent, hitting $44.46 a share.
Kinross (NYSE:KGC) , Eldorado Gold (NYSE:EGO), Iamgold (NYSE:IAG) Up As Gold Rebounds
Kinross Gold (NYSE:KGC) (TSE:K), Eldorado Gold (NYSE:EGO), Iamgold Corp. (NYSE:IAG) (TSE:IMG) are partaking in the rebound of gold after noon today in New York, as investors start to return to the metal after taking profits from last week's two record-breaking gold price days.
At 1:21 PM EDT, gold prices were at $1,240.20 an ounce, a gain of $7.60.
Eldorado Gold led the gold miners today, and continues to hold strong, hitting $18.04, a $0.25 increase, or 1.41 percent gain, as of 1:22 PM EDT.
Kinross Gold was close in share price to Eldorado Gold, standing at $18.24, a gain of $0.16, or 0.88 percent, also at 1:22 PM EDT.
Also at about the same share price was Iamgold, which stood at $18.23 a share at the same time as the others, increasing $0.20, or 1.11 percent.
At 1:21 PM EDT, gold prices were at $1,240.20 an ounce, a gain of $7.60.
Eldorado Gold led the gold miners today, and continues to hold strong, hitting $18.04, a $0.25 increase, or 1.41 percent gain, as of 1:22 PM EDT.
Kinross Gold was close in share price to Eldorado Gold, standing at $18.24, a gain of $0.16, or 0.88 percent, also at 1:22 PM EDT.
Also at about the same share price was Iamgold, which stood at $18.23 a share at the same time as the others, increasing $0.20, or 1.11 percent.
Shell (LSE:RDSA) Penalized By Bond Market, 2.75 Billion Debt Offering
In a 2.75 billion dollar debt offering, Shell (LSE:RDSA) received penalties by the bond market. Anadarko's notes saw a significant decline as fear mounts that profits will fall across the oil industry due to the worst U.S. oil spill in history.
Shell has the most rigs in the Gulf that are now being effected by the deepwater drilling ban. The effect is causing Shell to face higher yield spreads causing investors considerable doubt to weather the government will further increase restrictions and regulations. Anadarko has yet to see if they will be required to pay their share of the oil spill disaster. Having a 25 percent stake, if it's found that they do have to pay they would be required to pay 25 percent of the oil cleanup costs.
Levington, a managing director of corporate credit at Brookfield in New York said, "it could delay the timely projects or possibly eliminate them. It could require additional monitoring and maintenance, all of which could hurt earnings, cash flow, and returns on oil invested capital."
Shell has the most rigs in the Gulf that are now being effected by the deepwater drilling ban. The effect is causing Shell to face higher yield spreads causing investors considerable doubt to weather the government will further increase restrictions and regulations. Anadarko has yet to see if they will be required to pay their share of the oil spill disaster. Having a 25 percent stake, if it's found that they do have to pay they would be required to pay 25 percent of the oil cleanup costs.
Levington, a managing director of corporate credit at Brookfield in New York said, "it could delay the timely projects or possibly eliminate them. It could require additional monitoring and maintenance, all of which could hurt earnings, cash flow, and returns on oil invested capital."
Gold Prices Today Under Downward Pressure
Yesterday's sell-off in gold was expected, as the two record-breaking days last week all but ensured Monday would follow that pattern, and that was the case.
Today's gold prices continue to decline early in the session, as investors continue to take profits after a robust gold week.
Yet as the day progresses, a rebound has emerged, and gold prices have started to go up after 12:00 PM EDT; a trend that happens many times after profit-taking early in a day.
This will continue to be the practice concerning the movement of gold prices, as there are a variety of people and institutions involved, and they include gold investors, traders and speculators, each one with their own strategy to make money on gold, which will continue to create a jagged graph on a daily basis, but one that will continue to trend up.
Today's gold prices continue to decline early in the session, as investors continue to take profits after a robust gold week.
Yet as the day progresses, a rebound has emerged, and gold prices have started to go up after 12:00 PM EDT; a trend that happens many times after profit-taking early in a day.
This will continue to be the practice concerning the movement of gold prices, as there are a variety of people and institutions involved, and they include gold investors, traders and speculators, each one with their own strategy to make money on gold, which will continue to create a jagged graph on a daily basis, but one that will continue to trend up.
BP (NYSE:BP) Oil Spill Costs U.S. State Pensions $1.4 Billion
While the majority of the focus is on the effects of BP's (NYSE:BP) oil spill disaster in the ocean and to wildlife, it's effects have also touched the U.S. State pension. The California Public Employees fund has lost a total value of close to $284.6 million. There are 42 state retirement accounts that are tied into BP's stock prices.
The U.S. Public Pension fund has been struggling since last year, with a decline of 21 percent total investment losses. As of May 1 of this year, they held more than $300 million shares in BP. The largest U.S. Pension fund, Calpers at $210 billion, had a total of 58.2 million shares as of April 20th. This is more than any other state pension. They saw a decline from $585.7 million down to $301 million.
