Anadarko Petroleum (NYSE:APC) has discovered oil at the Itauna well if offshore waters of Brazil, according to Colombian state-run oil company Ecopetrol (ECOPETROL.BO), who is a partner with Anadarko in the project.
Each company holds a 50 percent stake in the well.
This is the first major exploration find for Ecopetrol, which was in Block BM-C-29, close to Block BM-C-30, the huge Wahoo oil and gas field held by Anadarko.
While there is still a lot of drilling to do, Anadarko spokesman John Christiansen said the company was encouraged by what they've discovered so far in the Block.
Ecopetrol agreed, saying “future developments and projections will be subject to additional data to be obtained during the exploration activities carried out in the block in the following months.”
Estimates will be made at a later date.
Thursday, September 30, 2010
BP (NYSE:BP) to Get Bill Total from Gulf States
A better picture of the liabilities will be seen when the Gulf states given their bills to BP (NYSE:BP), which appears to be sometime in the near future.
Most are negotiating with BP over the final tally, but Alabama Attorney General Troy King went against the wishes of Governor Riley and sued BP. There's still a cloud hanging over his reasoning, as all other states are working with BP in an attempt to come to an agreement.
King attempted to justify his misguided actions by saying BP had a "record of not living up to their commitments." He oddly added, that if BP won't "pay Alabama what it owes, a court will force you to do it."
It's odd because the governor was making progress with BP and wasn't concerned over whether or not they'd pay. Now the state suffers from it.
Other states would prefer to go the route of making a deal with BP too, as the cost and time of going through a trial would be immense, and by time the litigation was over, the present need for the money would be gone.
But the states have said if they aren't able to reach an agreement with BP, they would go the legal route if all else failed.
BP spokesman Scott Dean said, "BP remains committed to paying all legitimate government claims. We have already made more than $1 billion in government payments."
Most are negotiating with BP over the final tally, but Alabama Attorney General Troy King went against the wishes of Governor Riley and sued BP. There's still a cloud hanging over his reasoning, as all other states are working with BP in an attempt to come to an agreement.
King attempted to justify his misguided actions by saying BP had a "record of not living up to their commitments." He oddly added, that if BP won't "pay Alabama what it owes, a court will force you to do it."
It's odd because the governor was making progress with BP and wasn't concerned over whether or not they'd pay. Now the state suffers from it.
Other states would prefer to go the route of making a deal with BP too, as the cost and time of going through a trial would be immense, and by time the litigation was over, the present need for the money would be gone.
But the states have said if they aren't able to reach an agreement with BP, they would go the legal route if all else failed.
BP spokesman Scott Dean said, "BP remains committed to paying all legitimate government claims. We have already made more than $1 billion in government payments."
Wednesday, September 29, 2010
John Paulson: Gold Could Hit $4,000
Hedge fund manager and billionaire John Paulson said he sees gold prices moving in a range of $2,400 to $4,000 an ounce, citing double-digit inflation emerging by 2012.
Paulson, speaking at New York's University Club recently, said 80 percent of his assets are held in gold.
He added that the coming inflation will result in gold prices being pushed up even more.
Paulson also said the inevitable quantitative easing by the Federal Reserve could extend double-digit inflation out for serveral years.
It's possible it could be even more than that depending on the economy and the political pressure to interfere with it, which would result in even more stimulus. That would add to the desirability and value of gold.
Paulson, speaking at New York's University Club recently, said 80 percent of his assets are held in gold.
He added that the coming inflation will result in gold prices being pushed up even more.
Paulson also said the inevitable quantitative easing by the Federal Reserve could extend double-digit inflation out for serveral years.
It's possible it could be even more than that depending on the economy and the political pressure to interfere with it, which would result in even more stimulus. That would add to the desirability and value of gold.
Shell (NYSE:RDS-A) Expanding in Gulf Even in Tough Environment
Even though the BP (NYSE:BP) oil spill has created a tough environment to work in for the oil industry in the Gulf of Mexico, that isn't stopping Royal Dutch Shell Plc (NYSE:RDS-A) from focusing on significant expansion in the region.
According to Marvin Odum, who directs exploration and production at Shell in North and South America, by 2015 and further down the road, he sees the company increasing production by over 250,000 barrels of oil equivalent a day in the Gulf.
Odum said, “In the Gulf of Mexico we’ve increased our efforts in the deepwater in recent years with encouraging results. The longer-term outlook for deepwater remains positive, despite the current drilling moratorium.”
Shell CFO Simon Henry concurs with that, saying the company has six oil discoveries they made recently which could “extend production to the 250,000 barrels a day level for quite some time to come.”
The company said the oil moratorium by the Obama administration has resulted in close to 8,000 barrels of oil less in production a day.
According to Marvin Odum, who directs exploration and production at Shell in North and South America, by 2015 and further down the road, he sees the company increasing production by over 250,000 barrels of oil equivalent a day in the Gulf.
Odum said, “In the Gulf of Mexico we’ve increased our efforts in the deepwater in recent years with encouraging results. The longer-term outlook for deepwater remains positive, despite the current drilling moratorium.”
Shell CFO Simon Henry concurs with that, saying the company has six oil discoveries they made recently which could “extend production to the 250,000 barrels a day level for quite some time to come.”
The company said the oil moratorium by the Obama administration has resulted in close to 8,000 barrels of oil less in production a day.
BP's (NYSE:BP) Incoming CEO Fires Deep Water Well Executive
Andy Inglis, who was the executive in charge of deep water wells at BP (NYSE:BP), was fired by incoming CEO Bob Dudley. Inglis was over exploration and production for the oil giant.
Outgoing CEO Tony Hayward replaced Inglis on the board of TNK-BP in the early part of September, although he'll remain until October 31, according to Dudley.
The divisions Inglis oversaw will be broken up into three units.
After the firing of Inglis, Dudley announced there will be a new unit to oversee safety practices throughout the company.
Heading up the new safety unit will be Mark Bly, who was responsible for the team which did an internal investigation as to the causes of the failed Macondo well.
Dubbed the Safety & Operation Risk unit, it will be authorized to intervene in any technical activity performed by BP and its workers.
An announcement said, "It will have its own expert staff embedded in BP's operating units, including exploration projects and refineries. It will be responsible for ensuring that all operations are carried out to common standards, and for auditing compliance with those standards."
Outgoing CEO Tony Hayward replaced Inglis on the board of TNK-BP in the early part of September, although he'll remain until October 31, according to Dudley.
The divisions Inglis oversaw will be broken up into three units.
After the firing of Inglis, Dudley announced there will be a new unit to oversee safety practices throughout the company.
Heading up the new safety unit will be Mark Bly, who was responsible for the team which did an internal investigation as to the causes of the failed Macondo well.
Dubbed the Safety & Operation Risk unit, it will be authorized to intervene in any technical activity performed by BP and its workers.
An announcement said, "It will have its own expert staff embedded in BP's operating units, including exploration projects and refineries. It will be responsible for ensuring that all operations are carried out to common standards, and for auditing compliance with those standards."
TransAtlantic Petroleum (Amex:TAT) Placed "Under Review" by Canaccord Genuity
TransAtlantic Petroleum (Amex:TAT) has had it price target and rating placed "under Review" by Canaccord Genuity.
Canaccord said, "TransAtlantic Petroleum has provided an operational update and has filed a free writing prospectus for an equity
financing for a minimum of US $50 million up to a maximum of $100 million in gross proceeds...We are placing our recommendation and target price UNDER REVIEW pending disclosure of the specific terms of the announced equity financing."
TransAtlantic says commitments have been received from investors to acquire 30,357,143 common shares in a registered direct offering at a purchase price of $2.80/share. That would generate about $85 million, which after fees and expenses, would come to about $80.6 million.
The stock closed Tuesday at $2.81, down $0.16, or 5.39 percent.
Canaccord said, "TransAtlantic Petroleum has provided an operational update and has filed a free writing prospectus for an equity
financing for a minimum of US $50 million up to a maximum of $100 million in gross proceeds...We are placing our recommendation and target price UNDER REVIEW pending disclosure of the specific terms of the announced equity financing."
TransAtlantic says commitments have been received from investors to acquire 30,357,143 common shares in a registered direct offering at a purchase price of $2.80/share. That would generate about $85 million, which after fees and expenses, would come to about $80.6 million.
The stock closed Tuesday at $2.81, down $0.16, or 5.39 percent.
Chevron (NYSE:CVX) Boldly Files Criminal Charges Against "Activist"
It's far past time for businesses to fight back against outrageous shareholder activism, and Chevron is taking the lead by filing criminal charges against one such so-called shareholder, who only acquired shares so she would rant against the company at a shareholder meeting.
The woman arrested and charged was Antonia Juhasz who attacked the environmental record of Chevron, but further disrupted the meeting by engaging in chanting against them as well. She could get up to six months in jail.
This has rightly caused a lot of buzz and negative feedback from those who promote such things, as it raises the stakes in the game by bringing negative sanctions against these ridiculous people and their alleged causes.
By Chevron taking these steps and gauging the response, they've done the right thing. Now they need to hold to their guns and let the legal process play out, and hopefully this nut will spend some time in jail. Who knows, maybe she'll even sue those who encouraged her to do what she did.
Some attempt to say this is good for business to have fake shareholders buy up a few shares only for the purpose of ranting, as if this is going to change a business or cause them to respond to their childish and outrageous demands.
Allowing people to throw tantrums and engage in anti-social behavior so they can garner attention isn't something businesses should have to put up with, and hopefully more of them will press charges as Chevron has to see if these nuts are willing to pay the price.
To let them run loose without consequences is a big mistake, and only encourages them to go further with their attempts to sabotage meetings and disrupt business in general.
This is a good first step, and other businesses need to follow in the footsteps of Chevron, as it'll cut back on most of the tactics and out-of-control behavior these types of eco-terrorists engage in.
The woman arrested and charged was Antonia Juhasz who attacked the environmental record of Chevron, but further disrupted the meeting by engaging in chanting against them as well. She could get up to six months in jail.
This has rightly caused a lot of buzz and negative feedback from those who promote such things, as it raises the stakes in the game by bringing negative sanctions against these ridiculous people and their alleged causes.
By Chevron taking these steps and gauging the response, they've done the right thing. Now they need to hold to their guns and let the legal process play out, and hopefully this nut will spend some time in jail. Who knows, maybe she'll even sue those who encouraged her to do what she did.
Some attempt to say this is good for business to have fake shareholders buy up a few shares only for the purpose of ranting, as if this is going to change a business or cause them to respond to their childish and outrageous demands.
Allowing people to throw tantrums and engage in anti-social behavior so they can garner attention isn't something businesses should have to put up with, and hopefully more of them will press charges as Chevron has to see if these nuts are willing to pay the price.
To let them run loose without consequences is a big mistake, and only encourages them to go further with their attempts to sabotage meetings and disrupt business in general.
This is a good first step, and other businesses need to follow in the footsteps of Chevron, as it'll cut back on most of the tactics and out-of-control behavior these types of eco-terrorists engage in.
BP (NYSE:BP) Negotiating with Feds Over Oil Fines
BP (NYSE:BP) has entered into negotiations with the Obama administration over coming to some type of settlement over fines related to the Gulf of Mexico oil spill.
According to Rep. Steve Scalise, R-La., his staff got wind of the discussions when working on legislation related to the oil spill which would keep money from fines paid out by BP in the Gulf region.
Unsurprisingly, the real battle is over whether or not BP will be labeled as being grossly negligent in relationship to the spill.
The problem with that is no study, other than the one conducted by BP, has been conducted to find out the absolute reason behind the accident.
So how could the government be battling over something that there is no conclusion made yet? The only reason BP is in their sights is no company related to the spill has the capital to pay the fines other than them. Of course they also had the largest stake in the well, but that has nothing to do with culpability.
It may surprise people, but BP is in the driver's seat in regard to this issue. If the government doesn't come to an agreement with them, all BP has to do is litigate, and that would take years, essentially holding up any fines being paid out until then, and with no guarantee the government would win the case (in reference to BP being considered grossly negligent).
Just under the Clean Water Act, BP could pay out up to $21 billion. It's doubtful it will ever come to that, as that wouldn't include other fines and the money they'll have to pay out from the hundreds of lawsuits.
Even with the size of BP, they just aren't big enough to pay that kind of money out, which doesn't include the $20 billion escrow fund which has the claims part of the fund administered by Kenneth Feinberg.
There should be a settlement of some sort, but it will depend on how far the Department of Justice wants to take it. If they ask for too much, it may leave BP few options.
Again, the problem is there are no conclusions yet made as to the cause of the disaster, and until that is investigated and discovered, it's hard to see the government has to stand on; at least concerning the decision on whether or not BP was grossly negligent, which is the crux of this particular part of the fine process.
According to Rep. Steve Scalise, R-La., his staff got wind of the discussions when working on legislation related to the oil spill which would keep money from fines paid out by BP in the Gulf region.
Unsurprisingly, the real battle is over whether or not BP will be labeled as being grossly negligent in relationship to the spill.
The problem with that is no study, other than the one conducted by BP, has been conducted to find out the absolute reason behind the accident.
So how could the government be battling over something that there is no conclusion made yet? The only reason BP is in their sights is no company related to the spill has the capital to pay the fines other than them. Of course they also had the largest stake in the well, but that has nothing to do with culpability.
It may surprise people, but BP is in the driver's seat in regard to this issue. If the government doesn't come to an agreement with them, all BP has to do is litigate, and that would take years, essentially holding up any fines being paid out until then, and with no guarantee the government would win the case (in reference to BP being considered grossly negligent).
Just under the Clean Water Act, BP could pay out up to $21 billion. It's doubtful it will ever come to that, as that wouldn't include other fines and the money they'll have to pay out from the hundreds of lawsuits.
Even with the size of BP, they just aren't big enough to pay that kind of money out, which doesn't include the $20 billion escrow fund which has the claims part of the fund administered by Kenneth Feinberg.
There should be a settlement of some sort, but it will depend on how far the Department of Justice wants to take it. If they ask for too much, it may leave BP few options.
Again, the problem is there are no conclusions yet made as to the cause of the disaster, and until that is investigated and discovered, it's hard to see the government has to stand on; at least concerning the decision on whether or not BP was grossly negligent, which is the crux of this particular part of the fine process.
BP's (NYSE:BP) Money Should Go to Gulf States Says Feds
While it may seem obvious, and it is, the federal government decided to write a 130-page report on why the Gulf states should be the ones receiving the bulk of the money paid by BP (NYSE:BP) for the oil spill.
It wasn't said, but definitely implied, that there are many people and/or institutions attempting to get a share of the money even though they weren't affected.
Obvious ones are the arrogant so-called scientific institutions and universities who seem to think someone owes them this money just because they exist. Of course it's put in terms that they are the great authorities on the subject.
This of course is sure to be the case with those in health fields and economics as well, who in a time of shortages are attempting to treat BP as if they're a government which they can tap for funds.
Concerning fines associated with the Clean Water Act, which are estimated to end up anywhere from $5 billion to $20 billion, according to Rep. Steve Scalise, R-La, the law must be changed in order to keep most of that money in the Gulf region.
Lawmakers from Louisiana have already introduced bills in the House and Senate to get that part of the process moving.
It wasn't said, but definitely implied, that there are many people and/or institutions attempting to get a share of the money even though they weren't affected.
Obvious ones are the arrogant so-called scientific institutions and universities who seem to think someone owes them this money just because they exist. Of course it's put in terms that they are the great authorities on the subject.
This of course is sure to be the case with those in health fields and economics as well, who in a time of shortages are attempting to treat BP as if they're a government which they can tap for funds.
Concerning fines associated with the Clean Water Act, which are estimated to end up anywhere from $5 billion to $20 billion, according to Rep. Steve Scalise, R-La, the law must be changed in order to keep most of that money in the Gulf region.
Lawmakers from Louisiana have already introduced bills in the House and Senate to get that part of the process moving.
Newmont (NYSE:NEM) Downgraded by Stifel Nicolaus
Newmont Mining (NYSE:NEM) was downgraded from "Buy" to "Hold" by Stifel Nicolaus, as concerns over the lower production at the Boddington mine in Australia by analyst Heather Douglas was the reason for the downgrade.
Valuations seem to be too high after the approximate 30 percent increase in share price this year, and with Boddington not producing at levels it was expected to, expectations are it could drop in price.
Douglas consequently removed her $80 price target on the giant gold miner as well.
As the company moves toward full production at Boddington, the grade of ore has been lower than anticipated, and that could dramatically affect guidance and revenue if that doesn't change.
In the first half of 2009, through the end of June, Boddington brought in just under $500 million in combined gold and copper sales.
The market largely shook off the downgrade, with Newmont closing at $64.23, gaining $1.58, or 2.52 percent.
Valuations seem to be too high after the approximate 30 percent increase in share price this year, and with Boddington not producing at levels it was expected to, expectations are it could drop in price.
Douglas consequently removed her $80 price target on the giant gold miner as well.
As the company moves toward full production at Boddington, the grade of ore has been lower than anticipated, and that could dramatically affect guidance and revenue if that doesn't change.
In the first half of 2009, through the end of June, Boddington brought in just under $500 million in combined gold and copper sales.
The market largely shook off the downgrade, with Newmont closing at $64.23, gaining $1.58, or 2.52 percent.
Call Options Rising on SPDR Gold Trust (NYSEArca:GLD)
Quantitative easing by the Federal Reserve is a surety, and in response, an increasing number of call options being taken on SPDR Gold Trust (NYSEArca:GLD).
While it's not certain the exact way the Fed will acquire Treasury bonds, it doesn't matter, as the result will be the same: the debasing of the American dollar, which will drive up the price of gold.
There are many other reasons gold is going up, but among traders, quantitative easing is one that can give fast rise to the price of the yellow metal, while most other gold supports offer steady increase in the price of gold over a period of time.
SPDR has whetted the appetite of traders even more when they made a killing when it went from $123 to $126, and now they're positioned to take advantage of what appears to be another nice move up, as gold continues to shatter records on a consistent basis, with nothing in the short term to stop the rise.
There of course could be a temporary correction, but in general, the price of gold will continue to rise, and options will be taken out on the more predictable companies like SPDR.
The Gold Trust closed Tuesday at $127.85, up $1.23, or 0.89 percent.
SPDR increased it bullion holdings from 5.17 metric tons to 1,305.69 metric tons as of September 28.
