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Gas Storage at New All-Time High – Analyst Blog

Zacks Market Commentaries — Mon, 19 Oct 2009 14:11:58 +0000

Last Thursday, we received a mildly bearish report from the federal government’s Energy Information Administration (EIA), showing a higher-than-expected rise in natural gas supplies. Stockpiles held in underground storage in the lower 48 states rose by 58 billion cubic feet (Bcf) for the week ended October 9.

This takes the current storage level to a new all-time high of 3.72 trillion cubic feet (Tcf), which is up 13.8% from last year's level and 14.6% above the five-year range (as clear from the nearby chart from the EIA). Current stocks are 450 Bcf above last year’s level and 474 Bcf above the five-year average. The inventory addition was lower than the five-year-average injection of 64 Bcf and last year's build of 81 Bcf.

The relentless increase in gas storage levels has meant that with three weeks remaining in the storage injection season, stockpiles are already 96% full. At this pace, by October 31, which is the end of the injection season, inventories could easily test the maximum capacity of 3.89 Tcf.

Despite the bearish EIA report, natural gas prices (we are referring to Henry Hub spot prices here) have edged up over the past few weeks, currently approaching $5.00 per million Btu (MMBtu), helped by indications of an economic rebound and expectations of a cold winter weather waiting just around the corner. Additionally, the presence of colder weather in early October (particularly in the Rocky Mountain region), have also helped support natural gas prices. However, prices are still way off the July 2008 highs, when they rallied to over $13 per MMBtu, before trending down to seven-year low level of sub-$2 per MMBtu recently.

Continued strong domestic production (from a number of unconventional natural gas fields) and recessionary consumption (due to the economic downturn), particularly in the industrial sector, are at the core of the commodity's current woes. Additionally, the Atlantic hurricane season did little to disrupt offshore production and onshore refineries.

But with U.S. natural gas fundamentals still remaining weak (storage levels are 15% above their five-year average), we are not fully convinced about the sustainability of the commodity’s current gains. This translates into limited upside for natural gas weighted companies and related support plays.

As a result, we remain cautious on natural gas-focused E&P players such as XTO Energy (XTO), Chesapeake Energy (CHK), EOG Resources (EOG), Devon Energy Corp. (DVN), EnCana Corp. (ECA) and Anadarko Petroleum Corp. (APC). We currently rate shares of these companies as Neutral.

We also maintain our Neutral recommendations for land drillers such as Nabors Industries (NBR) and Patterson-UTI Energy (PTEN), as well as natural gas-centric service providers such as BJ Services (BJS), given the extent of excess capacity in the sector that is expected to weigh on dayrates and margins well into next year.

Oil majors like BP Plc (BP) – that have significant natural gas operations – are also expected to remain under pressure until pricing and demand improve further.
Read the full analyst report on "XTO"
Read the full analyst report on "CHK"
Read the full analyst report on "EOG"
Read the full analyst report on "DVN"
Read the full analyst report on "ECA"
Read the full analyst report on "APC"
Read the full analyst report on "NBR"
Read the full analyst report on "PTEN"
Read the full analyst report on "BJS"
Read the full analyst report on "BP"
Zacks Investment Research

Natural Gas Storage Hits New High – Analyst Blog

Zacks Market Commentaries — Fri, 09 Oct 2009 14:01:03 +0000

In its weekly release yesterday, the Energy Information Administration (EIA) reported a bigger-than-expected 69 billion cubic feet (Bcf) addition to natural gas stockpiles for the week ended October 2.

This takes the current storage level to a new record high of 3.66 trillion cubic feet (Tcf), which is up 14.9% from last year's level and 15.1% above the five-year range (as clear from the nearby chart from the EIA). Current stocks are 473 Bcf above last year’s level and 480 Bcf above the five-year average. The inventory addition was lower than the five-year-average injection of 70 Bcf and last year's build of 87 Bcf.

The relentless increase in gas storage levels has meant that with four weeks remaining in the storage injection season, stockpiles are already 94% full. At this pace, by October 31, which is the end of the injection season, inventories could easily test the maximum capacity of 3.89 Tcf.