Brad Pacheco, a spokesman said, " Calpers has a well diversified portfolio and long term investment strategy to weather these ups and downs, even those caused by unusual circumstances such as this one. We will be engaging BP on corporate governance to discuss the impact of the crisis on the value of the company."
The U.S. Public Pension fund has been struggling since last year, with a decline of 21 percent total investment losses. As of May 1 of this year, they held more than $300 million shares in BP. The largest U.S. Pension fund, Calpers at $210 billion, had a total of 58.2 million shares as of April 20th. This is more than any other state pension. They saw a decline from $585.7 million down to $301 million.
Brad Pacheco, a spokesman said, " Calpers has a well diversified portfolio and long term investment strategy to weather these ups and downs, even those caused by unusual circumstances such as this one. We will be engaging BP on corporate governance to discuss the impact of the crisis on the value of the company."
GOLD BUBBLE? WHAT BUBBLE?
by Toby Connor
We continue to hear pundits describe gold as a bubble. Certainly it will turn into a bubble before this is all over but we are hardly in the bubble stage yet. In order for a bubble to form you need the public to come into an asset class. The public is pretty dim and it can take 15-20 years before they "catch on". It took 18 before they noticed the tech bubble.
Once they do start to "get it" we will have about a year to a year and a half as gold enters the parabolic stage before the bubble pops. See the Nasdaq chart below from late 98 to March of 2000.
At the top there will be lines outside the the local coin dealer waiting for the next shipment of gold to come in.
At the top 7 of 10 billboards you see driving down the highway will have something to do with precious metals.
At the top the guy standing next to you in the grocery store will tell you how many thousands of dollars he made last month off his gold coins.
At the top smart money will eventually come to their senses and realize that true value (profitable companies making the necessities for life on Earth) are being given away for pennies on the dollar to purchase a shiny metal that really has no intrinsic value.
Of course not!
I think we might be getting close to the Nasdaq 1998 level, but gold is hardly in the runaway parabolic stage where it rallies over 100% in a year. Not to mention that none of the other signs I noted above are even remotely present yet.
But no one needs to worry about a bubble just yet. We need to have at least one more serious correction similar to what happened in `08 or in tech stocks in 1998 to wash out bullish sentiment before we can start the final parabolic run into a true bubble top.
If I had to guess I would say that will occur during the next liquidation event which should be due in mid to late 2012 as the stock market collapses down into the third leg of the secular bear market.
That should mark the next four year cycle low and possibly the nominal bottom for the secular bear market in stocks that began in March of 2000. I expect the selling pressure at that climactic event will also drag gold down into the correction that should separate the second phase (what gold has been in since early '06) from the third and final bubble stage. Gold will quickly recover, like it did from the last selling climax, and when it does this is when we will see the public begin to panic into gold.
Then and only then can we start talking about a bubble.
At the moment I think we are about to enter the second leg of an ongoing C-wave advance that began in September of last year. I'm expecting this leg to take gold to the $1400-$1500 level before experiencing a major D-wave correction.
I'll be monitoring the advance on a daily basis to keep subscribers appraised of where gold is in its intermediate cycle. When I think we are getting close to the top of the C-wave I'll warn subscribers to take profits and exit the precious metals market so as not to get caught in a D-wave correction.
Gold Scents
We continue to hear pundits describe gold as a bubble. Certainly it will turn into a bubble before this is all over but we are hardly in the bubble stage yet. In order for a bubble to form you need the public to come into an asset class. The public is pretty dim and it can take 15-20 years before they "catch on". It took 18 before they noticed the tech bubble.
Once they do start to "get it" we will have about a year to a year and a half as gold enters the parabolic stage before the bubble pops. See the Nasdaq chart below from late 98 to March of 2000.
At gold's top, half of your neighbors will be buying gold (not selling like they are doing now).
At the top 7 of 10 billboards you see driving down the highway will have something to do with precious metals.
At the top the guy standing next to you in the grocery store will tell you how many thousands of dollars he made last month off his gold coins.
At the top everyone will have become convinced the dollar is toilet paper and will only continue to decline until it has become worthless.
At the top the population will believe that we have to go back on a gold standard. By the way, a gold standard never stopped any country from debasing its currency. In ancient Rome they clipped some of the gold out of the coins. Roosevelt confiscated and arbitrarily revalued gold in the 30's. A gold standard will not prevent a government from trying to get something for nothing by debasing the currency.
At the top stocks will be universally hated and gold universally loved. In reality, stocks will at that time, represent true value. Much more so than a shiny metal with virtually no industrial uses.
At the top smart money will eventually come to their senses and realize that true value (profitable companies making the necessities for life on Earth) are being given away for pennies on the dollar to purchase a shiny metal that really has no intrinsic value.
Here is a chart of the Nasdaq followed by a chart of gold. You tell me, does gold look like a bubble yet?
Of course not!
I think we might be getting close to the Nasdaq 1998 level, but gold is hardly in the runaway parabolic stage where it rallies over 100% in a year. Not to mention that none of the other signs I noted above are even remotely present yet.