While it's not certain the exact way the Fed will acquire Treasury bonds, it doesn't matter, as the result will be the same: the debasing of the American dollar, which will drive up the price of gold.
There are many other reasons gold is going up, but among traders, quantitative easing is one that can give fast rise to the price of the yellow metal, while most other gold supports offer steady increase in the price of gold over a period of time.
SPDR has whetted the appetite of traders even more when they made a killing when it went from $123 to $126, and now they're positioned to take advantage of what appears to be another nice move up, as gold continues to shatter records on a consistent basis, with nothing in the short term to stop the rise.
There of course could be a temporary correction, but in general, the price of gold will continue to rise, and options will be taken out on the more predictable companies like SPDR.
The Gold Trust closed Tuesday at $127.85, up $1.23, or 0.89 percent.
SPDR increased it bullion holdings from 5.17 metric tons to 1,305.69 metric tons as of September 28.
Ivanhoe (NYSE:IVN) Shares Jump on Mineralization Find
Shares of Ivanhoe Mines Ltd. (NYSE:IVN) soared after they announced the discovery of a mineralized zone of gold and copper 1 kilometre long at its prolific Oyu Tolgoi project in Mongolia.
Consequently, the original estimates of copper and gold could be much larger than thought.
"To intercept almost one kilometre of copper and gold mineralization in a new drill hole is a remarkable development," Executive Chairman Robert Friedland said in a statement.
If this is close to the norm in the mine, the value of it could be astronomical, although that of course has to be proven.
Either way, Ivanhoe and partner Rio Tinto (NYSE:RTP) are sitting on billions worth of minerals.
Production will begin on the mine in the latter part of 2012.
Ivanhoe closed at $24.25 in New York, gaining $1.23, or 5.30 percent.
Consequently, the original estimates of copper and gold could be much larger than thought.
"To intercept almost one kilometre of copper and gold mineralization in a new drill hole is a remarkable development," Executive Chairman Robert Friedland said in a statement.
If this is close to the norm in the mine, the value of it could be astronomical, although that of course has to be proven.
Either way, Ivanhoe and partner Rio Tinto (NYSE:RTP) are sitting on billions worth of minerals.
Production will begin on the mine in the latter part of 2012.
Ivanhoe closed at $24.25 in New York, gaining $1.23, or 5.30 percent.
Tuesday, September 28, 2010
Anadarko (NYSE:APC) Liberian Drilling Should Start in December
Anadarko Petroleum Corp. (NYSE:APC) should be ready to start it first drilling at the Venus offshore oil field in December, according to the energy minister of Liberia.
Eugene Shannon, minister of land, mines and energy, said at an energy conference in Africa, "We are looking forward to December to have the first well drilled in Venus Basin by Anadarko."
In September 2009, Anadarko announced they had made a major find off the Sierra Leone coast, which had the potential to open up a gigantic oil business in West Africa.
Billions of barrels of oil could be in the region, where the consortium, led by Anadarko, and including Tullow Oil (OTC:TUWLF), among others, could tap into for years.
Eugene Shannon, minister of land, mines and energy, said at an energy conference in Africa, "We are looking forward to December to have the first well drilled in Venus Basin by Anadarko."
In September 2009, Anadarko announced they had made a major find off the Sierra Leone coast, which had the potential to open up a gigantic oil business in West Africa.
Billions of barrels of oil could be in the region, where the consortium, led by Anadarko, and including Tullow Oil (OTC:TUWLF), among others, could tap into for years.
Gold Prices Today Soar to Record High
Gold prices today surged to another record high, as gold futures for December delivery increased by $10.20 to $1,308.80 an ounce in early trading. That breaks last weeks record of $1,302.30 an ounce
At 1:00 PM EDT, spot gold had risen $14.80 to $1,309.40 an ounce, also a record.
While gold usually moves up on economic bad news, when it retains support in the face of good economic news, you know it has legs, and that continues to be the case.
The numerous fundamentals remain in place for the economy, inflation, safety, protecting assets, weak U.S. dollar, debt, low interest rates, quantitative easing, and the sovereign debt crisis in Europe, which encourage the upward move of gold.
Not one of those are going to be changing any time soon, and in some cases, if not all, will continue to get worse, other than interest rates, which are about as low as they can go.
Enjoy the ongoing gold bull market. Until there is real economic recovery, lowered debt and higher interest rates, nothing is going to change this.
At 1:00 PM EDT, spot gold had risen $14.80 to $1,309.40 an ounce, also a record.
While gold usually moves up on economic bad news, when it retains support in the face of good economic news, you know it has legs, and that continues to be the case.
The numerous fundamentals remain in place for the economy, inflation, safety, protecting assets, weak U.S. dollar, debt, low interest rates, quantitative easing, and the sovereign debt crisis in Europe, which encourage the upward move of gold.
Not one of those are going to be changing any time soon, and in some cases, if not all, will continue to get worse, other than interest rates, which are about as low as they can go.
Enjoy the ongoing gold bull market. Until there is real economic recovery, lowered debt and higher interest rates, nothing is going to change this.
Citigroup (NYSE:C), BNP, Barclays (NYSE:BCS), RBS (NYSE:RBS) Leading BP (NYSE:BP) $3 Billion Bond Issuance
BP Capital Markets PLC, the funding unit of BP Plc (NYSE:BP), is close to issuing about $3 billion in bonds, led by Citigroup (NYSE:C), BNP Paribas, Barclays Capital (NYSE:BCS), Royal Bank of Scotland (NYSE:RBS) and Mizuho Securities USA Inc.
The bonds will be 5- and 10-year bonds sold in U.S. dollars.
Pricing of the bonds will be somewhere in the low to mid 200 basis points range over Treasuries, with tranches split close to equal.
BP PLC, the parent company, will be guaranteeing the bonds, which are projected to be rated A2 by Moody's Investors Service (NYSE:MC) and A by Standard & Poor's.
In a filing with the Securities and Exchange Commission BP said they will use the capital to pay for existing debt and other general corporate purposes.
A spokesman for BP said the bond issuance isn't specifically related to the BP oil spill and is part of normal financial management of the company.
The bonds will be 5- and 10-year bonds sold in U.S. dollars.
Pricing of the bonds will be somewhere in the low to mid 200 basis points range over Treasuries, with tranches split close to equal.
BP PLC, the parent company, will be guaranteeing the bonds, which are projected to be rated A2 by Moody's Investors Service (NYSE:MC) and A by Standard & Poor's.
In a filing with the Securities and Exchange Commission BP said they will use the capital to pay for existing debt and other general corporate purposes.
A spokesman for BP said the bond issuance isn't specifically related to the BP oil spill and is part of normal financial management of the company.
BP's (NYSE:BP) Texas City Probation Will Remain in Place
The Department of Justice says it won't be revoking the probation of BP (NYSE:BP) in relationship to the 2005 Texas City explosion which claimed the lives of 15 workers.
In a March 2009 deal, BP said it would pay a $50 million fine over the accident and go through a 3-year probation for the violation of air pollution laws in the U.S. connected to the explosion.
Terms of the deal with the U.S. Occupational Safety and Health Administration (OSHA) were they were supposed to finish the work of installing automated safety equipment and perform a review of pressure-relief valves in the refinery.
When BP missed the deadline to complete the work OSHA notified prosecutors of the situation, and the company was fined $87 million for that and other safety problems which emerged later.
The response of the prosecutors was they “might seek revocation and/or extension of probation” until they came into compliance with the agreement.
Prosecutors, after talking to all parties involved, decided to give BP another 18 months to meet the required demands.
In a March 2009 deal, BP said it would pay a $50 million fine over the accident and go through a 3-year probation for the violation of air pollution laws in the U.S. connected to the explosion.
Terms of the deal with the U.S. Occupational Safety and Health Administration (OSHA) were they were supposed to finish the work of installing automated safety equipment and perform a review of pressure-relief valves in the refinery.
When BP missed the deadline to complete the work OSHA notified prosecutors of the situation, and the company was fined $87 million for that and other safety problems which emerged later.
The response of the prosecutors was they “might seek revocation and/or extension of probation” until they came into compliance with the agreement.
Prosecutors, after talking to all parties involved, decided to give BP another 18 months to meet the required demands.
BP's (NYSE:BP) Don Suttles Sees Offshore Drilling Returning in Stages
The oil moratorium and new regulations imposed on the offshore oil industry by the Obama administration will probably result in a slow restart of drilling once the moratorium is lifted, according to BP's (NYSE:BP) chief operating officer Don Suttles.
Suttles said concerning interim regulations, that "Certain equipment, certain wells, certain rigs are going to find it easier to meet those requirements," adding that will probably ultimately lead to a "phased restart" of offshore drilling in the Gulf of Mexico.
William Reilly, a co-chair of the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, said when asked about the speed with which drilling will resume and the moratorium lifted, that he and co-Chair Bob Graham "have both raised a number of questions" concerning "just how much one needs to do" to increase the quality of oversight of the 33 oil rigs remaining in the Gulf.
"It's not entirely clear what remains to be done," Reilly said.
In other words, this is an over-response, not matter how it's spun. What more can be done than to ensure equipment is working properly and workers are trained to do their jobs well, and there is testing and follow up to verify it?
While Reilly didn't say it, he does seem to be frustrated over attempting to make something perfect in a world where perfection is impossible.
Suttles said concerning interim regulations, that "Certain equipment, certain wells, certain rigs are going to find it easier to meet those requirements," adding that will probably ultimately lead to a "phased restart" of offshore drilling in the Gulf of Mexico.
William Reilly, a co-chair of the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, said when asked about the speed with which drilling will resume and the moratorium lifted, that he and co-Chair Bob Graham "have both raised a number of questions" concerning "just how much one needs to do" to increase the quality of oversight of the 33 oil rigs remaining in the Gulf.
"It's not entirely clear what remains to be done," Reilly said.
In other words, this is an over-response, not matter how it's spun. What more can be done than to ensure equipment is working properly and workers are trained to do their jobs well, and there is testing and follow up to verify it?
While Reilly didn't say it, he does seem to be frustrated over attempting to make something perfect in a world where perfection is impossible.
Citigroup (NYSE:C), Bank of America (NYSE:BAC), Morgan Stanley (NYSE:MS) Make Little on Petrobras (NYSE:PBR) Fees
Petrobras (NYSE:PBR) has been in the news recently because of its enormous equity offering of $67 billion in common and preferred shares of the company, generating massive media coverage because it's one of the largest equity deals in history.
Global bookrunners like Citigroup (NYSE:C), Bank of America (NYSE:BAC) and Morgan Stanley (NYSE:MS) didn't fare as well though, as the fees from the deal won't do much to add to the bottom line of the company.
Fees for the overall deal came to only $147.2 million, a little over 0.20 percent of the deal.
Similar to other deals, the low fees were spun as irrelevant in relationship to the knowledge the participating banks would receive, and marketed as steps to numerous other deals in the near future.
Banco Bradesco of Brazil was the lead manager for the offering, with Grupo Santander of Spain and Banco Itau of Brazil also participating.
Global bookrunners like Citigroup (NYSE:C), Bank of America (NYSE:BAC) and Morgan Stanley (NYSE:MS) didn't fare as well though, as the fees from the deal won't do much to add to the bottom line of the company.
Fees for the overall deal came to only $147.2 million, a little over 0.20 percent of the deal.
Similar to other deals, the low fees were spun as irrelevant in relationship to the knowledge the participating banks would receive, and marketed as steps to numerous other deals in the near future.
Banco Bradesco of Brazil was the lead manager for the offering, with Grupo Santander of Spain and Banco Itau of Brazil also participating.
Barclays (NYSE:BCS) Reiterates "Overweight" on EOG (NYSE:EOG)
Barclays said it it reiterating its "Overweight" on EOG Resources (NYSE:EOG), citing "superior cash flow."
"Recent concerns have focused on capital spending, a lack of hedges and well performance rather than the strong cash flow growth that should drive performance. Superior cash flow growth should drive the shares higher. We expect cash flow to nearly double by 2012 vs. 2010 levels. This growth should far exceed peers' 30%," Barclays said.
EOG, which explores for, develops and produces crude oil and natural gas, closed Monday at $91.25, down $0.86, or 0.93 percent.
Barclays has a hefty price target of $155 on the energy company.
"Recent concerns have focused on capital spending, a lack of hedges and well performance rather than the strong cash flow growth that should drive performance. Superior cash flow growth should drive the shares higher. We expect cash flow to nearly double by 2012 vs. 2010 levels. This growth should far exceed peers' 30%," Barclays said.
EOG, which explores for, develops and produces crude oil and natural gas, closed Monday at $91.25, down $0.86, or 0.93 percent.
Barclays has a hefty price target of $155 on the energy company.
Monday, September 27, 2010
Barrick (NYSE:ABX) Sees $1,500 Gold in 2011
The largest gold mine in the world, Barrick Gold (NYSE:ABX), said it sees gold prices in 2011 "easily" surpassing $1,500 an ounce.
Barrick CFO Jamie Sokalsky cites the underlying supports which should ensure gold continues to rise, as the reason for his optimism.
Those supports include the European sovereign debt crisis which won't go away, geopolitical circumstances, macroeconomic issues, and supply and demand.
Taken together, Sokalsky is right, there is nothing to justify believing those issues are going to go away any time soon, and that guarantees the price of gold will continue to go up until it does.
Although Sokalsky didn't point to it specifically, the expected near-future quantitative easing by the Federal Reserve will be another part of the support foundation for gold.
At the London Bullion Market Association meeting, on average those attending believe gold prices will stand at over $1,400 at the same time next year.
As for how Sokalsky likes that potential in reference to Barrick, he sees them positioned strongly to move up with the price increase of gold, saying the elimination of hedges and prices locked in of future production concerning forward sales is good news for the company and shareholders.
Even though cash costs estimates will probably be at the top end because of royalties related to the increase in gold prices, that also will help increase margins for the same reason, with margins versus cash costs growing to over $700 an ounce in the second quarter.
Barrick CFO Jamie Sokalsky cites the underlying supports which should ensure gold continues to rise, as the reason for his optimism.
Those supports include the European sovereign debt crisis which won't go away, geopolitical circumstances, macroeconomic issues, and supply and demand.
Taken together, Sokalsky is right, there is nothing to justify believing those issues are going to go away any time soon, and that guarantees the price of gold will continue to go up until it does.
Although Sokalsky didn't point to it specifically, the expected near-future quantitative easing by the Federal Reserve will be another part of the support foundation for gold.
At the London Bullion Market Association meeting, on average those attending believe gold prices will stand at over $1,400 at the same time next year.
As for how Sokalsky likes that potential in reference to Barrick, he sees them positioned strongly to move up with the price increase of gold, saying the elimination of hedges and prices locked in of future production concerning forward sales is good news for the company and shareholders.
Even though cash costs estimates will probably be at the top end because of royalties related to the increase in gold prices, that also will help increase margins for the same reason, with margins versus cash costs growing to over $700 an ounce in the second quarter.
Exxon (NYSE:XOM), Shell (NYSE:RDS-A) Increasing Drilling at Qurna
ExxonMobil (NYSE:XOM) and Royal Dutch Shell (NYSE:RDS-A), partners in the West Qurna Phase One field in Iraq, said they're going to increase the amount of drilling in the project by over twice as much as they are now in order to attain the production goals of the venture, according to ExxonMobil Iraq Vice President James Adams..
The goal is to produce 2.325 million barrels of oil daily. That could even result in close to three times the existing 370 wells in the Qurna field.
For the rest of 2010, Adams said only a handful of wells will be able to be drilled, as they are still investigating and evaluating Qurna.
Daily production at the field at this time is 200,000 to 250,000 barrels a day. Earlier in the year Adams said the goal of the venture in the short term is to increase production by 10 percent at the end of the first quarter of next year.
The West Qurna Phase One project has an estimated 8.7 billion barrels in it.
The goal is to produce 2.325 million barrels of oil daily. That could even result in close to three times the existing 370 wells in the Qurna field.
For the rest of 2010, Adams said only a handful of wells will be able to be drilled, as they are still investigating and evaluating Qurna.
Daily production at the field at this time is 200,000 to 250,000 barrels a day. Earlier in the year Adams said the goal of the venture in the short term is to increase production by 10 percent at the end of the first quarter of next year.
The West Qurna Phase One project has an estimated 8.7 billion barrels in it.
Moody's (NYSE:MCO) Says BP (NYSE:BP) Credit Swaps Trading at Investment Grade
According to the market research arm of Moody’s Investors Service (NYSE:MCO), BP (NYSE:BP) credit default swaps are trading at investment-grade levels.
BP debt protected by credit default for a five year period dropped 3.4 basis points to 188.5 shortly after 11:00 AM EDT in New York, according to CMA, a provider of data for the industry. CMA data reveal the CDS contracts have dropped 681 basis points since June 16.
Trading levels imply the company is trading at a rating of Baa3, while Moody's has a rating of A2 on the debt, four levels about the implied rating.
Baa3 is the lowest rung of the investment-grade rating system of Moody's.
BP debt protected by credit default for a five year period dropped 3.4 basis points to 188.5 shortly after 11:00 AM EDT in New York, according to CMA, a provider of data for the industry. CMA data reveal the CDS contracts have dropped 681 basis points since June 16.
Trading levels imply the company is trading at a rating of Baa3, while Moody's has a rating of A2 on the debt, four levels about the implied rating.
Baa3 is the lowest rung of the investment-grade rating system of Moody's.
Gold Sales Stopped at EU Central Banks
In adherence to the guidelines of the Central Bank Gold Agreement of Europe, in addition to Switzerland and Sweden, central banks in the region will stop selling gold reserves.
That will put an end to over ten years of selling the gold by the banks.
The CBGA puts a cap on collective sales by the banks.
This could provide even more support to gold, which already enjoys strong support, and is another piece of the underlying fundamentals which are driving gold prices up, taking supply out of the gold market.
Although there will probably be some instances of relatively small sales, expectations are the central banks will follow the overall Central Bank Gold Agreement they made.
Sales from the banks have already plummeted over the last CBGA year, dropping 96 percent to 6.2 tons.
That will put an end to over ten years of selling the gold by the banks.
The CBGA puts a cap on collective sales by the banks.
This could provide even more support to gold, which already enjoys strong support, and is another piece of the underlying fundamentals which are driving gold prices up, taking supply out of the gold market.