Despite the bearish EIA report, natural gas prices (we are referring to Henry Hub spot prices here) have stayed firm over the past few weeks, currently settling at around $4.00 per million Btu (MMBtu), helped by indications of an economic rebound. However, prices are still way off the July 2008 highs, when they rallied to over $13 per MMBtu, before trending down to seven-year low level of sub-$2 per MMBtu recently.

Continued strong domestic production (from a number of unconventional natural gas fields) and recessionary consumption (due to the economic downturn), particularly in the industrial sector, are at the core of the commodity's current woes. Additionally, the Atlantic hurricane season did little to disrupt offshore production and onshore refineries.

But with U.S. natural gas storage levels remaining 15% above their five-year average, we do not see any sustained price gains on the commodity front. This translates into limited upside for natural gas weighted companies and related support plays.

As a result, we remain cautious on natural gas-focused E&P players such as XTO Energy (XTO), Chesapeake Energy (CHK), EOG Resources (EOG), Devon Energy Corp. (DVN) and EnCana Corp. (ECA). We currently rate shares of these companies as Neutral.

We also maintain our Neutral recommendations for land drillers such Nabors Industries (NBR) and Patterson-UTI Energy (PTEN), as well as natural gas-centric service providers such as BJ Services (BJS), given the extent of excess capacity in the sector that is expected to weigh on dayrates and margins well into next year.
Read the full analyst report on "XTO"
Read the full analyst report on "CHK"
Read the full analyst report on "EOG"
Read the full analyst report on "DVN"
Read the full analyst report on "ECA"
Read the full analyst report on "NBR"
Read the full analyst report on "PTEN"
Read the full analyst report on "BJS"
Zacks Investment Research

Natural Gas Builds at Slower Pace – Analyst Blog

Zacks Market Commentaries — Fri, 18 Sep 2009 14:21:23 +0000

Yesterday, we received a mildly positive report from the federal government’s Energy Information Administration (EIA), showing a less-than-expected rise in natural gas supplies. Stockpiles held in underground storage in the lower 48 states rose by 66 billion cubic feet (Bcf) for the week ended September 11.

This takes the current storage level to 3.46 trillion cubic feet (Tcf), which is up 16.7% from last year's level and 16.4% above the five-year range (as clear from the nearby chart from the EIA). Current stocks are 496 Bcf above last year’s level and 487 Bcf above the five-year average. The inventory addition was lower than the five-year-average injection of 82 Bcf but slightly exceeded last year's build of 65 Bcf.

Overall, the relentless increase in gas storage levels continue to add to the long list of issues weighing on the commodity. At this pace, inventories are on course to surpass the all-time high level of 3.57 Tcf recorded at the end of October 2007.

Natural gas prices rallied earlier last year, reaching over $13 per million Btu (MMBtu) in July 2008, before trending down to seven-year low level of sub-$2 per MMBtu (we are referring to Henry Hub spot prices here).

Continued strong domestic production (from a number of unconventional natural gas fields) and recessionary consumption (due to the economic downturn), particularly in the industrial sector, are at the core of the commodity's current woes. Additionally, the Atlantic hurricane season has done little to disrupt offshore production and onshore refineries.

However, prices have rebounded somewhat over the past two weeks, currently settling at well over $3 per MMBtu, helped by back-to-back bullish storage data from the EIA as well as indications of an uptick in industrial production levels. But with U.S. natural gas storage levels still remaining 16% above their five-year average, we do not see any sustained price gains on the commodity front. This translates into limited upside for natural gas weighted companies and related support plays.

As a result, we remain cautious on natural gas-focused E&P players such as XTO Energy (XTO), Chesapeake Energy (CHK), EOG Resources (EOG), Devon Energy Corp. (DVN) and EnCana Corp. (ECA). We currently rate shares of these companies as Neutral.