But no one needs to worry about a bubble just yet. We need to have at least one more serious correction similar to what happened in `08 or in tech stocks in 1998 to wash out bullish sentiment before we can start the final parabolic run into a true bubble top.
If I had to guess I would say that will occur during the next liquidation event which should be due in mid to late 2012 as the stock market collapses down into the third leg of the secular bear market.
That should mark the next four year cycle low and possibly the nominal bottom for the secular bear market in stocks that began in March of 2000. I expect the selling pressure at that climactic event will also drag gold down into the correction that should separate the second phase (what gold has been in since early '06) from the third and final bubble stage. Gold will quickly recover, like it did from the last selling climax, and when it does this is when we will see the public begin to panic into gold.
Then and only then can we start talking about a bubble.
At the moment I think we are about to enter the second leg of an ongoing C-wave advance that began in September of last year. I'm expecting this leg to take gold to the $1400-$1500 level before experiencing a major D-wave correction.
I'll be monitoring the advance on a daily basis to keep subscribers appraised of where gold is in its intermediate cycle. When I think we are getting close to the top of the C-wave I'll warn subscribers to take profits and exit the precious metals market so as not to get caught in a D-wave correction.
Gold Scents
BP (NYSE:BP), Anadarko (NYSE:APC) May Arbitrate
The battle between BP (NYSE:BP) and Anadarko (NYSE:APC) may go down to being arbitrated, as the two battle over who may have to pay out billions over the oil spill in the Gulf of Mexico.
Anadarko, who owns a 25 percent stake in the well, would get hit the most of the two partners besides BP in the well, as Japanese oil giant Mitsui holds only a 10 percent stake, although that could end up costing billions if the worst case scenario is even close to playing out.
For now though, Anadarko is in the sights of BP, and they're pushing it as far as they can to get a decision made.
It may even be illegal for the two companies to litigate the dispute, as anything being fought over which is over $500,000 has been included in a provision of the partnership agreement, according to a regulatory filing by Anadarko.
This isn't to say it can't be litigated, but it does complicate the picture, and if the two entities trust those doing the arbitrating, it is a quicker and less expensive resolution to the problem.
Anadarko, who owns a 25 percent stake in the well, would get hit the most of the two partners besides BP in the well, as Japanese oil giant Mitsui holds only a 10 percent stake, although that could end up costing billions if the worst case scenario is even close to playing out.
For now though, Anadarko is in the sights of BP, and they're pushing it as far as they can to get a decision made.
It may even be illegal for the two companies to litigate the dispute, as anything being fought over which is over $500,000 has been included in a provision of the partnership agreement, according to a regulatory filing by Anadarko.
This isn't to say it can't be litigated, but it does complicate the picture, and if the two entities trust those doing the arbitrating, it is a quicker and less expensive resolution to the problem.
BP (NYSE:BP) Close To Placing Better Cap on Oil Leak
By the end of June, BP (NYSE:BP) should have an improved cap over the oil well now leaking oil into the Gulf, and it could be within a week if everything goes right, according to Coast Guard Admiral Thad Allen, who is representing the U.S government in overseeing the matter.
The practicals of it are the existing containment cap will be removed and then replaced with a larger one, which not only can capture more oil, but also allow those vessels processing or burning off the gas and oil to disconnect and move to safer waters in case of a hurricane.
One important additional element of the new cap will be a sensor which should give a more accurate reading of rate the oil is actually leaking into the Gulf; something no one has yet to get a handle on.
Government scientists have estimated a daily oil leak of 35,000 to 60,000 barrels, while the worst-case scenario from BP is as high as 100,000 barrels of oil a day gushing into the Gulf.
Once the cap is in place, there will be another vessel included in the processing of the oil, which could capture up to 53,000 barrels a day.
By the middle of July, BP hopes to be able to capture up to 80,000 barrels of day if that much is actually spilling into the ocean.
So far BP has captured 231,190 barrels of oil since the cap system has been in place.
The practicals of it are the existing containment cap will be removed and then replaced with a larger one, which not only can capture more oil, but also allow those vessels processing or burning off the gas and oil to disconnect and move to safer waters in case of a hurricane.
One important additional element of the new cap will be a sensor which should give a more accurate reading of rate the oil is actually leaking into the Gulf; something no one has yet to get a handle on.
Government scientists have estimated a daily oil leak of 35,000 to 60,000 barrels, while the worst-case scenario from BP is as high as 100,000 barrels of oil a day gushing into the Gulf.
Once the cap is in place, there will be another vessel included in the processing of the oil, which could capture up to 53,000 barrels a day.
By the middle of July, BP hopes to be able to capture up to 80,000 barrels of day if that much is actually spilling into the ocean.
So far BP has captured 231,190 barrels of oil since the cap system has been in place.
Monday, June 21, 2010
Ivanhoe Mines (NYSE:IVN) Beats Gold Price Trend Today - Up Over 2 Percent
Ivanhoe Mines (NYSE:IVN) (TSE:IVN) went against the grain of gold prices today, and pushed up over 2 percent, gaining $0.30, or 2.02 percent at the close in New York.