Although there will probably be some instances of relatively small sales, expectations are the central banks will follow the overall Central Bank Gold Agreement they made.
Sales from the banks have already plummeted over the last CBGA year, dropping 96 percent to 6.2 tons.
Halliburton (NYSE:HAL) Says BP (NYSE:BP) Wrong on Cement Work
With billions at stake, determining the fault of companies like BP (NYSE:BP) and Halliburton (NYSE:HAL) will have a dramatic effect on the health of the companies.
BP has blamed Halliburton concerning its cement work, saying the correct amount of hydrogen wasn't included in the cement mix. Halliburton responded by saying it was the design of the oil well itself that caused the problem.
Halliburton's vice president of cementing, Thomas Roth, said BP didn't test the actual cement used in the well, but rather a cement recipe the cement job used as a guide was was what was tested. He added they also used a different manufacturing technique than Halliburton uses when they tested the mix.
Roth also countered at a National Academies hearing in Washington that it was “BP’s well design and operational decisions compromised well integrity,” not the cement mix.
The question arose as to why Roth and Halliburton didn't stop the process if they knew the well design was faulty.
Roth responded by saying they “didn’t see it to be an unsafe operation as it was being executed.”
In an internal investigation, BP has mostly placed the blame of the failed oil well on other companies, including Halliburton and rig owner Transocean (NYSE:RIG).
BP has blamed Halliburton concerning its cement work, saying the correct amount of hydrogen wasn't included in the cement mix. Halliburton responded by saying it was the design of the oil well itself that caused the problem.
Halliburton's vice president of cementing, Thomas Roth, said BP didn't test the actual cement used in the well, but rather a cement recipe the cement job used as a guide was was what was tested. He added they also used a different manufacturing technique than Halliburton uses when they tested the mix.
Roth also countered at a National Academies hearing in Washington that it was “BP’s well design and operational decisions compromised well integrity,” not the cement mix.
The question arose as to why Roth and Halliburton didn't stop the process if they knew the well design was faulty.
Roth responded by saying they “didn’t see it to be an unsafe operation as it was being executed.”
In an internal investigation, BP has mostly placed the blame of the failed oil well on other companies, including Halliburton and rig owner Transocean (NYSE:RIG).
Chevron (NYSE:CVX), Shell (NYSE:RDS-A), Maersk Experiencing Lower September Production
Production in the Danish North Sea will be down for Chevron (NYSE:CVX), Shell (NYSE:RDS-A) and Maersk in September, as maintenance on the oil field continues for the second month in a row.
Consequently, production capacity will be below usual levels because of the ongoing work on a separator container. The water separator is being worked on to prolong the life of the field, as the aging field has an increasing ratio of water to oil and gas.
From September 1 through September 22, Halfdan has produced from 20,000 to 25,000 less barrels a day than normal.
The Dansk Undergrunds Consortium was formed in 1962, with Shell owning 46 percent, Maersk 39 percent, and Chevron 15 percent.
Through August the group has produced 51.3 million barrels of oil.
Consequently, production capacity will be below usual levels because of the ongoing work on a separator container. The water separator is being worked on to prolong the life of the field, as the aging field has an increasing ratio of water to oil and gas.
From September 1 through September 22, Halfdan has produced from 20,000 to 25,000 less barrels a day than normal.
The Dansk Undergrunds Consortium was formed in 1962, with Shell owning 46 percent, Maersk 39 percent, and Chevron 15 percent.
Through August the group has produced 51.3 million barrels of oil.
Halliburton (NYSE:HAL) Acquires Permedia Research Group
Halliburton (NYSE:HAL) announced it has acquired Permedia Research Group, which is based in Ottawa, Canada.
Gene Minnich, vice-president of the Halliburton division said, "The Permedia acquisition builds on our strategy to deliver integrated and differentiated basin-to-reservoir scale solutions and will provide our customers with a better understanding of hydrocarbon generation, migration and trapping mechanisms.
"Combined with Halliburton's leadership in deepwater exploration and unconventional resource plays, Permedia's tools and expertise will enable customers to dramatically improve their understanding of hydrocarbon potential and ultimately enhance their exploration and production success."
What Permedia specifically does is simulate the flows of petroleum in basins, while isolating the different types existing in them.
Permedia will get enhanced ability in exploration modelling as well as carbon dioxide sequestering.
Terms of the deal weren't released.
Gene Minnich, vice-president of the Halliburton division said, "The Permedia acquisition builds on our strategy to deliver integrated and differentiated basin-to-reservoir scale solutions and will provide our customers with a better understanding of hydrocarbon generation, migration and trapping mechanisms.
"Combined with Halliburton's leadership in deepwater exploration and unconventional resource plays, Permedia's tools and expertise will enable customers to dramatically improve their understanding of hydrocarbon potential and ultimately enhance their exploration and production success."
What Permedia specifically does is simulate the flows of petroleum in basins, while isolating the different types existing in them.
Permedia will get enhanced ability in exploration modelling as well as carbon dioxide sequestering.
Terms of the deal weren't released.
BP (NYSE:BP) Denies Texas City Refinery Leaking Gas
BP (NYSE:BP) had denied a claim by a Houston lawyer Tony Buzbee that a unit at its Texas City refinery is leaking gas. They claim the assertions by the lawyer that it represents an "extreme hazard" are inaccurate, although they didn't deny refinery's Pipestill 3A unit was leaking.
A letter from a lawyer to the company demanded they shut down the unit, or he'll petition a court to force them to do it.
BP noted the lawyer also sent out a press release at the same time contacting them.
"There is no need for Mr. Buzbee to be involved in this matter and no need for him to go to court," BP spokesman Michael Marr said in an e-mail to the Houston Chronicle. "Galveston County citizens and community leaders should be skeptical of claims by a lawyer with a presumed financial motive to make them. The fact that Mr. Buzbee sent his letter to the press at the same time as he sent it to BP suggests that publicity may be another goal."
Marr added that BP has contacted numerous government agencies about the equipment mentioned by Buzbee, including the the Texas attorney general, U.S. Environmental Protection Agency, the Galveston County district attorney, the county health district, the Texas Commission on Environmental Quality and the U.S. Occupational Safety and Health Administration.
Consequently, BP said it's none of Buzbee's business.
A letter from a lawyer to the company demanded they shut down the unit, or he'll petition a court to force them to do it.
BP noted the lawyer also sent out a press release at the same time contacting them.
"There is no need for Mr. Buzbee to be involved in this matter and no need for him to go to court," BP spokesman Michael Marr said in an e-mail to the Houston Chronicle. "Galveston County citizens and community leaders should be skeptical of claims by a lawyer with a presumed financial motive to make them. The fact that Mr. Buzbee sent his letter to the press at the same time as he sent it to BP suggests that publicity may be another goal."
Marr added that BP has contacted numerous government agencies about the equipment mentioned by Buzbee, including the the Texas attorney general, U.S. Environmental Protection Agency, the Galveston County district attorney, the county health district, the Texas Commission on Environmental Quality and the U.S. Occupational Safety and Health Administration.
Consequently, BP said it's none of Buzbee's business.
Eldorado (NYSE:EGO) and Low Cost Benefits
Eldorado Gold (NYSE:EGO) received a lot of attention recently when they were named as the fastest growing company in 2010 by Fortune, but growth isn't the only strengh of Eldorado, as their low operational costs puts them in an enviable place.
The two major benefits of any company with low costs advantage are the flexibility it has and the ability to navigate its way through difficult economic times.
In gold mining, and mining in general, that's one of the major differentiators and moats separating the miners as a quality investment.
Even though Eldorado suffered some negative media coverage when they were openly outbid for Andea Resources by Goldcorp (NYSE:GG), all it revealed is what everyone already knew: they aren't able to successfully wage a bidding war against the major miners.
But as Eldorado CEO Paul Wright noted recently, they have two solid in Turkey and China, with another in the permitting stage in Greece. That will keep them busy for several years even if nothing else happens.
Wright wasn't concerned over the major miners' strength to outbid them on companies either, as most the time they don't end up interested in the same assets.
While Wright has said he would be open to another potential acquisition, it would have to be a very opportunistic one. Much of that is related to geographic preferences for the company they want to work in.
In his mind it'll probably be a couple of years before they start looking in the acquisition area again.
Over the long term Wright says he making decisions on the assumption the price of gold will continue rising, and being one of the top low cost miners in the industry, can do well in strong and weak economic environments.
The cash cost for gold production in the latest quarter for Eldorado was $375 an ounce.
The two major benefits of any company with low costs advantage are the flexibility it has and the ability to navigate its way through difficult economic times.
In gold mining, and mining in general, that's one of the major differentiators and moats separating the miners as a quality investment.
Even though Eldorado suffered some negative media coverage when they were openly outbid for Andea Resources by Goldcorp (NYSE:GG), all it revealed is what everyone already knew: they aren't able to successfully wage a bidding war against the major miners.
But as Eldorado CEO Paul Wright noted recently, they have two solid in Turkey and China, with another in the permitting stage in Greece. That will keep them busy for several years even if nothing else happens.
Wright wasn't concerned over the major miners' strength to outbid them on companies either, as most the time they don't end up interested in the same assets.
While Wright has said he would be open to another potential acquisition, it would have to be a very opportunistic one. Much of that is related to geographic preferences for the company they want to work in.
In his mind it'll probably be a couple of years before they start looking in the acquisition area again.
Over the long term Wright says he making decisions on the assumption the price of gold will continue rising, and being one of the top low cost miners in the industry, can do well in strong and weak economic environments.
The cash cost for gold production in the latest quarter for Eldorado was $375 an ounce.
Newmont Mining (NYSE:NEM) Making its Move?
If you look at a chart of Newmont Mining's (NYSE:NEM) performance over the last five years, you find it less than inspiring, as until this summer, it hadn't reached the levels it has in the early part of 2006, when it hit $59.87 on January 9.
It took until June of 2010 for the largest U.S. gold miner to reach and surpass those levels, and it looks like they may have finally broken out, closing at $63.40 on Friday, after reaching as high as $65.40 on Wednesday.
With expectations high in the gold mining stocks because of the ongoing gold bull market, the largest gold mining companies have underperformed as the smaller companies have been outperforming them in a major way.
Major gold miners were held back because costs were increasing at approximately the same pace as prices.
Increasing gold prices are finally starting to overcome that, and it looks like Newmont may be in for a nice upward run.
Although Barrick Gold (NYSE:ABX) and Goldcorp (NYSE:GG) have outperformed Newmont over the last five years, over the last two or three years, when gold prices were soaring, they've been mostly flat as well.
It took until June of 2010 for the largest U.S. gold miner to reach and surpass those levels, and it looks like they may have finally broken out, closing at $63.40 on Friday, after reaching as high as $65.40 on Wednesday.
With expectations high in the gold mining stocks because of the ongoing gold bull market, the largest gold mining companies have underperformed as the smaller companies have been outperforming them in a major way.
Major gold miners were held back because costs were increasing at approximately the same pace as prices.
Increasing gold prices are finally starting to overcome that, and it looks like Newmont may be in for a nice upward run.
Although Barrick Gold (NYSE:ABX) and Goldcorp (NYSE:GG) have outperformed Newmont over the last five years, over the last two or three years, when gold prices were soaring, they've been mostly flat as well.
Chevron (NYSE:CVX) Shows How to Fight Eco-terrorists Like Greenpeace
Companies should take a page from the book of Chevron (NYSE:CVX) who battle the controversial so-called environmental group Greenpeace and won, sending them packing from their outrageous and illegal actions of taking over a drilling ship by attaching a "survival pod" to an anchor.
The warring activist faction was ordered by a judge to leave the drilling ship or face fines and/or incarceration. The little cowards are running, whining as they run with their tales between their legs.
Chevron recently said, "This kind of action is foolhardy and demonstrates that Greenpeace is willing to put its volunteers at risk to carry out such reckless publicity stunts and we are concerned for the safety of those involved."
This is of course a marketing tool for people like this who don't have honest jobs, and use the circumstance to call attention to themselves in order to raise funding for their endless and dangerous stunts.
Responding to the court order, Greenpeace representatives noted they couldn't stay doing what they were doing because it would allow Chevron to receive a lot of the money donated to them from supporters.
That's what you do with these types of people and eco-terrorist organizations: threaten to bleed them dry. They do more harm to people because of the added cost of doing business from their ludicrous actions and lawsuits.
If businesses would be more aggressive in these matters, they would find these losers backing way off just calling names form the sidelines.
The warring activist faction was ordered by a judge to leave the drilling ship or face fines and/or incarceration. The little cowards are running, whining as they run with their tales between their legs.
Chevron recently said, "This kind of action is foolhardy and demonstrates that Greenpeace is willing to put its volunteers at risk to carry out such reckless publicity stunts and we are concerned for the safety of those involved."
This is of course a marketing tool for people like this who don't have honest jobs, and use the circumstance to call attention to themselves in order to raise funding for their endless and dangerous stunts.
Responding to the court order, Greenpeace representatives noted they couldn't stay doing what they were doing because it would allow Chevron to receive a lot of the money donated to them from supporters.
That's what you do with these types of people and eco-terrorist organizations: threaten to bleed them dry. They do more harm to people because of the added cost of doing business from their ludicrous actions and lawsuits.
If businesses would be more aggressive in these matters, they would find these losers backing way off just calling names form the sidelines.
Is Missing BP (NYSE:BP) Oil Really a Mystery?
The assertions by some "independent" scientists that there is all sorts of BP (NYSE:BP) oil in the Gulf of Mexico has continued to be unproven, and the longer it is searched for the more it looks like it may have been asserted from fear and disbelief over the ability of the Gulf of Mexico to heal itself, than from any type of science.
Bordering on science fiction is the alleged 22-mile-long underwater oil plume "found" by the Woods Hole Oceanographic Institution in Massachusetts, but reported two months after the supposed finding, and that only after a report released by the National Oceanic and Atmospheric Administration, which stated about 75 percent of the oil at that time had either been cleaned by the Gulf itself, mostly through evaporation and oil-eating microbes, or to a small degree, the skimming boats.
That didn't fit the narrative wanted by activist scientists and those looking to get a piece of the research pie, and so they continue to make other assertions that have yet to be confirmed. That's why I mentioned fear above, as they fear not getting the millions that inevitably comes from companies in these types of accidents.
The latest assertion is there has been a bunch of oil found on the floor of the ocean, supposedly from the BP oil spill.
But my question is why should NOAA go out and search for every story about hidden oil lingering somewhere in the Gulf using taxpayer dollars.
NOAA is now going off to find oil based on findings of University of Georgia biologist Samantha Joye, who asserts she has found oil on the ocean floor that appears to be from the BP oil well. Supposedly it's about 16 nautical miles from the well.
Joye asserts the oil looks like it settled in a way that would appear to make it look like it came from the well rather than the millions of gallons of oil which naturally leak into the Gulf every year.
It's not that there couldn't be oil, but what's happening here is efforts by institutions and individual scientists to make a name for themselves by finding something that contradicts government studies. That could set them up for life.
That's not to say there may not be some oil out in the Gulf somewhere, but so far original findings of NOAA that the Gulf is rapidly cleaning itself up has been confirmed by followup studies.
Scientists with agendas just don't want to hear that, and their refusal to believe it even in light of prove shows they have an agenda beyond finding the truth about the oil.
The agenda is about garnering funds by making a name for themselves. The Woods Hole Oceanographic Institution has already lost a lot of credibility from their claims, and those who continue to try to contradict the oil findings better be doing it based on real data found, rather than fictitious gigantic plumes or other science fiction stories.
Bordering on science fiction is the alleged 22-mile-long underwater oil plume "found" by the Woods Hole Oceanographic Institution in Massachusetts, but reported two months after the supposed finding, and that only after a report released by the National Oceanic and Atmospheric Administration, which stated about 75 percent of the oil at that time had either been cleaned by the Gulf itself, mostly through evaporation and oil-eating microbes, or to a small degree, the skimming boats.
That didn't fit the narrative wanted by activist scientists and those looking to get a piece of the research pie, and so they continue to make other assertions that have yet to be confirmed. That's why I mentioned fear above, as they fear not getting the millions that inevitably comes from companies in these types of accidents.
The latest assertion is there has been a bunch of oil found on the floor of the ocean, supposedly from the BP oil spill.
But my question is why should NOAA go out and search for every story about hidden oil lingering somewhere in the Gulf using taxpayer dollars.
NOAA is now going off to find oil based on findings of University of Georgia biologist Samantha Joye, who asserts she has found oil on the ocean floor that appears to be from the BP oil well. Supposedly it's about 16 nautical miles from the well.
Joye asserts the oil looks like it settled in a way that would appear to make it look like it came from the well rather than the millions of gallons of oil which naturally leak into the Gulf every year.
It's not that there couldn't be oil, but what's happening here is efforts by institutions and individual scientists to make a name for themselves by finding something that contradicts government studies. That could set them up for life.
That's not to say there may not be some oil out in the Gulf somewhere, but so far original findings of NOAA that the Gulf is rapidly cleaning itself up has been confirmed by followup studies.
Scientists with agendas just don't want to hear that, and their refusal to believe it even in light of prove shows they have an agenda beyond finding the truth about the oil.
The agenda is about garnering funds by making a name for themselves. The Woods Hole Oceanographic Institution has already lost a lot of credibility from their claims, and those who continue to try to contradict the oil findings better be doing it based on real data found, rather than fictitious gigantic plumes or other science fiction stories.
JPMorgan (NYSE:JPM) Sees $90 Oil by End of 2010
JPMorgan (NYSE:JPM) said the price of oil by the end of 2010 should reach close to $90 a barrel.
Data perceived as positive for the economy is partly driving the outlook, but probably the weak U.S. dollar is the main catalyst, as the commitment by the Federal Reserve to interfere in the economy if it remains weak a a major driver as well, which is part of the loss of value of the dollar.
One possible thing that could derail the higher price is if consumers continue to hold back on traveling and spending, which could cause demand to go down and inventories to go up, which could push oil prices down to lower levels than expected.
For Friday, in afternoon trade West Texas Intermediate crude for November contracts was up to $76.35 a barrel, gaining $1.17 on the New York Mercantile Exchange.
Data perceived as positive for the economy is partly driving the outlook, but probably the weak U.S. dollar is the main catalyst, as the commitment by the Federal Reserve to interfere in the economy if it remains weak a a major driver as well, which is part of the loss of value of the dollar.