We also maintain our Neutral recommendations for land drillers such Nabors Industries (NBR) and Patterson-UTI Energy (PTEN), as well as natural gas-centric service providers such as BJ Services (BJS), given the extent of excess capacity in the sector that is expected to weigh on dayrates and margins well into next year.
Read the full analyst report on "XTO"
Read the full analyst report on "CHK"
Read the full analyst report on "EOG"
Read the full analyst report on "DVN"
Read the full analyst report on "ECA"
Read the full analyst report on "NBR"
Read the full analyst report on "PTEN"
Read the full analyst report on "BJS"
Zacks Investment Research

Natural Gas Inventories Rise Less – Analyst Blog

Zacks Market Commentaries — Fri, 11 Sep 2009 15:57:26 +0000

In its weekly release yesterday, the Energy Information Administration (EIA) reported a less-than-expected 69 billion cubic feet (Bcf) weekly addition to natural gas stockpiles for the week ended September 4.

This takes the current storage level to 3.39 trillion cubic feet (Tcf), which is up 17.1% from last year's level and 17.4% above the five-year range (as clear from the nearby chart from the EIA). Current stocks are 495 Bcf above last year’s level and 503 Bcf above the five-year average.

The inventory addition was higher than last year's build of 63 Bcf and the five-year-average injection of 67 Bcf. The relentless increase in gas storage levels continue to add to the long list of issues weighing on the commodity. At this pace, inventories are on course to surpass the all-time high level of 3.57 Tcf recorded at the end of October 2007.

Natural gas prices rallied earlier last year, reaching over $13 per million Btu (MMBtu) in July 2008, before trending down. Prices have since plummeted to the current seven-year low level of sub-$3 per MMBtu (we are referring to Henry Hub spot prices here).

Continued strong domestic production (from a number of unconventional natural gas fields) and recessionary consumption (due to the economic downturn), particularly in the industrial sector, are at the core of the commodity's current woes. Additionally, the Atlantic hurricane season has done little to disrupt offshore production and onshore refineries.

The supply picture is expected to reverse in the coming months as the lagging effect of the sharp drop in domestic drilling activity takes effect. Partly offsetting the production drop is the expected ramp-up of LNG imports this year.

The commodity’s weak near-term outlook, coupled with the ongoing credit market turmoil, has prompted natural gas producers to curtail capital expenditure plans for 2009. As a result, this has been an extremely difficult period for natural gas and related energy support plays.

Considering the plunge in the commodity prices, we remain cautious on natural gas-focused E&P players such as XTO Energy (XTO), Chesapeake Energy (CHK), EOG Resources (EOG) and EnCana Corp. (ECA). We currently rate shares of these companies as Neutral.

We also remain wary of land drillers such Nabors Industries (NBR) and natural gas-centric service providers such as BJ Services (BJS), given the extent of excess capacity in the sector that is expected to weigh on dayrates and margins well into next year.

However, with the U.S. natural gas rig count edging up over 700, the seventh successive weekly gain, we see producers slowly ramping back activity. Considering this, we have recently upgraded these two stocks (NBR and BJS) from Underperform to Neutral.
Read the full analyst report on "XTO"
Read the full analyst report on "CHK"
Read the full analyst report on "EOG"
Read the full analyst report on "ECA"
Read the full analyst report on "NBR"
Read the full analyst report on "BJS"
Zacks Investment Research

Natural Gas Stockpiles Expand – Analyst Blog

Zacks Market Commentaries — Fri, 04 Sep 2009 15:25:32 +0000

Yesterday, in its weekly release, the federal government’s Energy Information Administration (EIA) reported another rise in natural gas supplies. Stockpiles held in underground storage in the lower 48 states rose by 65 billion cubic feet (Bcf) for the week ended August 28.

This takes the current storage level to 3.32 trillion cubic feet (Tcf), which is up 17.3% from last year's level and 17.8% above the five-year range (as clear from the nearby chart from the EIA). Current stocks are 489 Bcf above last year and 501 Bcf above the five-year average.

The inventory addition was smaller than last year's build of 92 Bcf but exceeded the five-year-average injection of 64 Bcf. The relentless increase in gas storage levels continue to add to the long list of issues weighing on the commodity. At this pace, inventories are on course to surpass the all-time high level of 3.57 Tcf recorded at the end of October 2007.