In what could become the mining story of the decade, Ivanhoe is poised to continue its rise in value, even if all it had was its Oyu Tolgoi Project in Mongolia, which is scheduled to being production sometime in the middle of 2013, with construction on the mine starting this month.
The project will bring Ivanhoe into the top tier of not just gold mining companies, but mining companies in general, with copper production expected to be at 1.2 billion pounds a year, and gold at 650,000 ounces a year over the first decade of production.
At its peak, single-year production at the project could reach as high as 1.1 million ounces of gold and 1.7 billion pounds of copper. Hints have been swirling that these estimates could possibly be conservative.
Oyu Tolgoi is projected to become one of the three top copper/gold mines in the world, and has a solid, long-term legal and regulatory agreement in place, and is partners with the Government of Mongolia in the project.
Ivanhoe has a 57 percent stake in SouthGobi Resources, a subsidiary also based in Mongolia which has been providing coal to customers in China.
They also own 81 percent of Ivanhoe Australia (ASE:IVA), which a scoping study has concluded has significant molybdenum and rhenium deposits which should offer long-term cashflows, according the company. The caveat there of course is the impact of the 40 super tax on profits which has resulted in many companies putting off projects into the future.
The company also owns the Altynalmas Gold Ltd., in Kazakhstan, recently bumping their position up to a 50 percent stake in the company which controls the Kyzyl Gold Project in that country via a 100 percent stake.
Altogether, Ivanhoe has the underpinnings for a long, profitable run into the future, and in a few short years should become one of the premiere miners in the world, and as mentioned earlier, possibly the mining story of the decade.
If the main solid management and keep operational cost, along with debt, low, they should be one of the best investments in the sector for the long term.
In what could become the mining story of the decade, Ivanhoe is poised to continue its rise in value, even if all it had was its Oyu Tolgoi Project in Mongolia, which is scheduled to being production sometime in the middle of 2013, with construction on the mine starting this month.
The project will bring Ivanhoe into the top tier of not just gold mining companies, but mining companies in general, with copper production expected to be at 1.2 billion pounds a year, and gold at 650,000 ounces a year over the first decade of production.
At its peak, single-year production at the project could reach as high as 1.1 million ounces of gold and 1.7 billion pounds of copper. Hints have been swirling that these estimates could possibly be conservative.
Oyu Tolgoi is projected to become one of the three top copper/gold mines in the world, and has a solid, long-term legal and regulatory agreement in place, and is partners with the Government of Mongolia in the project.
Ivanhoe has a 57 percent stake in SouthGobi Resources, a subsidiary also based in Mongolia which has been providing coal to customers in China.
They also own 81 percent of Ivanhoe Australia (ASE:IVA), which a scoping study has concluded has significant molybdenum and rhenium deposits which should offer long-term cashflows, according the company. The caveat there of course is the impact of the 40 super tax on profits which has resulted in many companies putting off projects into the future.
The company also owns the Altynalmas Gold Ltd., in Kazakhstan, recently bumping their position up to a 50 percent stake in the company which controls the Kyzyl Gold Project in that country via a 100 percent stake.
Altogether, Ivanhoe has the underpinnings for a long, profitable run into the future, and in a few short years should become one of the premiere miners in the world, and as mentioned earlier, possibly the mining story of the decade.
If the main solid management and keep operational cost, along with debt, low, they should be one of the best investments in the sector for the long term.
Newmont (NYSE:NEM), Barrick (NYSE:ABX), Goldcorp (NYSE:GG) All Down As Investors Take Profits
In the morning it looked like gold may be performing a little differently after it broke all-time highs on two different days last week, but that changed later in the day as gold prices plummeted, and gold majors like Newmont Mining (NYSE:NEM), Barrick Gold (NYSE:ABX) and Goldcorp (NYSE:GG) plummeted with it.
Barrick Gold dropped the most of the major three gold miners, falling to $44.80 in New York, a decline of $1.58, or 3.41 percent, at the end of the trading day.
Goldcorp wasn't far behind them, falling to $44.35 a share, a drop of $1.51, or 3.29 percent at close.
Finally, Newmont was next, plunging to $59.48 at the end of the day, a decline of $1.77, or 2.89 percent.
This was mostly based on investor taking profits and putting their money to work elsewhere.
Barrick Gold dropped the most of the major three gold miners, falling to $44.80 in New York, a decline of $1.58, or 3.41 percent, at the end of the trading day.
Goldcorp wasn't far behind them, falling to $44.35 a share, a drop of $1.51, or 3.29 percent at close.
Finally, Newmont was next, plunging to $59.48 at the end of the day, a decline of $1.77, or 2.89 percent.
This was mostly based on investor taking profits and putting their money to work elsewhere.
YOU WILL PAY: BP (NYSE:BP), Transocean (NYSE:RIG), Halliburton (NYSE:HAL), and Cameron (NYSE:CAM)
You will pay is what is being told to BP (NYSE:BP), Transocean (NYSE:RIG), Halliburton (NYSE:HAL), and Cameron (NYSE:CAM). This demand is coming from 11 East Coast states that have already told BP they put the full responsibility of the damage from the oil spill disaster onto their shoulders.