One possible thing that could derail the higher price is if consumers continue to hold back on traveling and spending, which could cause demand to go down and inventories to go up, which could push oil prices down to lower levels than expected.
For Friday, in afternoon trade West Texas Intermediate crude for November contracts was up to $76.35 a barrel, gaining $1.17 on the New York Mercantile Exchange.
Friday, September 24, 2010
Gold Prices Surpass $1,300 as Dollar Plummets in Value
There are so many variables, which when combined, provide the perfect storm for gold prices, and at any one time one or the other can be highlighted, continuing to push the price of gold upward.
Today's record gold price, where gold futures traded as high as $1,301.30 an ounce on the COMEX, was moved largely by the weakening U.S. dollar, which has shrunk against the euro (EUR/USD), gaining over 1.3 percent in morning trading.
So far in September gold has gained 4.2 percent, and is up 18.5 percent for 2010.
While $1,300 is not much more than a measuring stick and doesn't mean that much, whenever a new increment of $100 is met it's important psychologically, and reinforces the underlying fundamentals as to why gold continues to soar.
Today's record gold price, where gold futures traded as high as $1,301.30 an ounce on the COMEX, was moved largely by the weakening U.S. dollar, which has shrunk against the euro (EUR/USD), gaining over 1.3 percent in morning trading.
So far in September gold has gained 4.2 percent, and is up 18.5 percent for 2010.
While $1,300 is not much more than a measuring stick and doesn't mean that much, whenever a new increment of $100 is met it's important psychologically, and reinforces the underlying fundamentals as to why gold continues to soar.
BP (NYSE:BP) Loan Could be Boosted to $2.25 Billion
A $2 billion loan sought by BP (NYSE:BP) could be increased to $2.25 billion, as the deal, back by Azerbaijan oil sales, drew more demand than expected.
The 15-plus banks part of the deal offered to lend more than the amount sought by BP.
Revenue from the Azeri-Chirag- Deepwater Gunashli field in the waters of Azerbaijan is the collateral for the loan.
BP is borrowing another $3 billion using collateral from their operations in Angola. That deal will remain as it is, and won't be bumped up.
The loans are for five years, and BP will pay 250 basis points over the London interbank offered rate in the first year, 300 after the second year, and 325 after three years.
The 15-plus banks part of the deal offered to lend more than the amount sought by BP.
Revenue from the Azeri-Chirag- Deepwater Gunashli field in the waters of Azerbaijan is the collateral for the loan.
BP is borrowing another $3 billion using collateral from their operations in Angola. That deal will remain as it is, and won't be bumped up.
The loans are for five years, and BP will pay 250 basis points over the London interbank offered rate in the first year, 300 after the second year, and 325 after three years.
BP (NYSE:BP) Research Funds Fought Over by Scientists Who Think They're Entitled to it
In a pathetic display of arrogance and greed, scientists from outside the Gulf states belief they should be recipients of part of the $500 million research money given by BP (NYSE:BP) to study the effects of the Gulf oil spill.
We've said at Dripping Oil from the beginning that many of the statements and assertions made by "independent" scientists was for the purpose of somehow getting their hands on money from the BP accident.
Some poor scientists are worried they're going to be overlooked because the money will largely dispensed to scientists located in the Gulf community.
Hilariously called critics, they are supposedly fearful scientist with "distinguished" oceanographic organizations who won't be included. Guess what, not everybody gets invited to the party.
Amazingly, some have even labeled the Woods Hole Oceanographic Institution as distinguished, after their assertion there was a giant oil plume blog floating around in the Gulf, even though attempts to find the fictitious oil monster has been met with failure.
Another organization named was the Scripps Institution of Oceanography in California. It's like these elitist, arrogant people think they're smarter and more special than the poor Gulf state scientists.
They really don't care about the scientists per se, but the money their institutions will get as a result of them being named to the studies.
Not a person doesn't know this has always been about money, and even money given by BP to certain Berkley departments is being fought over internally because someone else didn't get it.
Research departments across America are short of funds, and this is an attempt to steal funds from the Gulf states to give the liberal, elitist universities - who are located among two of the most socialist states in America - money after they're own state budgets are a disaster because of their ant-business legislation and endless entitlement programs.
BP is expected to sign a deal which wold give preference to scientific institutions in the Gulf states. Good for them. Let the money stay where it's needed, not in the hands of whining people who continue to believe they are entitled to anything someone else gets.
We've said at Dripping Oil from the beginning that many of the statements and assertions made by "independent" scientists was for the purpose of somehow getting their hands on money from the BP accident.
Some poor scientists are worried they're going to be overlooked because the money will largely dispensed to scientists located in the Gulf community.
Hilariously called critics, they are supposedly fearful scientist with "distinguished" oceanographic organizations who won't be included. Guess what, not everybody gets invited to the party.
Amazingly, some have even labeled the Woods Hole Oceanographic Institution as distinguished, after their assertion there was a giant oil plume blog floating around in the Gulf, even though attempts to find the fictitious oil monster has been met with failure.
Another organization named was the Scripps Institution of Oceanography in California. It's like these elitist, arrogant people think they're smarter and more special than the poor Gulf state scientists.
They really don't care about the scientists per se, but the money their institutions will get as a result of them being named to the studies.
Not a person doesn't know this has always been about money, and even money given by BP to certain Berkley departments is being fought over internally because someone else didn't get it.
Research departments across America are short of funds, and this is an attempt to steal funds from the Gulf states to give the liberal, elitist universities - who are located among two of the most socialist states in America - money after they're own state budgets are a disaster because of their ant-business legislation and endless entitlement programs.
BP is expected to sign a deal which wold give preference to scientific institutions in the Gulf states. Good for them. Let the money stay where it's needed, not in the hands of whining people who continue to believe they are entitled to anything someone else gets.
Dynegy (NYSE:DYN) Downgraded by JP Morgan (NYSE:JPM)
JP Morgan (NYSE:JPM) downgraded Dynegy (NYSE:DYN) from "Overweight" to "Neutral," while lowering the price target on the company from $10 to $5.
After a 40-day period of seeking an alternative to the bid from The Blackstone Group (NYSE:BX), Dynegy, while receiving some interest, didn't end up with any other bids.
Dynegy stated, “Despite this solicitation of interest, Dynegy did not receive any acquisition proposals.”
They said eight parties gained access to private company information in order to make an informed decision, but they evidently didn't like what they saw.
A shareholder meeting of Dynegy on November 17 is set, where the merger with Blackstone will be approved. The deal should close in near the end of November.
After a 40-day period of seeking an alternative to the bid from The Blackstone Group (NYSE:BX), Dynegy, while receiving some interest, didn't end up with any other bids.
Dynegy stated, “Despite this solicitation of interest, Dynegy did not receive any acquisition proposals.”
They said eight parties gained access to private company information in order to make an informed decision, but they evidently didn't like what they saw.
A shareholder meeting of Dynegy on November 17 is set, where the merger with Blackstone will be approved. The deal should close in near the end of November.
Global Hunter Initates Coverage on Callon Petroleum (NYSE:CPE)
Global Hunter said it has initiated coverage on Callon Petroleum (NYSE:CPE), starting them off with a "Buy" rating, citing their move away from exposure to the Gulf of Mexico.
"Callon Petroleum Company refocused its exploration and production efforts onshore in the Permian Basin and North Louisiana, away from its historical focus in the Gulf of Mexico," said Global.
Callon closed Thursday at $3.81, gaining $0.06, or 1.60 percent.
Global has a price target of $7.30 on the oil company.
"Callon Petroleum Company refocused its exploration and production efforts onshore in the Permian Basin and North Louisiana, away from its historical focus in the Gulf of Mexico," said Global.
Callon closed Thursday at $3.81, gaining $0.06, or 1.60 percent.
Global has a price target of $7.30 on the oil company.
Barrick (NYSE:ABX), Newmont (NYSE:NEM) and Goldcorp (NYSE:GG) Will Move Up as Gold Prices Continue to Soar
A number of gold miners, including giants Barrick Gold Corp. (NYSE:ABX), Newmont Mining Corp. (NYSE:NEM), and Goldcorp Inc. (NYSE:GG) should perform strongly going forward, as valuations are historically cheap, and lag the upward movement of the price of gold.
A growing number of investors are increasingly excited about the possibilities for gold mining companies, as it's inevitable they attract more and more attention, which will increase investment, but could also draw those who don't understand the market. That could lead to a bubble sometime in the future, but it's nowhere near to that place now.
Higher gold prices are creating wider margins, which of course will lead to strong earnings for the gold miners, and the current quarter should be very strong for them.
Valuation for gold mining stocks have plummeted to their lowest levels in about 18 months, creating the powerful argument for a surge in the price of the gold mining sector.
The more important long term outlook is the underlying fundamentals, including inflation, weak economy, deficits and out-of-control government spending.
That isn't going to change any time in the near future, and the gold miners and investors in them will benefit as a result.
Some think it could be up to three years before investing in gold and gold stocks go mainstream, and that's a lot of time to make money before irrational investors enter the sector, if that proves to be the case.
A growing number of investors are increasingly excited about the possibilities for gold mining companies, as it's inevitable they attract more and more attention, which will increase investment, but could also draw those who don't understand the market. That could lead to a bubble sometime in the future, but it's nowhere near to that place now.
Higher gold prices are creating wider margins, which of course will lead to strong earnings for the gold miners, and the current quarter should be very strong for them.
Valuation for gold mining stocks have plummeted to their lowest levels in about 18 months, creating the powerful argument for a surge in the price of the gold mining sector.
The more important long term outlook is the underlying fundamentals, including inflation, weak economy, deficits and out-of-control government spending.
That isn't going to change any time in the near future, and the gold miners and investors in them will benefit as a result.
Some think it could be up to three years before investing in gold and gold stocks go mainstream, and that's a lot of time to make money before irrational investors enter the sector, if that proves to be the case.
Patterson-UTI (Nasdaq:PTEN) Upgraded by Raymond James (NYSE:RJF)
Raymond James (NYSE:RJF) upgraded Patterson-UTI Energy (Nasdaq:PTEN) from "Outperform" to "Strong Buy," increasing their price target from $20 to $22.
Patterson-UTI, among onshore drillers, is among the favorites of a number of commentators and analysts, as Jefferies also upgraded the stock earlier in September.
Because operators released land rigs during the recession to safe capital, Patterson was significantly weakened. Now almost all the market share they lost at that time has been regained.
Since August 25 when the stock stood at $13.90, it has made a nice upward move, although it is still almost level with the $16.23 it was at on July 30.
Patterson closed Thursday at $16.45, gaining $0.05, or 0.30 percent. Volume was almost identical to the 3-month daily average.
Patterson-UTI, among onshore drillers, is among the favorites of a number of commentators and analysts, as Jefferies also upgraded the stock earlier in September.
Because operators released land rigs during the recession to safe capital, Patterson was significantly weakened. Now almost all the market share they lost at that time has been regained.
Since August 25 when the stock stood at $13.90, it has made a nice upward move, although it is still almost level with the $16.23 it was at on July 30.
Patterson closed Thursday at $16.45, gaining $0.05, or 0.30 percent. Volume was almost identical to the 3-month daily average.
BP (NYSE:BP) Oil Spill 500,000 Less Barrels than Government Figures
Results of an independent study of how much oil was spilled by BP (NYSE:BP) into the Gulf came up about 500,000 barrels less than the government estimate of 4.9 million barrels. The new study asserted about 4.4 million barrels were released from the oil well.
The team published the results in the journal "Science," and said the new oil estimate came from watching the video of the oil escaping from the Gulf bottom.
Team leader Timothy Crone, from Columbia University's Lamont-Doherty Earth Observatory, and a marine geophysicist, pushed for the release of high resolution video from the cameras of BP, saying the raw footage from poorer resolution couldn't accurately measure the oil flow.
With availability of only some short high resolution video, the findings in this case do generate questions as to how accurate they are.
Researchers admitted, "We clearly acknowledge the limits of our technique; we're unlikely to ever know the exact figure."
Even though the figures were 500,000 barrels less than the government estimate, some are already suggesting it could be viewed as another situation of the government spinning the numbers.
Who cares? There are those who have already entered the conspiracy theory zone, and until they get the numbers that fit their desired narrative, nothing will be believed.
The Gulf cleaning up the oil naturally so quickly leaves it even harder to get an estimate. With the government figures saying almost 75 percent of the oil had left the Gulf (and that was a while ago), there is no way to confirm if measurements are accurate.
We will never know, and other than how much BP may have to pay in fines, it's largely irrelevant. It's more important to get it cleaned up than obsess with the accuracy of how many barrels spilled into the Gulf.
This seems to be scientists and university departments attempting to create a situation where they can attempt to get funding for their departments and pet projects.
The team published the results in the journal "Science," and said the new oil estimate came from watching the video of the oil escaping from the Gulf bottom.
Team leader Timothy Crone, from Columbia University's Lamont-Doherty Earth Observatory, and a marine geophysicist, pushed for the release of high resolution video from the cameras of BP, saying the raw footage from poorer resolution couldn't accurately measure the oil flow.
With availability of only some short high resolution video, the findings in this case do generate questions as to how accurate they are.
Researchers admitted, "We clearly acknowledge the limits of our technique; we're unlikely to ever know the exact figure."
Even though the figures were 500,000 barrels less than the government estimate, some are already suggesting it could be viewed as another situation of the government spinning the numbers.
Who cares? There are those who have already entered the conspiracy theory zone, and until they get the numbers that fit their desired narrative, nothing will be believed.
The Gulf cleaning up the oil naturally so quickly leaves it even harder to get an estimate. With the government figures saying almost 75 percent of the oil had left the Gulf (and that was a while ago), there is no way to confirm if measurements are accurate.
We will never know, and other than how much BP may have to pay in fines, it's largely irrelevant. It's more important to get it cleaned up than obsess with the accuracy of how many barrels spilled into the Gulf.
This seems to be scientists and university departments attempting to create a situation where they can attempt to get funding for their departments and pet projects.
Thursday, September 23, 2010
BP (NYSE:BP) HOlds Safety Review at Texas City Plant
After two workers were burned from the release of steam at the troubled Texas City plant of BP (NYSE:BP), safety reviews have been and are being conducted in response to the accident.
This is the same plant which had an explosion in 2005 which killed 15 people and left over 170 injured. It's also the plant which is being investigated for benzene release at this time and is being sued in a class action.
The majority of workers at the plant spent most the of Wednesday work day in safety meetings, according to BP spokesman Michael Marr. In spite of the accident, no units at the facility were shut down, added Marr.
One of the injured reportedly had 30 percent of his body covered in burns, and was transported to a regional hospital in Galveston.
Reviews are part of BP's response to increase safety at the plant after the 2005 explosion, deaths and injuries.
This is the same plant which had an explosion in 2005 which killed 15 people and left over 170 injured. It's also the plant which is being investigated for benzene release at this time and is being sued in a class action.
The majority of workers at the plant spent most the of Wednesday work day in safety meetings, according to BP spokesman Michael Marr. In spite of the accident, no units at the facility were shut down, added Marr.
One of the injured reportedly had 30 percent of his body covered in burns, and was transported to a regional hospital in Galveston.
Reviews are part of BP's response to increase safety at the plant after the 2005 explosion, deaths and injuries.
Wetlands Foundation wants BP (NYSE:BP) Fines Money
An organization called America’s Wetlands Foundation has called for the their organization to receive 80 percent of the money BP (NYSE:BP) will pay in fines from the Gulf oil spill.
In a report named “Secure Gulf Project,” the activist group also said they want the federal revenue sharing scheduled to being in 2017 to be moved up to 2011, which would be used to finance projects to conserve restore the coasts.
They also called for a big government oversight authority to oversee the process.
with the amount of fines BP are expected to pay estimated to be a minimum of $5 billion, I'm sure this activist group would love to get there hands on that, along with an unknown amount of taxpayer dollars.
The truth is the Gulf states have made decisions for decades on pursuing energy projects off their coast, now they want to abuse this situation to restore their coasts by using BP and taxpayer money.
Restoration of the coasts as needed in accordance with BP's part it in has nothing to do with restoring the coasts from decades of wear and decisions by residents and politicians in the area.
Over the last five years, Louisiana alone has lost up to 250,000 acres of coastland.
Democrat Sen. Mary Landrieu, D-La., said the oil leak by BP has called attention to the need of coastal restoration, but that has been known for a long time, and as mentioned, has largely happened based upon decisions to pursue the energy markets through offshore drilling.
They should use their own taxes from the drilling to fund restoration, not the taxpayers from everywhere else.
And as far as the America’s Wetlands Foundation, who are they to demand money from anybody, and there should be a thorough vetting process for any non-profit organization seeking funds in connection to the oil spill, as there are so many agendas out there with groups like this, they could use the money to promote parts of those agendas most of us wouldn't approve of.
In a report named “Secure Gulf Project,” the activist group also said they want the federal revenue sharing scheduled to being in 2017 to be moved up to 2011, which would be used to finance projects to conserve restore the coasts.
They also called for a big government oversight authority to oversee the process.
with the amount of fines BP are expected to pay estimated to be a minimum of $5 billion, I'm sure this activist group would love to get there hands on that, along with an unknown amount of taxpayer dollars.
The truth is the Gulf states have made decisions for decades on pursuing energy projects off their coast, now they want to abuse this situation to restore their coasts by using BP and taxpayer money.
Restoration of the coasts as needed in accordance with BP's part it in has nothing to do with restoring the coasts from decades of wear and decisions by residents and politicians in the area.
Over the last five years, Louisiana alone has lost up to 250,000 acres of coastland.
Democrat Sen. Mary Landrieu, D-La., said the oil leak by BP has called attention to the need of coastal restoration, but that has been known for a long time, and as mentioned, has largely happened based upon decisions to pursue the energy markets through offshore drilling.
They should use their own taxes from the drilling to fund restoration, not the taxpayers from everywhere else.
And as far as the America’s Wetlands Foundation, who are they to demand money from anybody, and there should be a thorough vetting process for any non-profit organization seeking funds in connection to the oil spill, as there are so many agendas out there with groups like this, they could use the money to promote parts of those agendas most of us wouldn't approve of.
Comstock Resources (NYSE:CRK) Has "Market Perform" Maintained by FBR Capital
FBR Capital says it is maintaining their "Market Perform" on Comstock Resources, Inc. (NYSE:CRK).