Natural gas prices rallied earlier last year, reaching over $13 per million Btu (MMBtu) in July 2008, before trending down. Prices have since plummeted to the current seven-year low level of around $2.2 per MMBtu (we are referring to Henry Hub spot prices here).

Continued strong domestic production (from a number of unconventional natural gas fields) and recessionary consumption (due to the economic downturn), particularly in the industrial sector, are at the core of the commodity's current woes. Additionally, the Atlantic hurricane season has done little to disrupt offshore production and onshore refineries.

The supply picture is expected to reverse in the coming months as the lagging effect of the sharp drop in domestic drilling activity takes effect. Partly offsetting the production drop is the expected ramp-up of LNG imports this year.

The commodity’s weak near-term outlook, coupled with the ongoing credit market turmoil, has prompted natural gas producers to curtail capital expenditure plans for 2009. As a result, this has been an extremely difficult period for natural gas and related energy support plays.

Considering the plunge in the commodity prices, we remain cautious on natural gas-focused E&P players such as XTO Energy (XTO), Chesapeake Energy (CHK), EOG Resources (EOG) and EnCana Corp. (ECA). We currently rate shares of these companies as Neutral.

In particular, we remain wary of land drillers such Nabors Industries (NBR) and natural gas-centric service providers such as BJ Services (BJS), given the extent of excess capacity in the sector that is expected to weigh on dayrates and margins well into next year. We have Underperform recommendations on both the companies.
Read the full analyst report on "XTO"
Read the full analyst report on "CHK"
Read the full analyst report on "EOG"
Read the full analyst report on "ECA"
Read the full analyst report on "NBR"
Read the full analyst report on "BJS"
Zacks Investment Research

Supply Glut Pressuring Natural Gas – Analyst Blog

Zacks Market Commentaries — Fri, 28 Aug 2009 15:47:48 +0000

In its weekly release yesterday, the Energy Information Administration (EIA) reported a bigger-than-expected 54 billion cubic feet (Bcf) weekly addition to natural gas stockpiles for the week ended August 21. This takes the current storage level to 3.26 trillion cubic feet (Tcf), which is up 18.8% from last year's level and 18.1% above the five-year range (as clear from the nearby chart from the EIA). Current stocks are 516 Bcf above this last year and 500 Bcf above the five-year average.

The build was smaller than last year's 100 Bcf build and the five-year-average injection of 67 Bcf. However, the relentless increase in gas storage levels continue to add to the long list of issues weighing on the commodity. Natural gas prices rallied earlier last year, reaching over $13 per million Btu (MMBtu) in July 2008, before trending down. Prices have since dropped sharply to the current seven-year low level of sub-$3 per MMBtu (we are referring to Henry Hub spot prices here).

Continued strong domestic production (from a number of unconventional natural gas fields) and recessionary consumption (due to the economic downturn), particularly in the industrial sector, are at the core of the commodity's current woes. The supply picture is expected to reverse in the coming months as the lagging effect of the sharp drop in domestic drilling activity takes effect. Partly offsetting the production drop is the expected ramp-up of LNG imports this year.

The commodity’s weak near-term outlook, coupled with the ongoing credit market turmoil, has prompted natural gas producers to curtail capital expenditure plans for 2009. As a result, this has been an extremely difficult period for natural gas and related energy support plays.

Considering the plunge in the commodity prices, we remain cautious on natural gas-focused E&P players such as XTO Energy (XTO), Chesapeake Energy (CHK), EOG Resources (EOG) and EnCana Corp. (ECA). We currently rate shares of these companies as Neutral.

In particular, we remain wary of land drillers such Nabors (NBR) and natural gas-centric service providers such as BJ Services (BJS), given the extent of excess capacity in the sector that is expected to weigh on dayrates and margins well into next year. We have Underperform recommendations on both the companies.
Read the full analyst report on "XTO"
Read the full analyst report on "CHK"
Read the full analyst report on "EOG"
Read the full analyst report on "ECA"
Read the full analyst report on "NBR"
Read the full analyst report on "BJS"
Zacks Investment Research

Zacks Analyst Blog Highlights: XTO Energy, Chesapeake, EOG Resources, Nabors and BJ Services – Press Releases