Connecticut's Attorney General, Richard Blumenthal said, "even without oil actually reaching the Connecticut shoreline, this massive oil spill could still impose damage and destruction to the entire Atlantic coastline." Marine life and birds are likely to be "severely damaged."
Blumenthal added, "Connecticut and a coalition of states are putting BP and affiliated companies on notice that we will not pay the price for their monumental failures." This request seems a little premature considering there has yet to be any damage or destruction done.
Meanwhile, the containment cap that BP is using to contain the oil on Sunday captured 14,570 barrels of oil. While using a secondary containment system to burn off oil, burned 8,720 barrels on Sunday. Between the two systems there is a daily average of 28,000 barrels being captured.
Connecticut's Attorney General, Richard Blumenthal said, "even without oil actually reaching the Connecticut shoreline, this massive oil spill could still impose damage and destruction to the entire Atlantic coastline." Marine life and birds are likely to be "severely damaged."
Blumenthal added, "Connecticut and a coalition of states are putting BP and affiliated companies on notice that we will not pay the price for their monumental failures." This request seems a little premature considering there has yet to be any damage or destruction done.
Meanwhile, the containment cap that BP is using to contain the oil on Sunday captured 14,570 barrels of oil. While using a secondary containment system to burn off oil, burned 8,720 barrels on Sunday. Between the two systems there is a daily average of 28,000 barrels being captured.
Stock Prices, Oil Futures: BP (NYSE:BP) and Anadarko (NYSE:APC)
BP (NYSE:BP) stock prices drop as many are wondering about oil futures, this drop is due to Anadarko Petroleum (NYSE:APC) making it clear that they are refusing to pay their share, being 25 percent of the oil cleanup costs. Typically in a situation like what has happened in the Gulf of Mexico, all companies involved that have a stake in the company are liable. By law, the only exception is if BP were to be found negligent. Then Anadarko may be released of any liability and would not have to pay anything.
BP shares were down 4.4 percent to $30.34. That's almost a 50 percent drop from where they closed on April 20th. While Anadarko's shares saw a jump in trading of 1.3 percent.
Monday morning BP stated that the oil spill response had reached 2 billion. They said they've paid out over 32,000 claims of the more than 65,000 claims they've received. In excess of $105 million. In a statement BP said, "it is too early to quantify other potential costs and liabilities associated with the incident."
Mike Tosaw, investment advisor representative of Know Your Options Incorporated stated,
"over the short term we're not touching it with a 10 foot poll," although he does expect it to make it over the long term. Tosaw continues, "I personally am not putting my money where my mouth is on that. There's just too much uncertainty with it."
BP shares were down 4.4 percent to $30.34. That's almost a 50 percent drop from where they closed on April 20th. While Anadarko's shares saw a jump in trading of 1.3 percent.
Monday morning BP stated that the oil spill response had reached 2 billion. They said they've paid out over 32,000 claims of the more than 65,000 claims they've received. In excess of $105 million. In a statement BP said, "it is too early to quantify other potential costs and liabilities associated with the incident."
Mike Tosaw, investment advisor representative of Know Your Options Incorporated stated,
"over the short term we're not touching it with a 10 foot poll," although he does expect it to make it over the long term. Tosaw continues, "I personally am not putting my money where my mouth is on that. There's just too much uncertainty with it."
Freeport-McMoRan (NYSE:FCX) Surges on Yuan News
Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX), along with a number of raw materials companies has been rising in price today as hopes the appreciation of the yuan against the U.S. dollar will help commodity companies going forward, after the announcement the Chinese will float their currency more against the greenback.
Shares of Freeport stood at $68.96, gaining $3.06, or 4.64%, as of 1:25 PM EDT.
One major problem many haven't considered yet, is the yuan, or renminbi, isn't assured of appreciating, and all the hand clapping and backslapping may be premature if the Chinese currency depreciates in value instead, which wouldn't be a stretch to consider at all.
Either way, the market is assuming the yuan will appreciate, and mining companies and commodity producers are benefiting from that assumption at this time.
No matter what happens though, it'll unfold over a period of time and not in the short term, which will be more sustainable whichever way things go.
Shares of Freeport stood at $68.96, gaining $3.06, or 4.64%, as of 1:25 PM EDT.
One major problem many haven't considered yet, is the yuan, or renminbi, isn't assured of appreciating, and all the hand clapping and backslapping may be premature if the Chinese currency depreciates in value instead, which wouldn't be a stretch to consider at all.
Either way, the market is assuming the yuan will appreciate, and mining companies and commodity producers are benefiting from that assumption at this time.
No matter what happens though, it'll unfold over a period of time and not in the short term, which will be more sustainable whichever way things go.
Citigroup (NYSE:C): India Gold Demand Down
Indian imports for gold is down, as surging gold prices has cut down on demand for the precious metal, according to Citigroup (NYSE:C).