"Our recent conversations with management suggest a willingness to slow down Haynesville activity to live within/close to cash flows. Also, a growing high condensate area focused Eagle Ford acreage position allows for improving flexibility in capital allocation. We are fans of the steps being undertaken, which signify a focus on returns, preservation of balance sheet strength, and gas price rebound optionality...However, we await a better entry point...," said FBR.
Comstock closed Wednesday at $21, gaining $0.21, or 1.01 percent.
FBR has a price target on the company of $25.
"Our recent conversations with management suggest a willingness to slow down Haynesville activity to live within/close to cash flows. Also, a growing high condensate area focused Eagle Ford acreage position allows for improving flexibility in capital allocation. We are fans of the steps being undertaken, which signify a focus on returns, preservation of balance sheet strength, and gas price rebound optionality...However, we await a better entry point...," said FBR.
Comstock closed Wednesday at $21, gaining $0.21, or 1.01 percent.
FBR has a price target on the company of $25.
Exxon (NYSE:XOM), Forest Oil (NYSE:FST) Downgraded by Howard Weil, Hess (NYSE:HES) Upgraded
Howard Weil sent a couple of mixed signals with the oil sector, downgrading ExxonMobil (NYSE:XOM) and Forest Oil (NYSE:FST), while upgrading Hess Corp. (NYSE:HES).
Exxon was downgraded from "Focus Stock" to "Market Outperform" with the price target lowered from $81 to $77.
The oil giant closed at $61.45, providing an approximate 25 percent upside for the stock.
Forest Oil was downgraded from "Market Outperform" to "Market Perform," with the price target lowered from $39 to $34. Forest closed Wednesday at $29.22, down $0.29, or 0.98 percent.
Hess on the other hand was upgraded from "Market Perform" to "Market Outperform. The price target on Hess was downwardly revised from $78 to $73.
Hess closed at $65.40, gaining $0.25, or 0.46 percent.
Exxon was downgraded from "Focus Stock" to "Market Outperform" with the price target lowered from $81 to $77.
The oil giant closed at $61.45, providing an approximate 25 percent upside for the stock.
Forest Oil was downgraded from "Market Outperform" to "Market Perform," with the price target lowered from $39 to $34. Forest closed Wednesday at $29.22, down $0.29, or 0.98 percent.
Hess on the other hand was upgraded from "Market Perform" to "Market Outperform. The price target on Hess was downwardly revised from $78 to $73.
Hess closed at $65.40, gaining $0.25, or 0.46 percent.
JPMorgan (NYSE:JPM) Opens Gold Storage Facility in Singapore
JPMorgan (NYSE:JPM) has now opened its gold storage facility in Singapore, which will also store other metals as well.
Tim Wilson, JPMorgan's head of Asia marketing of global commodities said, "We've seen increasing appetite from investors and clients to diversify the location of their gold holdings and our vault facility provides an alternative site to places such as London, New York and Zurich."
"This is a significant step for us to have a direct exposure to the physical gold market in Asia," added Wilson.
Along with other metals, the storage facility will also store resources for exchange-traded funds.
The facility is located in the free trade zone at the Changi international airport.
Along with the physical settlement of transactions of JPMorgan, the facility will be available for settlement of Singapore Mercantile Exchange gold futures contracts as well.
Tim Wilson, JPMorgan's head of Asia marketing of global commodities said, "We've seen increasing appetite from investors and clients to diversify the location of their gold holdings and our vault facility provides an alternative site to places such as London, New York and Zurich."
"This is a significant step for us to have a direct exposure to the physical gold market in Asia," added Wilson.
Along with other metals, the storage facility will also store resources for exchange-traded funds.
The facility is located in the free trade zone at the Changi international airport.
Along with the physical settlement of transactions of JPMorgan, the facility will be available for settlement of Singapore Mercantile Exchange gold futures contracts as well.
BP (NYSE:BP) Oil Spill Response Cut in Half by Government
Government workers now responding to the BP (NYSE:BP) Gulf oil spill have been cut almost in half, dropping from 48,000 right before the temporary cap sealed the well on July 15, now standing at close to 25,000.
With the command center in New Orleans the long-term station to oversee the operations, former centers in Mobile, Alambama and Houma, Louisiana have been shut down, with workers to be consolidated in the Big Easy.
Replacing government point man Thad Allen at the command center will be Coast Guard Rear Admiral Paul Zukunft.
Approximately 600 miles of coastline in the region are allegedly still affected by the oil spill, said Zukunft.
With the command center in New Orleans the long-term station to oversee the operations, former centers in Mobile, Alambama and Houma, Louisiana have been shut down, with workers to be consolidated in the Big Easy.
Replacing government point man Thad Allen at the command center will be Coast Guard Rear Admiral Paul Zukunft.
Approximately 600 miles of coastline in the region are allegedly still affected by the oil spill, said Zukunft.
Morgan Stanley (NYSE:MS) Acquires Forties Crude from Trafigura, Shell (NYSE:RDS-A), BP (NYSE:BP) Also Buy North Sea Grade
Morgan Stanley (NYSE:MS) acquired Forties cargo from Trafigura Beheer BV, the third acquisition they made of the North Sea grade this week.
The latest acquisition by Morgan Stanley was for October 11 to October 14, paying a premium of 10 cents over Dated Brent, according to the financial institution.
For BP, their acquisition was from Royal Dutch Shell Plc (NYSE:RDS-A) for October 7 to October 9 loading. They paid close to 30 cents above Dated Brent, which was 19 cents below the cash cost of North Sea oil.
Shell purchased Forties from Total SA (NYSE:TOT) for October 4 to October 6, paying 20 cents above Dated Brent, according to the two companies.
The November settlement for Brent crude traded at $77.65 a barrel, while the December contract traded at $77.97, generating a contango of 32 cents between the two contracts. Both were in reference to the London-based ICE Futures Europe exchange.
The latest acquisition by Morgan Stanley was for October 11 to October 14, paying a premium of 10 cents over Dated Brent, according to the financial institution.
For BP, their acquisition was from Royal Dutch Shell Plc (NYSE:RDS-A) for October 7 to October 9 loading. They paid close to 30 cents above Dated Brent, which was 19 cents below the cash cost of North Sea oil.
Shell purchased Forties from Total SA (NYSE:TOT) for October 4 to October 6, paying 20 cents above Dated Brent, according to the two companies.
The November settlement for Brent crude traded at $77.65 a barrel, while the December contract traded at $77.97, generating a contango of 32 cents between the two contracts. Both were in reference to the London-based ICE Futures Europe exchange.
Wednesday, September 22, 2010
Exxon (NYSE:XOM), Chevron (NYSE:CVX), BP (NYSE:BP), Conoco (NYSE:COP) On High Oil Supplies
Oil inventories increased by about one million barrels last weak, pushing the share prices of majors like Exxon (NYSE:XOM), Chevron (NYSE:CVX), BP (NYSE:BP), Conoco (NYSE:COP) all down on the day, although Exxon rebounded some as the day went on.
The big blow was analysts had been looking for a drop in oil inventory of about 1.5 million barrels, creating the 2.5 million oil barrel miss.
For indices tracking the energy sector, the NYSE Arca Oil Index (AMEX:XOI) fell $7.04 to 1,001.85, a drop of 0.70 percent; the Amex Natural Gas Index gained $0.70, or 0.14 percent, rising to $513.77 at 3:41 PM EDT; while the Philadelphia Oil Service Index dropped slightly to $189.62 as of 3:43 PM EDT.
BP was at $38.18, falling $0.41, or 1.06 percent at 3:31 PM EDT; Conoco fell to $56.09, losing $0.43, or 0.76 percent at 3:34 PM EDT; Exxon rose slightly to $61.59, gaining $0.05, or 0.08 percent at 3:44 PM EDT, and Chevron fell to $79.34, dropping $0.41, or 0.51 percent as of 3:45 PM EDT
The big blow was analysts had been looking for a drop in oil inventory of about 1.5 million barrels, creating the 2.5 million oil barrel miss.
For indices tracking the energy sector, the NYSE Arca Oil Index (AMEX:XOI) fell $7.04 to 1,001.85, a drop of 0.70 percent; the Amex Natural Gas Index gained $0.70, or 0.14 percent, rising to $513.77 at 3:41 PM EDT; while the Philadelphia Oil Service Index dropped slightly to $189.62 as of 3:43 PM EDT.
BP was at $38.18, falling $0.41, or 1.06 percent at 3:31 PM EDT; Conoco fell to $56.09, losing $0.43, or 0.76 percent at 3:34 PM EDT; Exxon rose slightly to $61.59, gaining $0.05, or 0.08 percent at 3:44 PM EDT, and Chevron fell to $79.34, dropping $0.41, or 0.51 percent as of 3:45 PM EDT
Eldorado Gold (NYSE:EGO) and Fallout from Andean (TSE:AND) Bid
Eldorado Gold (NYSE:EGO) has suffered some unexpected backlash when they were suddenly outbid by Goldcorp (NYSE:GG) for Andean Resources (TSE:AND).
Most of the fallout from the lost bid is in the rumor mill, more than anything else, and it didn't help that they were named the fastest-growing company by Fortune, when that isn't the case.
That invited intense scrutiny, which combined with the rumors, has seemed to hold the share price of the company down.
After the failed bid, the market was looking for Eldorado to attempt to snatch up other companies, which didn't work out, and they're pointing to organic growth instead rather than acquisitions going forward.
That created the problem of higher expectations in the market place, which, again, is holding down share price.
While open to the right acquisitions, the loss of the bid to Goldcorp showed the lack of financial power to make a good deal. CEO Wright sees possible acquisitions in a couple of years, rather than sooner.
That's probably due to the fact there will be consolidation as larger miners grab up the top assets as gold prices surge and the deals make sense.
Eldorado will be left with less desirable assets to look at, but still potentially very profitable ones.
The ultimate backlash in all this is Eldorado was seen as what they are, a smaller player in the big gold pond. That's not necessarily bad, but it is concerning short-term share price, which will have to work its way thorough lowered expectations.
Most of the fallout from the lost bid is in the rumor mill, more than anything else, and it didn't help that they were named the fastest-growing company by Fortune, when that isn't the case.
That invited intense scrutiny, which combined with the rumors, has seemed to hold the share price of the company down.
After the failed bid, the market was looking for Eldorado to attempt to snatch up other companies, which didn't work out, and they're pointing to organic growth instead rather than acquisitions going forward.
That created the problem of higher expectations in the market place, which, again, is holding down share price.
While open to the right acquisitions, the loss of the bid to Goldcorp showed the lack of financial power to make a good deal. CEO Wright sees possible acquisitions in a couple of years, rather than sooner.
That's probably due to the fact there will be consolidation as larger miners grab up the top assets as gold prices surge and the deals make sense.
Eldorado will be left with less desirable assets to look at, but still potentially very profitable ones.
The ultimate backlash in all this is Eldorado was seen as what they are, a smaller player in the big gold pond. That's not necessarily bad, but it is concerning short-term share price, which will have to work its way thorough lowered expectations.
Two BP (NYSE:BP) Workers Burned at Texas City Refinery
A pair of BP (NYSE:BP) workers from the Texas City refinery suffered burns while working at the facility.
While working on a crude unit at the refinery, they were burned by steam, one with up to 30 percent of his body burned. He was transported to a burn unit at a Galveston hospital, while the other was taken to a local hospital.
According to Texas City Fire Chief Brud Gorman, the most injured worker suffered burns to his left arm and leg, as well as to his torso.
The Texas City refinery continues to be one of the more difficult challenges for BP, as they lost 15 workers in an explosion in 2005, which also hurt 180 other workers.
They also are now under investigation concerning the alleged release of poisonous chemicals into the area, including benzene. That has resulted in a class action lawsuit against the company.
While working on a crude unit at the refinery, they were burned by steam, one with up to 30 percent of his body burned. He was transported to a burn unit at a Galveston hospital, while the other was taken to a local hospital.
According to Texas City Fire Chief Brud Gorman, the most injured worker suffered burns to his left arm and leg, as well as to his torso.
The Texas City refinery continues to be one of the more difficult challenges for BP, as they lost 15 workers in an explosion in 2005, which also hurt 180 other workers.
They also are now under investigation concerning the alleged release of poisonous chemicals into the area, including benzene. That has resulted in a class action lawsuit against the company.
No BP (NYSE:BP) Oil Plume Says Government
The alleged gigantic oil plume asserted to roam the Gulf by Woods Hole Oceanographic Institution in Massachusetts has never been proven, and the National Oceanic and Atmospheric Administration (NOAA) said they aren't able to find any such thing beneath the Gulf waters.
As a matter of fact, according to NOAA scientist Sam Walker, "We are continuing to find lower and lower concentrations," confirming the original story the majority of the oil was gone from the Gulf through a variety of means, including oil-eating microbes.
The government report stated almost 75 percent of the oil had disappeared, primarily through natural means, although a small portion was attributed to oil skimming vessels. Evaporation also played a large part in the Gulf cleaning itself up.
The Woods Hole Oceanographic Institution for some unknown reason didn't even make their assertions until after the government report, which was about two months after they allegedly found the giant oil plume monster.
Some so-called scientists just don't like the fact that the Gulf can largely clean itself, as it doesn't fit their narrative, and it doesn't bring in research money.
As a matter of fact, according to NOAA scientist Sam Walker, "We are continuing to find lower and lower concentrations," confirming the original story the majority of the oil was gone from the Gulf through a variety of means, including oil-eating microbes.
The government report stated almost 75 percent of the oil had disappeared, primarily through natural means, although a small portion was attributed to oil skimming vessels. Evaporation also played a large part in the Gulf cleaning itself up.
The Woods Hole Oceanographic Institution for some unknown reason didn't even make their assertions until after the government report, which was about two months after they allegedly found the giant oil plume monster.
Some so-called scientists just don't like the fact that the Gulf can largely clean itself, as it doesn't fit their narrative, and it doesn't bring in research money.
Advantage Oil (NYSE:AAV) Downgraded by TD Newcrest
Advantage Oil & Gas Ltd. (NYSE:AAV) was downgraded by TD Newcrest from "Action List Buy" to "Buy," with a price target of $8 on the company.
As with many companies with significant exposure to natural gas, concerns over prices going forward were the major reason for the downgrade.
"Although we have maintained our PT, we have reduced our rating to BUY to reflect our reduced forecast for natural gas prices. We are mindful of the high future development capital in the company’s 2009 year-end reserve report and the impact lower gas prices may have on Advantage’s implied growth timeline," said TD.
TD did note in spite of that, "the company will be complete its Glacier gas plant in Q2/11, which is doubling in size to 100 mmcf/d. Development of its Glacier Montney gas play remains on track."
Advantage closed Tuesday at $6.23, dropping $0.05, or 0.80 percent.
As with many companies with significant exposure to natural gas, concerns over prices going forward were the major reason for the downgrade.
"Although we have maintained our PT, we have reduced our rating to BUY to reflect our reduced forecast for natural gas prices. We are mindful of the high future development capital in the company’s 2009 year-end reserve report and the impact lower gas prices may have on Advantage’s implied growth timeline," said TD.
TD did note in spite of that, "the company will be complete its Glacier gas plant in Q2/11, which is doubling in size to 100 mmcf/d. Development of its Glacier Montney gas play remains on track."
Advantage closed Tuesday at $6.23, dropping $0.05, or 0.80 percent.
Barrick (NYSE:ABX), Goldcrop (NYSE:GG), Newmont (NYSE:NEM) Rebound after Fed Meeting
Gold was weak leading up to the Fed meeting on Tuesday, as everyone was waiting to hear if the Federal Reserve was going to announce another round of quantitative easing.
Barrick Gold (NYSE:ABX), Goldcorp (NYSE:GG) and Newmont Mining (NYSE:NEM) almost at the same time of day were down heavily until the meeting ended and they all shot up to close in positive territory.
While the Fed really did nothing, which was good news, they did again give their promise to stimulate the economy if it needs to be.
That was enough to get gold moving up again, as it broke another record Tuesday, closing at $1,289, after surging $13 to reach $1,291.
Along with the promise to "stimulate" the economy if it needs it, the Fed also said how weak it still was, mirroring what we all knew, even with the ignorant announcement yesterday (not by the Fed) the recession has been over for over a year.
There wasn't enough to necessarily push gold prices up quickly, although we'll see today, but there was enough to confirm it's going to be a long haul for gold prices, and that's good news for gold investors.
The news they were going to continue to keep interest rates low was another major factor, which also plays into gold remaining a hot commodity.
Barrick Gold (NYSE:ABX), Goldcorp (NYSE:GG) and Newmont Mining (NYSE:NEM) almost at the same time of day were down heavily until the meeting ended and they all shot up to close in positive territory.
While the Fed really did nothing, which was good news, they did again give their promise to stimulate the economy if it needs to be.
That was enough to get gold moving up again, as it broke another record Tuesday, closing at $1,289, after surging $13 to reach $1,291.
Along with the promise to "stimulate" the economy if it needs it, the Fed also said how weak it still was, mirroring what we all knew, even with the ignorant announcement yesterday (not by the Fed) the recession has been over for over a year.
There wasn't enough to necessarily push gold prices up quickly, although we'll see today, but there was enough to confirm it's going to be a long haul for gold prices, and that's good news for gold investors.
The news they were going to continue to keep interest rates low was another major factor, which also plays into gold remaining a hot commodity.
BP (NYSE:BP) Rig Worker Fund Not Drawing Many People
The $100 million fund set up by BP (NYSE:BP) to pay for workers out of a job because of the Obama Gulf oil moratorium has drawn relatively few respondents, as only about 356 workers have applied for grants.
It seems the reasoning behind it is it's either not known too much, as there hasn't been much media coverage, or the possibility most employers have retained their workers despite the moratorium.
Expectations were as many as 9,000 people would seek the grants, which are offered in a range of $3,000 to $30,000.
Now the charity will move to the next stage and will offer support workers of the industry to apply for the grants. Those serving the sector, like supply boats, will be able to receive grants now.
BP finally permanently plugged the oil well after temporarily stopping the oil leak in July.
It seems the reasoning behind it is it's either not known too much, as there hasn't been much media coverage, or the possibility most employers have retained their workers despite the moratorium.
Expectations were as many as 9,000 people would seek the grants, which are offered in a range of $3,000 to $30,000.
Now the charity will move to the next stage and will offer support workers of the industry to apply for the grants. Those serving the sector, like supply boats, will be able to receive grants now.
