Monday, September 17, 2012

What Some Of Us Will Be Talking About On Tuesday; LNG Export Permitorium; Wells Coming Off the Confidential List; OXY USA Reports Another "OXY" Well

Maybe it's just the music I'm listening to, but I'm in a pretty good mood about the stock market.

Disclaimer: this is not an investment site; do not make any investment decisions based on what you read at this blog.

There are hints and early reports that "we" may be in for some earning surprises on the "up" side.

Exhibit #1 (as District Attorney Hamilton Burger, Perry Mason, would say): FedEx In-Play:
FedEx beats by $0.05, beats on revs; guides Q2 EPS below consensus; lowers FY13 EPS below consensus: Reports Q1 (Aug) earnings of $1.45 per share, five centers better than the Capital IQ Consensus Estimate of $1.40; co cut Q1 guidance to $1.37-1.43 from $1.45-1.60 on Sept 4; revenues rose 2.6% year/year to $10.79 bln vs the $10.68 bln consensus. FedEx Express will increase shipping rates by a net average of 3.9% for U.S. domestic, U.S. export and U.S. import services effective January 7, 2013. The full average rate increase of 5.9% will be partially offset by adjusting the fuel price threshold at which the fuel surcharge begins, reducing the fuel surcharge by two percentage points. FedEx Express rev +1% YoY to $6.6 bln as volume fell 5%; constrained by global economic conditions. FedEx Ground +8% as volume grew 5%. FedEx Freight rev +5%.
But the company is very, very downbeat about the full year. Very downbeat. So, we'll see.

So, if the outlook is so downbeat, why am I in a good mood about the stock market? A buying opportunity. And where do I find best buying opportunities? What do I like? High-dividend payers. Energy. Railroads. I think one of the bigger surprises will be the earnings coming out of Bakken-centric companies. Lots of talk about cutting costs. We'll see. The recent reports of Bakken premium to WTI is very, very interesting.
Amazon vs Wal-Mart

Update to Amazon story below, September 20, 2012: I thought I was more explicit in the post below, but I don't see it now; maybe it was in a comment. Whatever. When I wrote the note below, one of the main points was this: Amazon is now targeting Wal-Mart head-on. In today's WSJ, there's a long article, p B4, that says exactly that: Amazon will no longer sell Amazon's Kindle; the story explains why. Growing up, my dad and I saw the "demise" of Sears. Dad often said, and I agreed, no one was going to be able to take down Wal-Mart. I'm not so sure any more.

I like this: now that Amazon agrees to pay state sales tax to California, the company will feel free to place distribution centers in California. They already have one 85 miles outside of San Francisco. Order your Amazon product before you go to work in the morning, and find it on your doorstep when you get home. (By the way, I don't know if you know this: UPS and FedEx deliver items addressed to businesses during normal business hours; to home addresses after 4:00 p.m. if they have the volume to make the choice. Also the "left turn" rule is in effect whenever possible.)

From its website: note the CSC I put in red bold:

Amazon in North America

United States
Corporate Headquarters:
Seattle, WA

Shared Services Center:
Las Vegas, NV

Amazon Web Services:
Herndon, VA
Fulfillment Centers:
South Carolina
Customer Service Centers:
North Dakota
West Virginia

Minnesota, Iowa, the Dakotas, Montana, Nebraska, served by Kansas, I suppose. It would be interesting to see if Amazon puts in a "northern tier" fulfillment center.

I agree with analysts at the linked site: short term, state taxes will affect Amazon's bottom line, but in a very short time, this will end up causing even more competition for local brick and mortar, as Amazon puts in more distribution centers. Think Wal-Mart. The tax break was a nice "gimme" for customers, but it wasn't the primary reason consumers shopped at Amazon. Cost of gasoline, parking, unrewarding shopping experiences, etc., are the reasons folks shop at Amazon. Same day delivery will more than offset the sales tax nuisance. Interestingly, over time, has also morphed into a social networking site. "Amazon" is truly an apt name for this monster retailer.


It never quits: any opportunity to destroy the oil and gas industry and jobs.  A reader sent me this link. I would have missed it. The Energy Department again delays release of the liquid natural gas export report.

Data points:
  • looks like this report will be released after the election; sort of about the same time a decision is made on the Keystone XL; I'm not holding my breath; it's just a report, after all; they can kick this can downt the road for years
  • the US won't allow any export of LNG until the report is released
  • originally promised the report to be released by late summer
  • picking winners and losers: Cheniere Energy's Sabine Pass terminal has been approved; Dominion Resources and Sempra Energy are on hold (as in permitorium)
Go to the link: it's all about the re-election of incumbents. The only jobs incumbents are concerned about are their own.

Random thought: laying down rigs to cut costs. Lay down ALL your rigs and costs will drop significantly. I don't think NOG has any rigs.


Oil futures: up slightly today. After today's precipitous drop in a few short minutes that analysts cannot explain, not much recovery today. This suggests that there was a legitimate trading reason for the price of oil to drop. And the only thing that could explain it: the decision to release oil from the SPR. Look for the announcement at the close of the news cycle Friday. [Update: I'm wrong. The Wall Street Journal blames it on the Jewish holiday -- at the very end of the article. Google crude oil's quick fall leaves trail of queries. Or the October WTI option contracts that expired Monday. No talk about the SPR. We'll see.] [Update: about four hours later: now we have the SPR story. You can say you read it here first.]

Why does this not surprise me? French court wants to see all digital photos of topless Duchess of Cambridge. So do a lot of other folks. I can't make this stuff up.

RBN Energy: outstanding article on the Permian.

Wells coming off the confidential list on Tuesday:
  • 20173, 836, Petro-Hunt, Fort Berthold 148-95-26A-35-1H, Eagle Nest; t6/12; cum 20K 7/12;
  • 21816, 188, OXY USA, State Joe Loh 1-20-17H-143-98, Little Knife, t3/12; cum 7K 7/12; the Little Knife is a nice field; an Anschutz well in this field had an IP of 1,556 in 2010; 
  • 21982, drl, CLR, Florida 2-11H, Camp, 
  • 22031, 819, CLR, McClintock 1-1H, Pleasant Valley, t6/12; cum 26K 7/12; 
  • 22130, TA, WPX/Dakota-3 E&P, Mason 2-11HW, Van Hook, temporarily abandoned while WPX decides what to do with it; probably convert it to a SWD well; the formation was unstable; 
  • 22249, drl, Slawson, Magnum 2-36-25H, Baker, 

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