“Import data indicates that the surge in gold prices during May appear to be taking their toll,” Citigroup economists said in the report. “Although jewelry demand is typically price inelastic, the run-up in prices has begun to hurt consumption.”
Gold acquisitions in the country dropped by over half, as only 16 metric tons to 17 metric tons were purchased in May, plunging from the 34 metric tons acquired in April.
India has been the largest consumer of gold in relationship to jewelry use, although it really hasn't been a factor in gold prices during the year, although in the wedding season it at times can give it a bump up in price.
Economics is what's driving gold prices now, and that's the reason Indian demand for gold is down. That won't be a factor in the price of gold going forward, but a consequence of it.
“Import data indicates that the surge in gold prices during May appear to be taking their toll,” Citigroup economists said in the report. “Although jewelry demand is typically price inelastic, the run-up in prices has begun to hurt consumption.”
Gold acquisitions in the country dropped by over half, as only 16 metric tons to 17 metric tons were purchased in May, plunging from the 34 metric tons acquired in April.
India has been the largest consumer of gold in relationship to jewelry use, although it really hasn't been a factor in gold prices during the year, although in the wedding season it at times can give it a bump up in price.
Economics is what's driving gold prices now, and that's the reason Indian demand for gold is down. That won't be a factor in the price of gold going forward, but a consequence of it.
Gold Holds Steady After Records Last Week
Recent behavior of gold has had it plunging after a record day, and the fact that gold prices are holding up well today is a good sign that it may have gained support, and may be ready for another upward push.
Risk appetite has returned some today, and investors have been moving their money out of gold into other sectors.
There is nothing to conclude that this will continue, as economic data recently released showed there is little to be optimistic about in the American or global economies.
If there is much growth, it'll be very slow, if it happens at all. The obvious exception will be China, which will be growing at several percentage points below its recent average, which had reached close to 12 percent.
This ensures a strong case for gold continuing to go up, and the decision by China to float their currency more will not only enhance the desirability of gold, but will help other commodities as well; albeit over a period of time.
Risk appetite has returned some today, and investors have been moving their money out of gold into other sectors.
There is nothing to conclude that this will continue, as economic data recently released showed there is little to be optimistic about in the American or global economies.
If there is much growth, it'll be very slow, if it happens at all. The obvious exception will be China, which will be growing at several percentage points below its recent average, which had reached close to 12 percent.
This ensures a strong case for gold continuing to go up, and the decision by China to float their currency more will not only enhance the desirability of gold, but will help other commodities as well; albeit over a period of time.
Anadarko (NYSE:APC) Debt Costs Rise on Liability Concerns
The battle between Anadarko Petroleum Corp. (NYSE:APC) and BP (NYSE:BP) (LON:BP) over whether or not Anadarko should pay a portion of the costs related to the explosion of the Deepwater Horizon which caused the enormous oil spill in the region, has brought attention to Anadarko concerning the cost of protecting their debt.
Concerns over their debt has increased the upfront costs of Anadarko by $100,000 since Friday, increasing to $400,000 overall for credit default swaps. That's in addition to the $500,000 it cost to ensure $10 million annually.
BP has been pushing their partners, Anadarko and Mitsui over sharing the financial burden, especially Anadarko, who is a 25 percent partner in the venture.
Anadarko claims they're relieved of responsibility because their agreement to share costs was broken because of the "gross negligence" of BP.
BP has sent a bill to Anadarko, which will probably take litigation to collect, assuming BP would win the case.
Concerns over their debt has increased the upfront costs of Anadarko by $100,000 since Friday, increasing to $400,000 overall for credit default swaps. That's in addition to the $500,000 it cost to ensure $10 million annually.
BP has been pushing their partners, Anadarko and Mitsui over sharing the financial burden, especially Anadarko, who is a 25 percent partner in the venture.
Anadarko claims they're relieved of responsibility because their agreement to share costs was broken because of the "gross negligence" of BP.
BP has sent a bill to Anadarko, which will probably take litigation to collect, assuming BP would win the case.
BP (NYSE:BP) UPDATE: Fuel Spill containment
A group of reporters were able to tour the BP (NYSE:BP) oil rig on Saturday and see how the fuel spill containment was progressing. They flew along the Mississippi River Delta above the wetlands. They saw the ineffective boom floating as well as the skimmers. About 40 miles off the coast, they reach their destination which has a 200 foot derrick.
Wendell Guidry, the Transocean drilling superintendent that was on the rig said," its always, always on our mind." Work continues to press on around the clock. There are eight thrusters in place that keep the rig positioned correctly over the well. In the distance another rig is visible, it is siphoning oil and gas from the well and burning it. It appears the flames are coming down like a shower. There are ships surrounding this rig, their purpose is to hose of the deck to keep the heat from building.
Thad Allen, Coast Guard Administrator said that the drilling and construction of the relief wells is still ahead of schedule. Of course there can always be delays. Like on Saturday, a set of tongs which are used to hold the casings in place broke.