BP finally permanently plugged the oil well after temporarily stopping the oil leak in July.
Penn West (NYSE:PWE) Upgraded by TD Newcrest
Penn West Energy Trust (NYSE:PWE) was upgraded from "Buy" to "Action List Buy" by TD Newcrest.
"PWT will focus on light oil development in 2010 and 2011 using horizontal drilling and multi-stage fraccing. With industry average industry average capital efficiency results (an improvement from the past) our analysis shows the trust able to show modest growth in our analysis. Recent Joint Venture announcements should also help improve weak historical capital efficiencies as will the increased focus on horizontal drilling," said TD.
TD has a price target of $24 on the energy trust, which closed Tuesday at $19.16, gaining $0.14, or 0.74 percent.
Penn West is an open-end investment trust, which engages in buying, exploring, developing, exploiting, and holding interests in petroleum and natural gas properties and assets.
"PWT will focus on light oil development in 2010 and 2011 using horizontal drilling and multi-stage fraccing. With industry average industry average capital efficiency results (an improvement from the past) our analysis shows the trust able to show modest growth in our analysis. Recent Joint Venture announcements should also help improve weak historical capital efficiencies as will the increased focus on horizontal drilling," said TD.
TD has a price target of $24 on the energy trust, which closed Tuesday at $19.16, gaining $0.14, or 0.74 percent.
Penn West is an open-end investment trust, which engages in buying, exploring, developing, exploiting, and holding interests in petroleum and natural gas properties and assets.
Tuesday, September 21, 2010
Gold Prices Surge on Weak Economy Comments from Federal Reserve
While we don't need the Federal Reserve to tell us the U.S. economy is weak and anemic, gold investors and others were looking to see what they would say and announce, as it would definitely have a temporary impact at minimum, and a longer term one, depending on what they said.
For once the Federal Reserve said they weren't going to do anything at this time, and would wait to see if the economy could heal itself.
Too bad the schizophrenic central bank doesn't retain that policy. But then again, gold prices wouldn't be doing what they are doing if they didn't interfere.
The conclusion of the Federal Reserve wasn't any different than the last FOMC meeting, and that was they were still concerned about the economy, and stood ready to throw more money at it if they thought is is needed.
Like $1.7 trillion thrown down the hole wasn't enough last time.
If there weren't elections coming in November, the spending-addicted Fed would probably have interfered again, but since the Democrats are already going to get hammered, they didn't have the will to do what their addiction pressures them to do.
But gold prices responded to the comments on the weak economy, and they surged quickly once the news of the contents of the meeting were released.
Because it's nothing new, it's doubtful it'll have any significant effect on gold prices, although it does remind everyone of how bad the U.S economy really is.
Gold in the short term should continue to run up on the fundamentals, and the after the elections we should see an announcement from the Fed that they're ready to implement quantitative easing again, which will cause gold to soar price.
Of course that could happen without that, as many other factors outside the U.S., like growing geopolitical stress in Asia, along with the ongoing sovereign debt debacle in Europe, could push gold prices up quickly if and when any new changes come about, which they are almost sure to.
For once the Federal Reserve said they weren't going to do anything at this time, and would wait to see if the economy could heal itself.
Too bad the schizophrenic central bank doesn't retain that policy. But then again, gold prices wouldn't be doing what they are doing if they didn't interfere.
The conclusion of the Federal Reserve wasn't any different than the last FOMC meeting, and that was they were still concerned about the economy, and stood ready to throw more money at it if they thought is is needed.
Like $1.7 trillion thrown down the hole wasn't enough last time.
If there weren't elections coming in November, the spending-addicted Fed would probably have interfered again, but since the Democrats are already going to get hammered, they didn't have the will to do what their addiction pressures them to do.
But gold prices responded to the comments on the weak economy, and they surged quickly once the news of the contents of the meeting were released.
Because it's nothing new, it's doubtful it'll have any significant effect on gold prices, although it does remind everyone of how bad the U.S economy really is.
Gold in the short term should continue to run up on the fundamentals, and the after the elections we should see an announcement from the Fed that they're ready to implement quantitative easing again, which will cause gold to soar price.
Of course that could happen without that, as many other factors outside the U.S., like growing geopolitical stress in Asia, along with the ongoing sovereign debt debacle in Europe, could push gold prices up quickly if and when any new changes come about, which they are almost sure to.
BP (NYSE:BP) Fund Administrator Feinberg Says Cleanup Wages Won't be Deducted
Kenneth Feinberg, administrator of the BP (NYSE:BP) compensation fund, said he'll waive the previous requirement for those making claims to the fund of deducting wages earned from BP by helping with the oil spill cleanup.
This has been a point of contention for some time, and it seemed at the beginning there would be no concession at all, but the growing antagonism toward Feinberg and the slow pace of the fund may have had a part in Feinberg's decision.
According to Feinberg, fisherman will be specifically helped by the decision, who helped with the cleanup when they weren't able to fish.
So far the fund has paid out over $240 million on 68,000 claims.
This has been a point of contention for some time, and it seemed at the beginning there would be no concession at all, but the growing antagonism toward Feinberg and the slow pace of the fund may have had a part in Feinberg's decision.
According to Feinberg, fisherman will be specifically helped by the decision, who helped with the cleanup when they weren't able to fish.
So far the fund has paid out over $240 million on 68,000 claims.
BP (NYSE:BP) Joins Exxon (NYSE:XOM), Shell (NYSE:RDS-A), Conoco (NYSE:COP) and Chevron (NYSE:CVX) Response Group
It took them awhile, but they've finally done it, BP (NYSE:BP) said it will become part of the oil spill rapid response group which already includes Exxon Mobil (NYSE:XOM), Royal Dutch Shell (NYSE:RDS-A), ConocoPhillips (NYSE:COP) and Chevron (NYSE:CVX).
The group is called the Marine Well Containment Co., and will be operated by Exxon Mobil.
BP said their technical people and underwater well containment equipment will be made available to the group.
The companies said in the past they're going to spend about $1 billion to train teams and make equipment to respond to any possible future oil spill.
Last week they started promoting their work, which will have the equipment on standby in case they're needed.
The group is called the Marine Well Containment Co., and will be operated by Exxon Mobil.
BP said their technical people and underwater well containment equipment will be made available to the group.
The companies said in the past they're going to spend about $1 billion to train teams and make equipment to respond to any possible future oil spill.
Last week they started promoting their work, which will have the equipment on standby in case they're needed.
FBR Capital Adds Pioneer (NYSE:PXD) to 'Top Pick' List; Drop Devon (NYSE:DVN)
FBR Capital reiterated its "Outperform" rating on Pioneer Natural Resources NYSE:PXD), adds to 'Top Picks' list, while dropping Devon Energy (NYSE:DVN) from the list.
"We are adding Pioneer Natural to our Top Picks list based on our expectations of a higher-than-guided production growth rate and recent operational change-driven material improvements in returns from its core Spraberry asset...We note that we are concurrently removing Devon Energy from our Top Picks list. We maintain an Outperform rating on Devon Energy shares, but are of the opinion that nearer-term risk/reward is better with Pioneer," said FBR.
Pioneer closed Monday at $66.89, up $1.51, or 2.31 percent. Devon closed at $62.93, gaining $0.96, or 1.55 percent.
"We are adding Pioneer Natural to our Top Picks list based on our expectations of a higher-than-guided production growth rate and recent operational change-driven material improvements in returns from its core Spraberry asset...We note that we are concurrently removing Devon Energy from our Top Picks list. We maintain an Outperform rating on Devon Energy shares, but are of the opinion that nearer-term risk/reward is better with Pioneer," said FBR.
Pioneer closed Monday at $66.89, up $1.51, or 2.31 percent. Devon closed at $62.93, gaining $0.96, or 1.55 percent.
Barclays (NYSE:BCS) Response to 'U.S. Oil Services & Drilling: 2010 CEO Energy Conference'
Barclays (NYSE:BCS) said the companies presenting at the 2010 Barclays Capital CEO Energy Conference were overall positive.
They said, "Presenting companies at the 2010 Barclays Capital CEO Energy Conference were generally optimistic. The international E&P spending recovery has begun and appears poised to accelerate into 2011. North America was most often predicted to flatten. The view on the offshore markets was mixed with optimism expressed for ultra-deepwater and premium jackup demand, while the mid-water and commodity jackup markets are likely to remain under pressure. The outlook on the Gulf of Mexico was clearly one of caution."
Barclays went on to describe what they were looking for in companies and specific companies they liked:
"We continue to emphasize companies with leverage to major secular growth themes in the industry. Our top picks are Weatherford (NYSE:WFT), Schlumberger (NYSE:SLB), Cameron International (NYSE:CAM), National Oilwell Varco (NYSE:NOV), Dresser-Rand Group (NYSE:DRC), SeaDrill Limited (NYSE:SDRL) and Pride International (NYSE:PDE)."
They said, "Presenting companies at the 2010 Barclays Capital CEO Energy Conference were generally optimistic. The international E&P spending recovery has begun and appears poised to accelerate into 2011. North America was most often predicted to flatten. The view on the offshore markets was mixed with optimism expressed for ultra-deepwater and premium jackup demand, while the mid-water and commodity jackup markets are likely to remain under pressure. The outlook on the Gulf of Mexico was clearly one of caution."
Barclays went on to describe what they were looking for in companies and specific companies they liked:
"We continue to emphasize companies with leverage to major secular growth themes in the industry. Our top picks are Weatherford (NYSE:WFT), Schlumberger (NYSE:SLB), Cameron International (NYSE:CAM), National Oilwell Varco (NYSE:NOV), Dresser-Rand Group (NYSE:DRC), SeaDrill Limited (NYSE:SDRL) and Pride International (NYSE:PDE)."
Louisiana Holding BP (NYSE:BP) to Promises
While there's not really any reason at this time to think it, some people are getting nervous now that BP (NYSE:BP) has permanently plugged the oil well, thinking they may cut and run in spite of past promises.
Louisiana, which seems to be the most fearful and paranoid throughout the ordeal, of the Gulf states, let it be known there is still a lot of work to be done in the area.
BP has said from the beginning that they're going to clean up the area, and it isn't clear what prompted Louisiana Wildlife and Fisheries Secretary Bob Barham and Governor Bobby Jindal to imply BP wasn't going to do it.
Barham said, "Just because the well is plugged does not mean this event, the final chapter, has been closed."
Jindal has said until the coast of Louisiana is restored to pre-spill conditions, BP will have a job to do and pay for.
Louisiana, which seems to be the most fearful and paranoid throughout the ordeal, of the Gulf states, let it be known there is still a lot of work to be done in the area.
BP has said from the beginning that they're going to clean up the area, and it isn't clear what prompted Louisiana Wildlife and Fisheries Secretary Bob Barham and Governor Bobby Jindal to imply BP wasn't going to do it.
Barham said, "Just because the well is plugged does not mean this event, the final chapter, has been closed."
Jindal has said until the coast of Louisiana is restored to pre-spill conditions, BP will have a job to do and pay for.
Jefferies Raises Sempra Energy (NYSE:SRE) Price Target, Fitch Wary
News of the sale of RBS Sempra Commodities energy solutions division to Noble Gas and Power Corp. brought mixed reactions, with Jefferies increasing the price target on Sempra Energy (NYSE:SRE) and while Fitch said they're maintaining a negative watch.
Jefferies said the reason they raised the price target from $59.50 to $60, was "We find SRE shares undervalued based on P/E valuation.
The sale of Sempra's remaining interest in the RBS Sempra Commodities JV should allow for a higher multiple on a reduced earnings level due to relatively less risk associated with Sempra's other business units."
They reiterated their "Buy" rating on Sempra Energy as well.
Fitch said they're keeping a negative watch on Sempra for the same reasons Jefferies raised the price target, but their concern is what Sempra will do with the capital.
While they say there could be a downgrade ahead, Fitch said they'll wait for the sale of Sempra's North American wholesale power and natural gas unit before making a decision.
Fitch said the wholesale power and natural gas division could fetch from $640 million to $740 million.
Jefferies said the reason they raised the price target from $59.50 to $60, was "We find SRE shares undervalued based on P/E valuation.
The sale of Sempra's remaining interest in the RBS Sempra Commodities JV should allow for a higher multiple on a reduced earnings level due to relatively less risk associated with Sempra's other business units."
They reiterated their "Buy" rating on Sempra Energy as well.
Fitch said they're keeping a negative watch on Sempra for the same reasons Jefferies raised the price target, but their concern is what Sempra will do with the capital.
While they say there could be a downgrade ahead, Fitch said they'll wait for the sale of Sempra's North American wholesale power and natural gas unit before making a decision.
Fitch said the wholesale power and natural gas division could fetch from $640 million to $740 million.
BP (NYSE:BP) Joint Venture Battling for Major Russian Oil Fields
Via their joint venture with OAO Lukoil, TNK-BP, BP (NYSE:BP) is vying for rights to develop the Trebs and Titov oil fields, with the deadline to apply being on Monday the 20th.
The two oil fields are the largest undistributed oil fields in Russia.
Citigroup (NYSE:C) analysts recently said, “As Rosneft’s stellar performance of the past two years was driven by successful Vankor development, we believe that the company that ultimately wins the auction has good chances of being re-rated by the market. The auction will be a litmus test to reveal the sector winner.”
TNK-BP is hungry for this deal, as it would make them the second-largest oil producer in Russia.
This would be a great deal for BP as well, as TNK-BP generates close to 25 percent of production and 20 percent of reserves for the company. They produce about 1.7 million barrels of oil a day.
Opening bid for the assets is $587 million, which is expected to increase significantly because of the competitors wanting them, including, along with TNK-BP: OAO Gazprom, OAO Bashneft and India-based ONGC.
The two oil fields are the largest undistributed oil fields in Russia.
Citigroup (NYSE:C) analysts recently said, “As Rosneft’s stellar performance of the past two years was driven by successful Vankor development, we believe that the company that ultimately wins the auction has good chances of being re-rated by the market. The auction will be a litmus test to reveal the sector winner.”
TNK-BP is hungry for this deal, as it would make them the second-largest oil producer in Russia.
This would be a great deal for BP as well, as TNK-BP generates close to 25 percent of production and 20 percent of reserves for the company. They produce about 1.7 million barrels of oil a day.
Opening bid for the assets is $587 million, which is expected to increase significantly because of the competitors wanting them, including, along with TNK-BP: OAO Gazprom, OAO Bashneft and India-based ONGC.
Harmony (NYSE:HMY) CEO Sees $1,500 Gold Price by End of Year
Harmony Gold Mining Co. (NYSE:HMY) chief executive officer Graham Briggs said gold prices by the end of 2010 could reach as high as $1,500 an ounce.
This comes on the heals of several record-breaking performances by gold, as it soars on continuing concerns over the recession, European sovereign debt and anemic American and European economies.
Other than that, some clowns actually had the guts to declare the recession was over, but not just over now, but over in June 2009.
I guess the rest of us were just too dumb to see that. Glad they told us. We were so foolish to think otherwise.
Briggs added he doesn't see anything in the way to stop the continuing climb of gold anytime soon.
This comes on the heals of several record-breaking performances by gold, as it soars on continuing concerns over the recession, European sovereign debt and anemic American and European economies.
Other than that, some clowns actually had the guts to declare the recession was over, but not just over now, but over in June 2009.
I guess the rest of us were just too dumb to see that. Glad they told us. We were so foolish to think otherwise.
Briggs added he doesn't see anything in the way to stop the continuing climb of gold anytime soon.
Goldcorp (NYSE:GG), Barrick (NYSE:ABX), Newmont (NYSE:NEM) Gain on Record Gold Prices, Fed Meeting Expectations
Goldcorp (NYSE:GG), Barrick Gold (NYSE:ABX) and Newmont Mining (NYSE:NEM) continue to enjoy the record-breaking gold prices which have helped them to climb along with them. That was no different Monday, as gold prices surged to another record, reaching as high as $1,285 an ounce.
Even though all the largest gold miners increased in value, there was still the sense of things being held back in anticipation of the Fed meeting tomorrow, where everyone will be looking for a clue as to whether or not they're going to throw another round of quantitative easing at the market.
Goldcorp was the largest beneficiary of the largest miners mentioned above, closing at $43.70, gaining $1.04, or 2.44 percent.
Barrick Gold closed at $46.45, an increase of $0.46, or 1.00 percent.
Newmont closed at $63.27, a slight upward tick of $0.26, or 0.41 percent.
If quantitative easing is mentioned in today's Fed meeting, all these figures, especially gold futures, should shoot up to much higher levels.
Even though all the largest gold miners increased in value, there was still the sense of things being held back in anticipation of the Fed meeting tomorrow, where everyone will be looking for a clue as to whether or not they're going to throw another round of quantitative easing at the market.
Goldcorp was the largest beneficiary of the largest miners mentioned above, closing at $43.70, gaining $1.04, or 2.44 percent.
Barrick Gold closed at $46.45, an increase of $0.46, or 1.00 percent.
Newmont closed at $63.27, a slight upward tick of $0.26, or 0.41 percent.
If quantitative easing is mentioned in today's Fed meeting, all these figures, especially gold futures, should shoot up to much higher levels.
Beyond BP (NYSE:BP) Oil Spill, Kevin Costner Lays Out His Future Disaster Plan
Kevin Costner, who co-founded 'Ocean Therapy,' who developed a centrifuge system to separate oil and water which was deployed in helping to clean up the Gulf of Mexico, has now proposed a disaster plan for possible future oil spills in the Gulf.
The actor has been peddling his proposal to Gulf governors, members of Congress, and most recently to the Bureau of Ocean Energy Management, Regulation and Enforcement Director Michael Bromwich.
Costner's suggestion is to create what he called "coastal response facilities," which would be placed in several strategic cities on the Gulf coast, including Corpus Christi, Texas; Gulfport, Miss.; Pensacola, Fla., or Mobile, Ala.; Key West, Fla, and Port Fourchon and Lake Charles,
Costs to implement the plan would be about $895 million, and would entail a scattered fleet of 190 vessels which would be prepared for future accidents.
Oil giants Chevron (NYSE:CVX), ConocoPhillips (NYSE:COP) and Shell (NYSE:RDS-A) earlier in the year said they wanted to put together a rapid-response system, which would focus primarily making a better-designed blowout preventer which would to capture the oil better if there were a disaster.
