Anybody Buying Yet? Where’s the Bottom?

[SAJ-99]

See what happens. King crab legs, or beans and rice for dinner. It's only money!

Are Options Traders Betting on a Big Move in APA Corporation (APA) Stock?

Investors need to pay close attention to APA Corporation (APA) stock based on the movements in the options market lately.

finance.yahoo.com

Implied move is about 12%. Might be interesting, I will take a look.

Wonder how this will work out for Billings?

Billings should be fine, or at least they can worry about their other problems more than this. Refineries don't typically operate with a lot of excess fat. Not much to cut, if anything. It certainly isn't closing.

Sold out of my Verizon at close yesterday as I didn't want to roll the dice on earnings. Have to take another look in coming days as earnings weren't bad. Rolled that position into SPY calls at 70cents and sold them this morning for $1.4. Not King crab leg money or anything, but I keep chopping wood.

 

[TOGIE]

Implied move is about 12%. Might be interesting, I will take a look.


Billings should be fine, or at least they can worry about their other problems more than this. Refineries don't typically operate with a lot of excess fat. Not much to cut, if anything. It certainly isn't closing.

Sold out of my Verizon at close yesterday as I didn't want to roll the dice on earnings. Have to take another look in coming days as earnings weren't bad. Rolled that position into SPY calls at 70cents and sold them this morning for $1.4. Not King crab leg money or anything, but I keep chopping wood.

freaking verizon. such a bummer on what i thought was basically a steady dividend stock.

at this point i'm just gonna keep holding and forget about it.

 

[BigHornRam]

Option trading is beyond my comprehension. Something I could easily lose a lot of money doing!

 

[SAJ-99]

freaking verizon. such a bummer on what i thought was basically a steady dividend stock.

at this point i'm just gonna keep holding and forget about it.

Absolutely. I thought it was a safety play for any potential economic downturn. People don't get rid of their phones, ever, as long as they have a heart beat. The problem for VZ seems to be subscriber growth (or lack thereof). Maybe they are going to Tmobile?, but I'm not paying 100x trailing for that stock. VZ trades at 7x. If the trend continues VZ just cuts prices. Competition is a bitch.

 

[SAJ-99]

Option trading is beyond my comprehension. Something I could easily lose a lot of money doing!

It's an OUTSTANDING way to lose money. You should try it.

My bet was that we were going to get a pop this morning. Nothing on "news", just flows. There were a lot of put options that expired at close today still open yesterday. They had to be closed out and when they did all the option market maker hedging (shorting stocks) would come off as well, i.e. buying. Today we are looking at 3.7m puts trading versus 2.6m calls. Even bigger volume disparity in today's expiring options. People don't appear to be rolling to Nov monthly or Dec quarterly puts. We have more calls than puts in those. So the flow (Option market maker hedging) should be positive for the next few weeks (Until 31st maybe?). Lots of drivers that could change views the first week of November - Nov 2 Fed meeting, Nov 8 election day, Nov 10 CPI. VIX below 30 again. Lots of fun ahead.

Just heard Japan intervened in currency and Yen jumped 2%. Weaker dollar is good for everyone, but these interventions have never been very effective.

 

[BigHornRam]

It's an OUTSTANDING way to lose money. You should try it.

My bet was that we were going to get a pop this morning. Nothing on "news", just flows. There were a lot of put options that expired at close today still open yesterday. They had to be closed out and when they did all the option market maker hedging (shorting stocks) would come off as well, i.e. buying. Today we are looking at 3.7m puts trading versus 2.6m calls. Even bigger volume disparity in today's expiring options. People don't appear to be rolling to Nov monthly or Dec quarterly puts. We have more calls than puts in those. So the flow (Option market maker hedging) should be positive for the next few weeks (Until 31st maybe?). Lots of drivers that could change views the first week of November - Nov 2 Fed meeting, Nov 8 election day, Nov 10 CPI. VIX below 30 again. Lots of fun ahead.

Just heard Japan intervened in currency and Yen jumped 2%. Weaker dollar is good for everyone, but these interventions have never been very effective.

It's like doing shots of tequila. There are things in life I just don't need to try.

 

[BigHornRam]

Looks like even the TSLA investors made some money today!

 

[Sytes]

A few big name earning reports rolling in this week, including: Microsoft, Google, Apple, and Amazon. Will define the market culture, short term. Should hold some good immediate volatility.

 

[BigHornRam]

This guy must be a lot of fun at parties.....

'From Bambi to Godzilla.' Strategist David Rosenberg skewers the Federal Reserve as he sees a 30% hit to home prices and the S&P 500 returning to an early 2020 low

But don't despair. 'Permabear' Rosenberg sees a new bull market for stocks, bonds and other risk assets in 2024 when, he says, he becomes a 'permabull.'

www.marketwatch.com

"The Fed’s job is to take the punch bowl away as the party gets started, but this version of the Fed took the punch bowl away at 4 a.m.,” Rosenberg said, “when everybody was pissed drunk.”"