BP is still maintaining their drilling of the relief well should be completed sometime in August, of course there are no guarantees. Currently, they are close to 11,000 feet below the sea floor.
Wendell Guidry, the Transocean drilling superintendent that was on the rig said," its always, always on our mind." Work continues to press on around the clock. There are eight thrusters in place that keep the rig positioned correctly over the well. In the distance another rig is visible, it is siphoning oil and gas from the well and burning it. It appears the flames are coming down like a shower. There are ships surrounding this rig, their purpose is to hose of the deck to keep the heat from building.
Thad Allen, Coast Guard Administrator said that the drilling and construction of the relief wells is still ahead of schedule. Of course there can always be delays. Like on Saturday, a set of tongs which are used to hold the casings in place broke.
BP is still maintaining their drilling of the relief well should be completed sometime in August, of course there are no guarantees. Currently, they are close to 11,000 feet below the sea floor.
BP (NYSE:BP) Escrow Fund Getting Murkier
The creation of the escrow fund by BP (NYSE:BP) after being pressured by U.S. lawmakers to do it, has gotten even more complicated, as the calls by some lawmakers to have Anadarko Petroleum (NYSE:APC) and Japanese partner Mitsui share in the liability costs will probably go to court now, partly on the basis of the escrow fund being created without them being part of the process.
In other words, it's questionable whether BP had the legal right to enter into the agreement without the two partners giving their consent.
So not only are there concerns raised over the misuse of the fund for purposes not associated with damage from the oil spill, but now it could cause major problems going forward concerning the part of the other partners in the oil well as far as paying damages goes.
Anadarko was 25 percent partner in the well and Mitsui was a 10 percent partner. BP was the majority partner, accounting for the other 65 percent ownership in the project.
A lawsuit was obviously coming concerning sharing in the liability for the accident anyway, as the recent attack by Anardarko CEO Jim Hackett was an obvious prelude to BP being forced to go to court to get them to keep the company from "shirking its responsibilities," as BP stated.
Hackett said, "The mounting evidence clearly demonstrates that this tragedy was preventable and the direct result of BP's reckless decisions and actions. BP's behavior and action is likely represent gross negligence or wilful misconduct."
This is alluding to the language used in the law on capping the amount of liability at $75 million for oil companies. The reality that BP said they would ignore the cap could be interpreted as an admission of guilt concerning the "gross negligence or wilful misconduct" accusation from Anadarko.
On BP's part, this was a big mistake, as Anadarko spokesman John Christiansen said, "Although we have not been involved in any way with the White House or BP in the process, we are pleased that BP has agreed to establish a $20bn escrow fund.
"We believe this action by BP is consistent with their continued message that they will pay all legitimate claims."
... And it could be interpreted that way going forward.
All of this and there has been no determination on what caused the accident, and that doesn't include Cameron International (NYSE:CAM), which made the blowout preventer, or Halliburton (NYSE:HAL), who did the cement work; either of which could have involved faulty work which resulted in the oil spill.
So we have all this liability being paid, with no one but BP involved in the decision-making process, and no knowledge of what caused the accident in the first place to see if there was negligence from other parties.
After the grandstanding by the politicians and twisting of BP's arm to get the escrow account, we see it as another mistake made by lawmakers trying to gain political capital without considering the overall picture.
From the point of view of sharing liability, this is a disaster, and it's not certain it will stand up in a court of law when partners are left out of negotiations.
It could also make BP more vulnerable than it maybe had to be, and why they should have not allowed themselves to be pressured into the escrow account, as possession is everything, and now that they have to turn their money over to the possession of the government, there isn't much chance they'll ever have a say in it.
BP should have taken their time with this no matter what the pressure was, as in hindsight they now see they've painted themselves into a corner, and calls by lawmakers who pressed them on it to now have their partners start to help them pay for liability claims, sounds hollow, as these same politicians created the circumstances which has led to yet another fiasco.
The legal questions continue to grow concerning the escrow fund, as it's not even confirmed that in and of itself it's legal. Add to that the potential abuses, and now the realization the other partners in the oil well weren't even communicated with by lawmakers or BP in the creation of the escrow fund, and the legal questions continue to mount as the process plays itself out.
Obama and the Democrats especially, are guilty of their own demagoguery in the matter, which created an atmosphere of a need to rush along the paying out of liability claims, as if them taking it over will in any way expedite the payouts. In the end, as always with government bureaucracy, it'll take longer.
In their own rush to build political capital, the administration has again proven they have a difficult time focusing on more than one thing at a time, and in the end, have made the circumstances much harder than it had to be.
In other words, it's questionable whether BP had the legal right to enter into the agreement without the two partners giving their consent.
So not only are there concerns raised over the misuse of the fund for purposes not associated with damage from the oil spill, but now it could cause major problems going forward concerning the part of the other partners in the oil well as far as paying damages goes.
Anadarko was 25 percent partner in the well and Mitsui was a 10 percent partner. BP was the majority partner, accounting for the other 65 percent ownership in the project.