Coster's plan focuses instead on oil which has reached the surface. That of course coincides with the types of equipment his company uses, which cleans the oil from the surface.
The actor has been peddling his proposal to Gulf governors, members of Congress, and most recently to the Bureau of Ocean Energy Management, Regulation and Enforcement Director Michael Bromwich.
Costner's suggestion is to create what he called "coastal response facilities," which would be placed in several strategic cities on the Gulf coast, including Corpus Christi, Texas; Gulfport, Miss.; Pensacola, Fla., or Mobile, Ala.; Key West, Fla, and Port Fourchon and Lake Charles,
Costs to implement the plan would be about $895 million, and would entail a scattered fleet of 190 vessels which would be prepared for future accidents.
Oil giants Chevron (NYSE:CVX), ConocoPhillips (NYSE:COP) and Shell (NYSE:RDS-A) earlier in the year said they wanted to put together a rapid-response system, which would focus primarily making a better-designed blowout preventer which would to capture the oil better if there were a disaster.
Coster's plan focuses instead on oil which has reached the surface. That of course coincides with the types of equipment his company uses, which cleans the oil from the surface.
Monday, September 20, 2010
BP (NYSE:BP) Oil Well Declared Officially Dead, Most Oil Gone
BP (NYSE:BP) had an important but muted victory this weekend, as if finally and officially permanently sealed the stricken oil well, closing one chapter of the saga.
The vast majority of the oil which leaked from the well is gone, according to government officials, but some still remains, and it's uncertain as to what extent it's doing damage to the region.
Some scientists have made attempts to say there is a lot more oil left than the government asserts, but their arguments are extremely weak, and evidence small and unconvincing.
These scientists have agendas, and that is to obtain more research money for their university departments. Saying there is more oil than there is, attempts to generate the idea in the public mind that there is more research needed.
So far BP has spend close to $9.5 billion on cleanup, and is paying out another $20 billion via a compensation fund administered by Kenneth Feinberg.
They're also selling up to $30 billion in assets in order to pay for legal claims and other fines they may have to face.
The vast majority of the oil which leaked from the well is gone, according to government officials, but some still remains, and it's uncertain as to what extent it's doing damage to the region.
Some scientists have made attempts to say there is a lot more oil left than the government asserts, but their arguments are extremely weak, and evidence small and unconvincing.
These scientists have agendas, and that is to obtain more research money for their university departments. Saying there is more oil than there is, attempts to generate the idea in the public mind that there is more research needed.
So far BP has spend close to $9.5 billion on cleanup, and is paying out another $20 billion via a compensation fund administered by Kenneth Feinberg.
They're also selling up to $30 billion in assets in order to pay for legal claims and other fines they may have to face.
Is Gold Top Performing Metal in September?
The continual record-breaking performance of gold prices has obscured the smaller cousin of gold - silver, but for the month of September, even with the upward movement of gold, silver has so far outperformed it.
Silver investors have been expecting and waiting for this for some time, as the gold/silver ratio wasn't performing as it has historically, having a much wider spread in the favor of gold than usual.
That is starting to change. At the latter part of August, the ratio for gold and silver futures contracts was 64.34, and at the close on Thursday it stood at 61.22. It had been over 70 for quite some time.
While silver is an industrial metal, it is also considered a place of safety in time of economic trouble, similar to gold. If gold prices continue to soar, or as they do, sometimes investors gravitate toward silver as an alternative.
The gold/silver ratio is expected to continue to shrink for the rest of 2010 and through 2011.
Silver investors have been expecting and waiting for this for some time, as the gold/silver ratio wasn't performing as it has historically, having a much wider spread in the favor of gold than usual.
That is starting to change. At the latter part of August, the ratio for gold and silver futures contracts was 64.34, and at the close on Thursday it stood at 61.22. It had been over 70 for quite some time.
While silver is an industrial metal, it is also considered a place of safety in time of economic trouble, similar to gold. If gold prices continue to soar, or as they do, sometimes investors gravitate toward silver as an alternative.
The gold/silver ratio is expected to continue to shrink for the rest of 2010 and through 2011.
Conoco (NYSE:COP), Exxon (NYSE:XOM) Earnings Cut by Credit Suisse (NYSE:CS)
Credit Suisse (NYSE:CS) slashed earnings estimates on a number of oil and gas producers, basing their decision on lower price expectations for oil and gas in 2011.
For the overall average price of oil, Credit Suisse is looking at $72.50 a barrel next year. For gas, CS sees the price in a range dropping from their prior $6.50 down to $5.25 per million BTUs. Long term they see the top number remaining viable.
For ConocoPhillips (NYSE:COP), earnings per share was downwardly revised from $6.57 to $5.36, while Exxon was cut from $6.29 to $5.47 for 2011.
Some companies they like, especially because of new exploration projects, are Hess (NYSE:HES), Bunge Limited (NYSE:BG) and Marathon Oil (NYSE:MRO). The idea is this will help them stand out from their competitors.
Another idea from Credit Suisse is the large oil companies need to increase their dividends in order to attract more investors, as it would confirm management is confident about the future cash flows.
For the overall average price of oil, Credit Suisse is looking at $72.50 a barrel next year. For gas, CS sees the price in a range dropping from their prior $6.50 down to $5.25 per million BTUs. Long term they see the top number remaining viable.
For ConocoPhillips (NYSE:COP), earnings per share was downwardly revised from $6.57 to $5.36, while Exxon was cut from $6.29 to $5.47 for 2011.
Some companies they like, especially because of new exploration projects, are Hess (NYSE:HES), Bunge Limited (NYSE:BG) and Marathon Oil (NYSE:MRO). The idea is this will help them stand out from their competitors.
Another idea from Credit Suisse is the large oil companies need to increase their dividends in order to attract more investors, as it would confirm management is confident about the future cash flows.
Barclays (NYSE:BCS) Sees Gold Remaining Strong in Fourth Quarter
With fundamentals expected to remain in place, Barclays (NYSE:BCS) believes gold will continue to perform strongly in the fourth quarter.
Barclays said “we maintain our view for the fourth quarter of this year to be the strongest quarter on record yet for gold prices, with downside corrections finding support from the seasonally strong period for fabrication demand with the forthcoming wedding and festival season in key gold-consuming countries.”
Several reasons were cited by the financial firm, including expected continuation of quantitative easing, ongoing low interest rates, and gold miners continuing to abandon their hedge books.
Gold broke all-time records several times last week, and some are saying it could hit $1,300 this week if quantitative easing is mentioned by the Federal Reserve.
Barclays said “we maintain our view for the fourth quarter of this year to be the strongest quarter on record yet for gold prices, with downside corrections finding support from the seasonally strong period for fabrication demand with the forthcoming wedding and festival season in key gold-consuming countries.”
Several reasons were cited by the financial firm, including expected continuation of quantitative easing, ongoing low interest rates, and gold miners continuing to abandon their hedge books.
Gold broke all-time records several times last week, and some are saying it could hit $1,300 this week if quantitative easing is mentioned by the Federal Reserve.
Gold Anticipates Tuesday Fed Meeting
Gold investors are waiting in anticipation of the Federal Reserve’s Federal Open Market Committee meeting on Tuesday, as any hint there will be quantitative easing will cause the yellow metal to soar.
Citigroup (NYSE:C) has stated if there is a nod in that direction, gold could hit $1,300 this week, let alone by the end of the year, as many analysts and traders have estimated.
The Federal Reserve has a problem, as it probably doesn't want gold to get too big of a push, as it would remind everyone of their failing policies and the over $1 trillion spent which was a complete waste and ineffective.
On the other hand, the Obama administration and the Democrats have a vested interest, as they haven't been able to resist any event which makes them look like they're doing nothing about it.
with elections coming up soon, there could be pressure on the Fed to announce more spending or quantitative easing to make it look like Obama is attacking the continuing weak economy.
Either way, it seems like they will lose, as the majority of Americans are fed up with the out-of-control spending of American politicians and the Obama administration, and so to continue spending in this political environment is political suicide, but that hasn't stopped the majority of Democrats from continue their spending onslaught.
There's really nothing else the Fed can do, or the Obama administration. The question is will they try anyway. If they do, gold will probably skyrocket extremely quickly, if they don't, the liberal base of Obama will more than likely attack him for doing nothing.
Either way, gold will be the benefactor, and even if the term quantitative easing isn't used, or no decision is made, the Fed has already said they're ready to interfere again, so if gold pulls back, it'll only be temporary, as everyone knows they're drunk with spending, and they can't control themselves.
Citigroup (NYSE:C) has stated if there is a nod in that direction, gold could hit $1,300 this week, let alone by the end of the year, as many analysts and traders have estimated.
The Federal Reserve has a problem, as it probably doesn't want gold to get too big of a push, as it would remind everyone of their failing policies and the over $1 trillion spent which was a complete waste and ineffective.
On the other hand, the Obama administration and the Democrats have a vested interest, as they haven't been able to resist any event which makes them look like they're doing nothing about it.
with elections coming up soon, there could be pressure on the Fed to announce more spending or quantitative easing to make it look like Obama is attacking the continuing weak economy.
Either way, it seems like they will lose, as the majority of Americans are fed up with the out-of-control spending of American politicians and the Obama administration, and so to continue spending in this political environment is political suicide, but that hasn't stopped the majority of Democrats from continue their spending onslaught.
There's really nothing else the Fed can do, or the Obama administration. The question is will they try anyway. If they do, gold will probably skyrocket extremely quickly, if they don't, the liberal base of Obama will more than likely attack him for doing nothing.
Either way, gold will be the benefactor, and even if the term quantitative easing isn't used, or no decision is made, the Fed has already said they're ready to interfere again, so if gold pulls back, it'll only be temporary, as everyone knows they're drunk with spending, and they can't control themselves.
Moody's (NYSE:MCO) Maintaining BP's (NYSE:BP) Rating
Moody's (NYSE:MCO) they have no further downgrades for oil giant BP's (NYSE:BP) credit rating, adding they continue to see the outlook for the company as stable.
The company said, "Today's (Friday) rating action concludes the review for possible downgrade of BP's ratings that Moody's initiated on 3 June."
With the oil well permanently plugged, and the liabilities becoming a little clearer and able to be somewhat estimated, the current A2 credit rating will stay in place "under a range of likely outcomes for the ultimate total costs resulting from the oil spill," said Moody's.
That's not to say there won't be future credit pressures as the costs from claims and lawsuits mount up for BP, but the downgrading of several notches has included those factors in those actions Moody's took recently.
In other words, there could be more downgrades in the future, but in the short term the credit rating should remain where it is for the company.
The company said, "Today's (Friday) rating action concludes the review for possible downgrade of BP's ratings that Moody's initiated on 3 June."
With the oil well permanently plugged, and the liabilities becoming a little clearer and able to be somewhat estimated, the current A2 credit rating will stay in place "under a range of likely outcomes for the ultimate total costs resulting from the oil spill," said Moody's.
That's not to say there won't be future credit pressures as the costs from claims and lawsuits mount up for BP, but the downgrading of several notches has included those factors in those actions Moody's took recently.
In other words, there could be more downgrades in the future, but in the short term the credit rating should remain where it is for the company.
Gold Still Inexpensive Says Marc Faber
Speaking at a CLSA Investors’ Forum 2010 in Hong Kong recently, Marc Faber said he still sees gold prices as relatively inexpensive, even though record prices continue to be set.
Faber gave his reasoning as this, “Given all the unfunded liabilities and the money printing in the world and the size of the financial assets in the world, I don’t think we are in a bubble.”
He's definitely right. At this time these elements aren't close to being fully priced into the value of gold, and central banks and governments are drunk on spending and reckless in stimulus, as they're caught in their socialist schemes which can't be paid for.
Even though he still considers gold to be cheap, Faber does recommend a monthly investment rather than attempting to time the market or putting everything in at once.
He also suggests gold will go through some significant price swings and corrections while maintaining its upward climb. That means those with large, one-time investments could get slammed if their entry point is on the high end.
Bottom line is governments aren't going to quit attempting to pay for their socialist programs, and that guarantees quantitative easing and stimulus, along with the accompanying increase in gold prices.
Faber gave his reasoning as this, “Given all the unfunded liabilities and the money printing in the world and the size of the financial assets in the world, I don’t think we are in a bubble.”
He's definitely right. At this time these elements aren't close to being fully priced into the value of gold, and central banks and governments are drunk on spending and reckless in stimulus, as they're caught in their socialist schemes which can't be paid for.
Even though he still considers gold to be cheap, Faber does recommend a monthly investment rather than attempting to time the market or putting everything in at once.
He also suggests gold will go through some significant price swings and corrections while maintaining its upward climb. That means those with large, one-time investments could get slammed if their entry point is on the high end.
Bottom line is governments aren't going to quit attempting to pay for their socialist programs, and that guarantees quantitative easing and stimulus, along with the accompanying increase in gold prices.
Alamos (TSE:AGI) Increases Semi-annual Dividend
Alamos Gold (TSE:AGI) increased its semi-annual dividend again, bumping it up by 17 percent.
In April the company declared a dividend of 3 cents a share, and it was increased to 3.5 cents a share now.
CFO John Morda said in a statement, "This dividend increase reflects our balance sheet strength, increased realised gold sale prices, and our continued ability to generate strong cash flows from operations.”
Gold production for Alamos comes from its Mulatos mine, in Mexico. They also acquired Agi Dagi and Kirazli, both located in Turkey earlier in the year from Teck Resources (NYSE:TCK) and Fronteer Development Group (AMEX:FRG).
In April the company declared a dividend of 3 cents a share, and it was increased to 3.5 cents a share now.
CFO John Morda said in a statement, "This dividend increase reflects our balance sheet strength, increased realised gold sale prices, and our continued ability to generate strong cash flows from operations.”
Gold production for Alamos comes from its Mulatos mine, in Mexico. They also acquired Agi Dagi and Kirazli, both located in Turkey earlier in the year from Teck Resources (NYSE:TCK) and Fronteer Development Group (AMEX:FRG).
Chesapeake (NYSE:CHK) Must Inspect 171 Marcellus wells After Methane Leak
A methane leak in six wells of Chesapeake Energy Corp. (NYSE:CHK) has resulted in them being ordered to inspect 171 natural gas wells in Pennsylvania's Marcellus Shale.
Reports were received by Pennsylvania's Department of Environmental Protection over what was described as "bubbling water" on the Susquehanna River in northern part of the state.
Chesapeake believes it is methane gas from six wells about two or three miles from the area it was seen.
DEP Secretary John Hanger said in a statement, "Ventilation systems have been installed at six private water wells. Water has been provided to the three affected homes, and Chesapeake is evaluating and remediating each of its well bores within a four-and-a-half-mile radius of the gas migration, which is essential."
The reason for the order to examine 171 in the region were because the same well casing procedures were used on all of them.
Wells casings are used as a barrier to rock formations in order maintain the integrity of the well. They are placed in a well bore for that purpose.
Chesapeake recently had its price target cut by Credit Suisse (NYSE:CS) because of weak natural gas prices.
Reports were received by Pennsylvania's Department of Environmental Protection over what was described as "bubbling water" on the Susquehanna River in northern part of the state.
Chesapeake believes it is methane gas from six wells about two or three miles from the area it was seen.
DEP Secretary John Hanger said in a statement, "Ventilation systems have been installed at six private water wells. Water has been provided to the three affected homes, and Chesapeake is evaluating and remediating each of its well bores within a four-and-a-half-mile radius of the gas migration, which is essential."
The reason for the order to examine 171 in the region were because the same well casing procedures were used on all of them.
Wells casings are used as a barrier to rock formations in order maintain the integrity of the well. They are placed in a well bore for that purpose.
Chesapeake recently had its price target cut by Credit Suisse (NYSE:CS) because of weak natural gas prices.
Citigroup (NYSE:C) Right on $1,300 Gold?
Citigroup (NYSE:C) said last week if we hear the phrase "quantitative easing" used by the Federal Reserve this week, we'll probably see gold prices soar to record levels above $1,300.
Investors are strongly tuned into gold now, especially in light of the ongoing disaster with the European sovereign debt crisis and weak U.S. economy.
Ben Bernanke has already stated he's ready to intervene and resume quantitative easing if the economy goes south. And since it has, there are sure to be at minimum rumblings, and possibly guidance, as to what the central bank is planning.
It seems if there is any type of specifics mentioned in that regard, gold prices will probably soar past the $1,300 mark this week. We'll see if the Fed has the guts to say it at this time.
Investors are strongly tuned into gold now, especially in light of the ongoing disaster with the European sovereign debt crisis and weak U.S. economy.
Ben Bernanke has already stated he's ready to intervene and resume quantitative easing if the economy goes south. And since it has, there are sure to be at minimum rumblings, and possibly guidance, as to what the central bank is planning.
It seems if there is any type of specifics mentioned in that regard, gold prices will probably soar past the $1,300 mark this week. We'll see if the Fed has the guts to say it at this time.
EOG (NYSE:EOG) Upgraded by Credit Suisse (NYSE:CS)
Credit Suisse took the scalpel to a bunch of energy stocks on Friday, slashing a number of them, especially concerning their price targets, including EOG Resources (NYSE:EOG).
EOG was upgraded from "Underperform" to "Neutral," while their price target was cut from $106 to $97.
"Near-term gas markets are likely to remain weak on persistently high supply," Credit Suisse stated.
They see natural gas prices about 13 percent less than their previous estimate, dropping to $5.25 per million metric British thermal units in 2011. Long term they see natural gas prices hitting $6.50.
Like other analysts, Credit Suisse likes energy companies with more exposure to oil. Analysts wrote, "We see a better opportunity today in companies that produce mostly gas, but are drilling few gas wells because they have the liquids-prone assets in place to exploit."
EOG was upgraded for that reason, as the brokerage sees them positioned strongly for growth because of their oil shale holdings.
Other natural gas players have been making oil deals as well for the same reason.
EOG was upgraded from "Underperform" to "Neutral," while their price target was cut from $106 to $97.
"Near-term gas markets are likely to remain weak on persistently high supply," Credit Suisse stated.
They see natural gas prices about 13 percent less than their previous estimate, dropping to $5.25 per million metric British thermal units in 2011. Long term they see natural gas prices hitting $6.50.
Like other analysts, Credit Suisse likes energy companies with more exposure to oil. Analysts wrote, "We see a better opportunity today in companies that produce mostly gas, but are drilling few gas wells because they have the liquids-prone assets in place to exploit."