 

[SAJ-99]

Want to be confused? Maybe @wllm can help.

Texas Natural Gas Drops Toward Zero as Output Swamps Pipelines

(Bloomberg) -- Natural gas prices in the Permian Basin of West Texas are plunging toward zero as booming production overwhelms pipeline networks, creating a regional glut of the fuel.Most Read from BloombergRenters Hit Breaking Point in a Sudden Reversal for LandlordsChina Stocks Slide as...

finance.yahoo.com

 

[Deleted member 28227]

Want to be confused? Maybe @wllm can help.

Texas Natural Gas Drops Toward Zero as Output Swamps Pipelines

(Bloomberg) -- Natural gas prices in the Permian Basin of West Texas are plunging toward zero as booming production overwhelms pipeline networks, creating a regional glut of the fuel.Most Read from BloombergRenters Hit Breaking Point in a Sudden Reversal for LandlordsChina Stocks Slide as...

finance.yahoo.com

I think the one thing that article fails to explain is that a lot of wells produce oil and gas. There are some basins like the marcellus in PA/WV which is almost all gas, and there some parts of a few fields that produce mostly oil, but in general you get some amount of both. A step further often you get Natural Gas Liquids aka wet gas, so ethane, propane, isobutane, etc.

A lot of these plays are pretty remote (all things considered) and oil was trucked or trained out. It wasn't cost effective to build LNG facilities or pipelines for gas so operators just flared it... remember all the crazy nighttime photos of the bakken from space... anyway if a basin is mostly gas or a lot of gas, gas is what operators are looking for, it's what their business is based on and therefore pipe is laid before wells are drilled (marcellus/utica/woodford) so those areas have plenty of take away capacity.

The permian has a lower gas to oil ratio so there is less gas infrastructure, this becomes an issue when the basin ramps up production because of high oil prices because with that oil comes gas and it quickly overwhelms infrastructure.

Rules/penalties for flaring have been enacted so at some point the economics create a situation where the oil is so valuable it makes sense to keep drilling and then pay to have you gas removed instead of paying the fine.

Hence companies like crusoe energy which get paid to take gas and then use it to run server farms.

Related, ESG as been a big topic and part of that is emissions obviously flaring is a major component of an OG companies emissions. 'Gas companies' like EQT have a much better flaring intensity benchmark 0% then even the best permian companies FANG or DVN ~1.5%

Saudi, Iran, etc also flare lots of gas.

 

[SAJ-99]

I think the one thing that article fails to explain is that a lot of wells produce oil and gas. There are some basins like the marcellus in PA/WV which is almost all gas, and there some parts of a few fields that produce mostly oil, but in general you get some amount of both. A step further often you get Natural Gas Liquids aka wet gas, so ethane, propane, isobutane, etc.

A lot of these plays are pretty remote (all things considered) and oil was trucked or trained out. It wasn't cost effective to build LNG facilities or pipelines for gas so operators just flared it... remember all the crazy nighttime photos of the bakken from space... anyway if a basin is mostly gas or a lot of gas, gas is what operators are looking for, it's what their business is based on and therefore pipe is laid before wells are drilled (marcellus/utica/woodford) so those areas have plenty of take away capacity.

The permian has a lower gas to oil ratio so there is less gas infrastructure, this becomes an issue when the basin ramps up production because of high oil prices because with that oil comes gas and it quickly overwhelms infrastructure.

Rules/penalties for flaring have been enacted so at some point the economics create a situation where the oil is so valuable it makes sense to keep drilling and then pay to have you gas removed instead of paying the fine.

Hence companies like crusoe energy which get paid to take gas and then use it to run server farms.

Related, ESG as been a big topic and part of that is emissions obviously flaring is a major component of an OG companies emissions. 'Gas companies' like EQT have a much better flaring intensity benchmark 0% then even the best permian companies FANG or DVN ~1.5%

Saudi, Iran, etc also flare lots of gas.

Sounds like there is a lot of LNG tankers sitting in port in Europe waiting to unload. Capacity at regasification plants is a big bottleneck.

@BigHornRam, you should ask for permission to use @wllm post is your investment newsletter.

 

[LopeHunter]

I think the one thing that article fails to explain is that a lot of wells produce oil and gas. There are some basins like the marcellus in PA/WV which is almost all gas, and there some parts of a few fields that produce mostly oil, but in general you get some amount of both. A step further often you get Natural Gas Liquids aka wet gas, so ethane, propane, isobutane, etc.

A lot of these plays are pretty remote (all things considered) and oil was trucked or trained out. It wasn't cost effective to build LNG facilities or pipelines for gas so operators just flared it... remember all the crazy nighttime photos of the bakken from space... anyway if a basin is mostly gas or a lot of gas, gas is what operators are looking for, it's what their business is based on and therefore pipe is laid before wells are drilled (marcellus/utica/woodford) so those areas have plenty of take away capacity.

The permian has a lower gas to oil ratio so there is less gas infrastructure, this becomes an issue when the basin ramps up production because of high oil prices because with that oil comes gas and it quickly overwhelms infrastructure.