A lawsuit was obviously coming concerning sharing in the liability for the accident anyway, as the recent attack by Anardarko CEO Jim Hackett was an obvious prelude to BP being forced to go to court to get them to keep the company from "shirking its responsibilities," as BP stated.
Hackett said, "The mounting evidence clearly demonstrates that this tragedy was preventable and the direct result of BP's reckless decisions and actions. BP's behavior and action is likely represent gross negligence or wilful misconduct."
This is alluding to the language used in the law on capping the amount of liability at $75 million for oil companies. The reality that BP said they would ignore the cap could be interpreted as an admission of guilt concerning the "gross negligence or wilful misconduct" accusation from Anadarko.
On BP's part, this was a big mistake, as Anadarko spokesman John Christiansen said, "Although we have not been involved in any way with the White House or BP in the process, we are pleased that BP has agreed to establish a $20bn escrow fund.
"We believe this action by BP is consistent with their continued message that they will pay all legitimate claims."
... And it could be interpreted that way going forward.
All of this and there has been no determination on what caused the accident, and that doesn't include Cameron International (NYSE:CAM), which made the blowout preventer, or Halliburton (NYSE:HAL), who did the cement work; either of which could have involved faulty work which resulted in the oil spill.
So we have all this liability being paid, with no one but BP involved in the decision-making process, and no knowledge of what caused the accident in the first place to see if there was negligence from other parties.
After the grandstanding by the politicians and twisting of BP's arm to get the escrow account, we see it as another mistake made by lawmakers trying to gain political capital without considering the overall picture.
From the point of view of sharing liability, this is a disaster, and it's not certain it will stand up in a court of law when partners are left out of negotiations.
It could also make BP more vulnerable than it maybe had to be, and why they should have not allowed themselves to be pressured into the escrow account, as possession is everything, and now that they have to turn their money over to the possession of the government, there isn't much chance they'll ever have a say in it.
BP should have taken their time with this no matter what the pressure was, as in hindsight they now see they've painted themselves into a corner, and calls by lawmakers who pressed them on it to now have their partners start to help them pay for liability claims, sounds hollow, as these same politicians created the circumstances which has led to yet another fiasco.
The legal questions continue to grow concerning the escrow fund, as it's not even confirmed that in and of itself it's legal. Add to that the potential abuses, and now the realization the other partners in the oil well weren't even communicated with by lawmakers or BP in the creation of the escrow fund, and the legal questions continue to mount as the process plays itself out.
Obama and the Democrats especially, are guilty of their own demagoguery in the matter, which created an atmosphere of a need to rush along the paying out of liability claims, as if them taking it over will in any way expedite the payouts. In the end, as always with government bureaucracy, it'll take longer.
In their own rush to build political capital, the administration has again proven they have a difficult time focusing on more than one thing at a time, and in the end, have made the circumstances much harder than it had to be.
Saturday, June 19, 2010
BP (NYSE:BP): Not Their First Oil Spill Disaster
Apparently this is not BP's (NYSE:BP) first oil spill catastrophe. Just four years ago they had another massive oil spill in Prudhoe Bay, Alaska. There was a 16 mile stretch of pipe that was corroded. This was discovered only a year after a BP refinery exploded in Texas City, Texas where 15 workers were killed and hundreds more injured.
Due to the many violations that were found to have contributed to the Texas City explosion, BP was fined $21 million. It also was mandatory that they were required to shutdown their Alaska oil drill site to make repairs to the corroded pipe. There seems to be a pattern with BP, for these two incidents to happen within a year of each other and now here we are again with BP causing the worst oil spill in U.S. history.
BP's chief executive prior to Tony Hayward was John Browne, Hayward's mentor. Browne was with BP for close to 10 years before resigning in 2007. "We have to get the priorities right and job number one is to get to these things that have happened, get them fixed and get them sorted out. We don't just sort them out on the surface we get them fixed deeply, said Browne in an interview four years ago after the Texas City and Alaskan catastrophe's.
The thing is BP had four years to fix their problems and if they had, we would not be watching the horror unfold of the worst oil spill in U.S. history.
Brown built BP by taking over other oil companies. Everyone in the oil business new he would then fire the best engineers and ruthlessly cutting costs.
Due to the many violations that were found to have contributed to the Texas City explosion, BP was fined $21 million. It also was mandatory that they were required to shutdown their Alaska oil drill site to make repairs to the corroded pipe. There seems to be a pattern with BP, for these two incidents to happen within a year of each other and now here we are again with BP causing the worst oil spill in U.S. history.
BP's chief executive prior to Tony Hayward was John Browne, Hayward's mentor. Browne was with BP for close to 10 years before resigning in 2007. "We have to get the priorities right and job number one is to get to these things that have happened, get them fixed and get them sorted out. We don't just sort them out on the surface we get them fixed deeply, said Browne in an interview four years ago after the Texas City and Alaskan catastrophe's.
The thing is BP had four years to fix their problems and if they had, we would not be watching the horror unfold of the worst oil spill in U.S. history.
Brown built BP by taking over other oil companies. Everyone in the oil business new he would then fire the best engineers and ruthlessly cutting costs.
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