EOG was upgraded for that reason, as the brokerage sees them positioned strongly for growth because of their oil shale holdings.
Other natural gas players have been making oil deals as well for the same reason.
Will BP (NYSE:BP) Oil Well Be Used Again?
Although BP (NYSE:BP) has stated its plans are to leave the unpopular oil well plugged and as it is, it's highly unlikely as time goes on that it will remain that was, as too much oil and gas would be available for sell.
This doesn't mean BP would tap into it themselves, even after years and other things are on the minds of people. But it wouldn't be surprising at all to see them sell the asset one day, and with the two relief wells already drilled, it would take just a few added steps to get the oil and gas flowing again.
Some believe the well and general area contain even more oil and gas, making it a waste to leave sitting there.
At one time BP had estimated there were 50 million barrels of oil in the well, with far below that being lost even at the higher government estimates.
Even though BP has said they won't access the well again, they did leave the possibility and probability they'll drill in the same block again; a nine-square-mile area.
If BP did decide to sell the block at some time, estimates are the value of the oil alone would be worth about $3.5 billion, and they could probably sell it for somewhere between $1 to $2 billion.
Either way, it would be surprising if this were to happen any time soon, but it would also be surprising if the block isn't drilled again some time in the distant future.
This doesn't mean BP would tap into it themselves, even after years and other things are on the minds of people. But it wouldn't be surprising at all to see them sell the asset one day, and with the two relief wells already drilled, it would take just a few added steps to get the oil and gas flowing again.
Some believe the well and general area contain even more oil and gas, making it a waste to leave sitting there.
At one time BP had estimated there were 50 million barrels of oil in the well, with far below that being lost even at the higher government estimates.
Even though BP has said they won't access the well again, they did leave the possibility and probability they'll drill in the same block again; a nine-square-mile area.
If BP did decide to sell the block at some time, estimates are the value of the oil alone would be worth about $3.5 billion, and they could probably sell it for somewhere between $1 to $2 billion.
Either way, it would be surprising if this were to happen any time soon, but it would also be surprising if the block isn't drilled again some time in the distant future.
BP (NYSE:BP) Well Finally Put to Rest
If stopping the oil from leaking with a cap could be called the wake, then the permanent sealing of the BP (NYSE:BP) oil well could be called its funeral; at least in reference to it being in danger of leaking again.
The final batch of cement for the "bottom kill" set on Saturday, which prepared the way for a pressure and weight test, which confirmed the well was permanently sealed.
The cap was placed on the well in July and more cement injected into the top of the well as an extra safety measure in August.
Cement was injected into the well through a relief well in this final step.
Questions on whether or not the block the well is located in will be drilled again by BP, and whether or not the may sell the plugged well to another operator to extract the approximate 46 million barrels of oil remaining, as well as the gas.
BP has said they won't be using the well again, although they left the option open they may drill into the block again.
The final batch of cement for the "bottom kill" set on Saturday, which prepared the way for a pressure and weight test, which confirmed the well was permanently sealed.
The cap was placed on the well in July and more cement injected into the top of the well as an extra safety measure in August.
Cement was injected into the well through a relief well in this final step.
Questions on whether or not the block the well is located in will be drilled again by BP, and whether or not the may sell the plugged well to another operator to extract the approximate 46 million barrels of oil remaining, as well as the gas.
BP has said they won't be using the well again, although they left the option open they may drill into the block again.
Friday, September 17, 2010
Enbridge (NYSE:ENB) Reopens Pipeline
After finding a leak on September in one of their pipelines and ultimately having to shut it down, Enbridge Energy Partners (NYSE:ENB) announced today it has now been reopened, again transporting crude oil from Canada to Illinois refineries.
The pipeline, which at full capacity can move up to 670,000 barrels of oil daily, reportedly provides close to 70 percent of the capacity for Chicago-area refineries.
Gas prices soared by as much as 15 cents a gallon in response to the shutting down of the pipeline.
The leak happened in the Chicago suburb of Romeoville, releasing about 6,100 barrels into the area before shutting it down.
The pipeline, which at full capacity can move up to 670,000 barrels of oil daily, reportedly provides close to 70 percent of the capacity for Chicago-area refineries.
Gas prices soared by as much as 15 cents a gallon in response to the shutting down of the pipeline.
The leak happened in the Chicago suburb of Romeoville, releasing about 6,100 barrels into the area before shutting it down.
Citigroup (NYSE:C), Goldman (NYSE:GS) See $1,300 Gold Sooner
Citigroup recently said they see the price of gold possibly reaching $1,300 an ounce as early as next week, depending on whether or not the Federal Reserve talks about quantitative easing.
Goldman Sachs (NYSE:GS) now agrees that their estimates on how long it'll take to reach $1,300 gold could come much quicker if quantitative easing is resumed.
In a note to clients, Goldman analysts said quantitative easing "would likely accelerate the move to our 6-month price target and provide upside risk to our forecast."
Gold prices broke another record in intraday trading Friday, reaching $1,284.40 an ounce for December delivery.
Goldman Sachs (NYSE:GS) now agrees that their estimates on how long it'll take to reach $1,300 gold could come much quicker if quantitative easing is resumed.
In a note to clients, Goldman analysts said quantitative easing "would likely accelerate the move to our 6-month price target and provide upside risk to our forecast."
Gold prices broke another record in intraday trading Friday, reaching $1,284.40 an ounce for December delivery.
Gold Prices Today Hit Another Record as Rally Continues
Gold prices today surged to another record, as mixed economic data, European sovereign debt, and probably most importantly, fears over a return to quantitative easing by the Federal Reserve, continue to drive the gold price up.
In the middle of the trading session gold futures December delivery moved as high as $1,284.40 an ounce, surpassing the previous intraday record of $1,279.50 an ounce and the record close of $1,273.80 an ounce, both of which happened on Thursday.
While much of this is credited to the lack of governments around the world being able to do anything about it, it's also increasingly related to the fact that a growing number of people believe governments should quit interfering with economies and let the free market sort it out.
With the November meeting of the Federal Open Market Committee expected to result in some comment on quantitative easing, investors are flooding to gold, as each time the idea is put forth, gold prices are strengthened, as when actions are taken it'll continue to debase currencies around the world, especially the U.S. dollar.
In the middle of the trading session gold futures December delivery moved as high as $1,284.40 an ounce, surpassing the previous intraday record of $1,279.50 an ounce and the record close of $1,273.80 an ounce, both of which happened on Thursday.
While much of this is credited to the lack of governments around the world being able to do anything about it, it's also increasingly related to the fact that a growing number of people believe governments should quit interfering with economies and let the free market sort it out.
With the November meeting of the Federal Open Market Committee expected to result in some comment on quantitative easing, investors are flooding to gold, as each time the idea is put forth, gold prices are strengthened, as when actions are taken it'll continue to debase currencies around the world, especially the U.S. dollar.
Allied Nevada (NYSE:ANV) Sells 5,000 Shares of Company
The president and CEO of Allied Nevada Gold Corp. (NYSE:ANV), Scott Andrew, sold 5,00 shares he held in the company for an average price of $26.21. He sold the shares on September 15, 2010.
Interestingly, institutional investors have been plowing investment into the gold miner, increasing the amount of shares owned from 69,878,861 shares to 83,606,659 shares over the last three months. That's just under a 20 percent increase.
Altogether, institutions now own over 94 percent of the company.
Institutional investors in Allied Gold include Chuck Royce of Royce & Associates, Steven Cohen of SAC Capital Advisors, and George Soros of Soros Fund Management LLC.
Interestingly, institutional investors have been plowing investment into the gold miner, increasing the amount of shares owned from 69,878,861 shares to 83,606,659 shares over the last three months. That's just under a 20 percent increase.
Altogether, institutions now own over 94 percent of the company.
Institutional investors in Allied Gold include Chuck Royce of Royce & Associates, Steven Cohen of SAC Capital Advisors, and George Soros of Soros Fund Management LLC.
Bp (NYSE:BP), Obama Connection Comment Results in TV Anchor Being Fired
TV anchorman Doug McKelway was fired for his comments concerning the connection between Barack Obama and BP (NYSE:BP). McKelway said Obama had received the largest BP campaign contribution in history, $77,051.
The story centered around a small demonstration on Capital Hill, which McKelway was covering. He noted it was a representation of "far-left environmental groups," adding it could "be a risky strategy because the one man who has more campaign contributions from BP than anybody else in history is now sitting in the Oval Office, President Barack Obama, who accepted $77,051 in campaign contributions from BP."
News director and general manager, Bill Lord, didn't like McKelway talking about Obama that way, or about Democrats in general, noting the cap-and-trade bill would increase everyone's utility bills, and Democrats wouldn't pass it before November elections.
Lord confronted McKelway about the broadcast, and after a yelling match, he was put on indefinite suspension in the latter part of July.
Incredibly, McKelway was fired by WJLA-TV, citing citing insubordination and misconduct.
The story centered around a small demonstration on Capital Hill, which McKelway was covering. He noted it was a representation of "far-left environmental groups," adding it could "be a risky strategy because the one man who has more campaign contributions from BP than anybody else in history is now sitting in the Oval Office, President Barack Obama, who accepted $77,051 in campaign contributions from BP."
News director and general manager, Bill Lord, didn't like McKelway talking about Obama that way, or about Democrats in general, noting the cap-and-trade bill would increase everyone's utility bills, and Democrats wouldn't pass it before November elections.
Lord confronted McKelway about the broadcast, and after a yelling match, he was put on indefinite suspension in the latter part of July.
Incredibly, McKelway was fired by WJLA-TV, citing citing insubordination and misconduct.
Fed Moratorium Study Blasted by Critics
The federal government released a so-called report Thursday saying the oil moratorium put in place in the Gulf of Mexico in response to the BP (NYSE:BP) oil spill isn't causing as much economic damage as originally thought.
The government says the moratorium has only caused the temporary loss of 8,000 to 12,000 jobs in the Gulf region, and about $1.8 billion less in spending.
Allegedly on 2,000 oil rig workers have been out of work during the six-month ban, and the other job losses from the Obama administration came from business serving the industry, such as suppliers.
Critics of the ban, which is just about everybody in the Gulf states, say the oil drilling ban has been devastating to the Gulf economy. They have estimated that as many as 50,000 workers would be affected by the ban.
The first estimate from the Interior Department was for 23,000 workers to be out of work from the moratorium.
I wonder if they're taking into account the four oil rigs already gone or leaving the area, with oil companies saying more will leave in the near future.
Those are thousands of jobs that will never return to the region.
The government says the moratorium has only caused the temporary loss of 8,000 to 12,000 jobs in the Gulf region, and about $1.8 billion less in spending.
Allegedly on 2,000 oil rig workers have been out of work during the six-month ban, and the other job losses from the Obama administration came from business serving the industry, such as suppliers.
Critics of the ban, which is just about everybody in the Gulf states, say the oil drilling ban has been devastating to the Gulf economy. They have estimated that as many as 50,000 workers would be affected by the ban.
The first estimate from the Interior Department was for 23,000 workers to be out of work from the moratorium.
I wonder if they're taking into account the four oil rigs already gone or leaving the area, with oil companies saying more will leave in the near future.
Those are thousands of jobs that will never return to the region.
BP (NYSE:BP) Acquires More Singapore Cargo
BP (NYSE:BP) has been to single largest buyer of ultra-low sulfur grade in Singapore in 2010, and they've reportedly acquired another cargo today.
The oil giant bought 150,000 barrels of gasoil from Vitol Group, which contained 10 parts per million of sulfur, or 0.001 percent, according to traders.
BP paid $1.60 a barrel over quoted prices for the 0.5 percent sulfur grade as well. They paid that same amount in a deal on Thursday.
The total acquisition by BP in 2010 has been 7.06 million barrels, with 470,000 already in September.
The oil giant bought 150,000 barrels of gasoil from Vitol Group, which contained 10 parts per million of sulfur, or 0.001 percent, according to traders.
BP paid $1.60 a barrel over quoted prices for the 0.5 percent sulfur grade as well. They paid that same amount in a deal on Thursday.
The total acquisition by BP in 2010 has been 7.06 million barrels, with 470,000 already in September.
Jefferies & Co. Recommend Barrick Gold (NYSE:ABX)
Now that summer is gone, a typically slow season for gold, Jefferies & Co. said the fall factor is playing a factor in the increase in gold prices, and they like gold mining giant Barrick Gold (NYSE:ABX) in the sector.
"The combination of monetary, supply demand, and technical drivers should allow gold and silver prices to achieve higher highs and greater lows over next 12-18 months. As investors discount a higher gold and silver price, we expect precious metal-related equities to better reflect improved price realizations and scarcity value," said Jefferies in a note to clients.
Barrick was at $46.10, gaining $0.20, or 0.44 percent as of 11:23 AM EDT.
"The combination of monetary, supply demand, and technical drivers should allow gold and silver prices to achieve higher highs and greater lows over next 12-18 months. As investors discount a higher gold and silver price, we expect precious metal-related equities to better reflect improved price realizations and scarcity value," said Jefferies in a note to clients.
Barrick was at $46.10, gaining $0.20, or 0.44 percent as of 11:23 AM EDT.
Magnum Hunter (AMEX:MHR), DCP (NYSE:DPM) in Natural Gas Joint Venture
Magnum Hunter Resources Corporation (AMEX:MHR) and DCP Midstream Partners, LP (NYSE:DPM) announced they're forming a natural gas joint venture in Ohio and West Virginia.
Each company will hold a 50 percent stake in the new company named Gathering JV.
To get the project going they're going to spend a combined $35 million, with DCP contributing $22.5 million and Magnum the other $12.5 million.
At closing DCP will also pay Magnum another $5 million for specific rights of way which are provided by Magnum, but beyond the original scope of the investment.
Each company will hold a 50 percent stake in the new company named Gathering JV.
To get the project going they're going to spend a combined $35 million, with DCP contributing $22.5 million and Magnum the other $12.5 million.
At closing DCP will also pay Magnum another $5 million for specific rights of way which are provided by Magnum, but beyond the original scope of the investment.
Judge Barbier Denies Fast-track BP (NYSE:BP) Trials
In a push to get speedier trials, plaintiffs in lawsuits against BP (NYSE:BP) asked Judge Carl Barbier to fast-track the trials. This was especially true of those who had injuries or loved ones killed from the accident.
While the judge said he sympathized with those requesting the speedier trials, he said expectation were unrealistic concerning how fast the claims could be tried.
The judge did encourage all the parties filing lawsuits to take into consideration settling with the defendants, or otherwise attempting mediation.
If those choices aren't made, it'll probably be many years before all of this is resolved for everyone involved.
While the judge said he sympathized with those requesting the speedier trials, he said expectation were unrealistic concerning how fast the claims could be tried.
The judge did encourage all the parties filing lawsuits to take into consideration settling with the defendants, or otherwise attempting mediation.
If those choices aren't made, it'll probably be many years before all of this is resolved for everyone involved.
Clean Harbors (NYSE:CLH) Raises Guidance From BP (NYSE:BP) Spill Cleanup
The full-year guidance of Clean Harbors Inc. (NYSE:CLH) has been raised because of the business generated from cleaning up the BP (NYSE:BP) oil spill.
Alan S. McKim, Chairman and Chief Executive Officer of Clean Harbors said, "Our overall business continues to perform well and we are on track to meet our expectations for 2010. In addition to the Gulf region clean-up, this quarter we participated in other emergency response related events including the oil spill in the Kalamazoo River area of Michigan. At the peak level this quarter, we had approximately 500 response-related personnel in Michigan along with a broad array of specialized equipment."
The guidance range for sales in 2010 increased from $1.6 billion to $1.65 billion to $1.63 billion to $1.68 billion.
Clean Harbors also raised its EBITDA from $270 million to $280 million up to $278 million to $288 million.
Capital expenditures will also rise from previous guidance of the mid-$80 million range too close to $100 million.
Alan S. McKim, Chairman and Chief Executive Officer of Clean Harbors said, "Our overall business continues to perform well and we are on track to meet our expectations for 2010. In addition to the Gulf region clean-up, this quarter we participated in other emergency response related events including the oil spill in the Kalamazoo River area of Michigan. At the peak level this quarter, we had approximately 500 response-related personnel in Michigan along with a broad array of specialized equipment."
The guidance range for sales in 2010 increased from $1.6 billion to $1.65 billion to $1.63 billion to $1.68 billion.
Clean Harbors also raised its EBITDA from $270 million to $280 million up to $278 million to $288 million.
Capital expenditures will also rise from previous guidance of the mid-$80 million range too close to $100 million.
Judge Extends BP (NYSE:BP) Lawsuit Claims Until April 2011
A battle over time has been engaged in the hundreds of lawsuits filed against BP (NYSE:BP) and other companies related to the Gulf oil spill, and the judge has issued several decisions in response to it.
Judge Carl Barbier, the judge overseeing the cases, said as far as the time-frame to file lawsuits against the defendants, plaintiffs will be given until April 20, 2011. That's exactly a year since the explosion on the Deepwater Horizon oil rig which led to 11 deaths and oil spilling into the Gulf.
As far as the limitation of liability in connection to Transocean (NYSE:RIG), a trial date has been set for October 2011 do deal with that issue.
Lawyers for the plaintiffs have been pushing for things to go quicker, while BP and others have said they need more time to produce evidence. The judge in that area has sided with the defendants, saying they need a realistic amount of time to mount a defense.
Over the issue of whether or not plaintiffs should be required to go through the $20 billion compensation fund set up by BP to see if they qualify before being allowed to file a lawsuit, the judge hasn't made a ruling on that yet.
Judge Carl Barbier, the judge overseeing the cases, said as far as the time-frame to file lawsuits against the defendants, plaintiffs will be given until April 20, 2011. That's exactly a year since the explosion on the Deepwater Horizon oil rig which led to 11 deaths and oil spilling into the Gulf.
As far as the limitation of liability in connection to Transocean (NYSE:RIG), a trial date has been set for October 2011 do deal with that issue.
Lawyers for the plaintiffs have been pushing for things to go quicker, while BP and others have said they need more time to produce evidence. The judge in that area has sided with the defendants, saying they need a realistic amount of time to mount a defense.
Over the issue of whether or not plaintiffs should be required to go through the $20 billion compensation fund set up by BP to see if they qualify before being allowed to file a lawsuit, the judge hasn't made a ruling on that yet.
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