Rules/penalties for flaring have been enacted so at some point the economics create a situation where the oil is so valuable it makes sense to keep drilling and then pay to have you gas removed instead of paying the fine.

Hence companies like crusoe energy which get paid to take gas and then use it to run server farms.

Related, ESG as been a big topic and part of that is emissions obviously flaring is a major component of an OG companies emissions. 'Gas companies' like EQT have a much better flaring intensity benchmark 0% then even the best permian companies FANG or DVN ~1.5%

Saudi, Iran, etc also flare lots of gas.

Great explanation. I was on a Boy Scout camp out where chili was served. At 14, after lights out in the cabin was announced we all arrived at the conclusion we should flare off some gas using wooden matches kept by the wood stove. In the morning, we realized tightie whities scorch. Boys are weird.

 

[Deleted member 28227]

Sounds like there is a lot of LNG tankers sitting in port in Europe waiting to unload. Capacity at regasification plants is a big bottleneck.

Yeah that was exactly my point about NG prices/killing coal etc on whatever thread that was; there are some many bottlenecks and for so long prices haven't warranted fixing them. So IMHO expanded gas export will raises prices some, enough to warrant the infrastructure, but then there is so much gas, so much gas being wasted, that prices aren't going to go up that much. You likely wouldn't have say $20 maybe $7-10.

 

[BigHornRam]

Whatever happened to this idea? We are short diesel and have too much natural gas. Someone could make some money here you would think. Article is from 2010 so no one has been able to do it profitably yet apparently.

New Interest in Turning Gas to Diesel (Published 2010)

With natural gas getting cheaper, a bit of alchemy may be the cheapest way to create a gallon of diesel fuel.

www.nytimes.com

 

[SAJ-99]

Yeah that was exactly my point about NG prices/killing coal etc on whatever thread that was; there are some many bottlenecks and for so long prices haven't warranted fixing them. So IMHO expanded gas export will raises prices some, enough to warrant the infrastructure, but then there is so much gas, so much gas being wasted, that prices aren't going to go up that much. You likely wouldn't have say $20 maybe $7-10.

The US storage isn't full, so a price of zero still seems a little wild. I agree this problem has been a long time in the making, but building excess capacity in any industry is never a profitable exercise on a spreadsheet model. I might be wrong, but I can't image that flaring is a profitable solution for nat gas that can't find a home when oil is only $85/brl. At $120? maybe. Maybe the EU should just buy some Permian producers.

I'm sure the O&G industry suggested solution will be more pipelines and tax breaks.

 

[BigHornRam]

Sounds like there is a lot of LNG tankers sitting in port in Europe waiting to unload. Capacity at regasification plants is a big bottleneck.

@BigHornRam, you should ask for permission to use @wllm post is your investment newsletter.

@wllm has already been bribed with the good stuff for his O&G knowledge. UPS just dropped off a case from my favorite supplier.

 

[noharleyyet]

@wllm has already been bribed with the good stuff for his O&G knowledge. UPS just dropped off a case from my favorite supplier.
View attachment 246363

 

[Deleted member 28227]

The US storage isn't full, so a price of zero still seems a little wild. I agree this problem has been a long time in the making, but building excess capacity in any industry is never a profitable exercise on a spreadsheet model. I might be wrong, but I can't image that flaring is a profitable solution for nat gas that can't find a home when oil is only $85/brl. At $120? maybe. Maybe the EU should just buy some Permian producers.

I'm sure the O&G industry suggested solution will be more pipelines and tax breaks.

The issue isn't storage or demand it's space in the lines, and the lines are maxed, or there isn't enough capacity at the plants that liquify it to send down the big lines. Also it's your lines or the lines your units are dedicated to, there might be enough takeaway from the basin as a whole, but for instance Oxy ramps up and runs out of gas space and then has to talk to FANG about space... it gets further complicated with hedges.

Until ESG and flaring regs flaring didn't mater, I mean it was wasteful as hell but it doesn't cost anything. As far as how onerous the penalties are versus WTI it depends on how much gas is coming up versus how much gas. If it's a big well and not a ton of gas it might be worth it at $55... just kinda depends. Also you have to remember that decline curves are steep, and you don't know how big your well will come on, we try to forecast but sometimes you're wrong. Lines and plants have to be built to handle peak, but then wells decline and you don't want an overbuilt system, that's uneconomic.




Total is in the space... though not as a operator, shell sold out to Conoco

https://totalenergies.com/system/files/documents/2022-09/TotalEnergies_2022_Strategy_and_Outlook_LNG_focus_presentation.pdf

 

[SAJ-99]

Lines and plants have to be built to handle peak, but then wells decline and you don't want an overbuilt system, that's uneconomic.

Absolutely. It's just not an industry that can turn on a dime to some new global political paradigm. I still hold that we are going to regret not planning adequately and flaring all this nat gas.

Maybe a silly question, but shouldn't industry start looking to store the gas from one new well in another depleted well? I guess the rock structure would determine if that was possible.