Zacks Market Commentaries — Mon, 24 Aug 2009 13:15:22 +0000

For Immediate Release

Chicago, IL – August 24, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: XTO Energy (XTO), Chesapeake (CHK), EOG Resources (EOG), Nabors (NBR) and BJ Services (BJS).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Friday’s Analyst Blog:

Natural Gas Continues to Build

Continued strong domestic production (from a number of unconventional natural gas fields) and recessionary consumption (due to the economic downturn), particularly in the industrial sector, are at the core of the commodity's current woes. The supply picture is expected to reverse in the coming months as the lagging effect of the sharp drop in domestic drilling activity takes effect. Partly offsetting the production drop is the expected ramp-up of LNG imports this year.

The commodity’s weak near-term outlook, coupled with the ongoing credit market turmoil, has prompted natural gas producers to curtail capital expenditure plans for 2009. As such, we remain cautious on natural gas-focused E&P players such as XTO Energy (XTO), Chesapeake (CHK) and EOG Resources (EOG). We currently rate shares of these companies as Neutral.

In particular, we remain wary of land drillers such Nabors (NBR) and natural gas-centric service providers such as BJ Services (BJS), given the extent of excess capacity in the sector that is expected to weigh on dayrates and margins well into next year. We have Underperform recommendation on both the companies.

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Zacks Investment Research

Natural Gas Continues to Build – Analyst Blog

Zacks Market Commentaries — Fri, 21 Aug 2009 18:00:12 +0000

Yesterday, in its weekly report, the Energy Information Administration (EIA) said that natural gas inventories for the latest week came towards the lower end of expectations. Stockpiles held in underground storage in the lower 48 states rose by 52 billion cubic feet (Bcf) to about 3.20 trillion cubic feet (Tcf) for the week ended August 14.

The data also showed that inventory levels were 19% above the five-year average of about 2.69 Tcf, and 21% above last year's storage level of about 2.64 Tcf (as clear from the following EIA chart).

The build was smaller than last year's 82 Bcf build and the five-year-average injection of 56 Bcf. However, the relentless increase in gas storage levels continue to add to the long list of issues weighing on the commodity. Natural gas prices rallied earlier last year, reaching over $13 per million Btu (MMBtu) in July 2008, before trending down. Prices have since dropped sharply to the current level of $3.36 per MMBtu (we are referring to Henry Hub spot prices here).

Continued strong domestic production (from a number of unconventional natural gas fields) and recessionary consumption (due to the economic downturn), particularly in the industrial sector, are at the core of the commodity's current woes. The supply picture is expected to reverse in the coming months as the lagging effect of the sharp drop in domestic drilling activity takes effect. Partly offsetting the production drop is the expected ramp-up of LNG imports this year.

The commodity’s weak near-term outlook, coupled with the ongoing credit market turmoil, has prompted natural gas producers to curtail capital expenditure plans for 2009. As such, we remain cautious on natural gas-focused E&P players such as XTO Energy (XTO) Chesapeake (CHK) and EOG Resources (EOG). We currently rate shares of these companies as Neutral.

In particular, we remain wary of land drillers such Nabors (NBR) and natural gas-centric service providers such as BJ Services (BJS), given the extent of excess capacity in the sector that is expected to weigh on dayrates and margins well into next year. We have Underperform recommendation on both the companies.
Read the full analyst report on "XTO"
Read the full analyst report on "CHK"
Read the full analyst report on "EOG"
Read the full analyst report on "NBR"
Read the full analyst report on "BJS"
Zacks Investment Research

Brigham Exploration (NASDAQ:BEXP): Upgraded to Strong Buy from Underperform at Raymond James

Notable Calls — Wed, 15 Jul 2009 12:37:00 +0000

div style="text-align: justify;"span style="font-weight: bold;"Brigham Exploration (NASDAQ:BEXP)/span is getting very positive comments this morning after the co last night issued an operations update and announced that the Strobeck 27-34 #1H well came online with an initial rate of 2,021 boe/d from the Three Forks/Sanish (TFS) zone:br /br /span style="font-weight: bold;"- Jefferies /spannotes the first of three wells scheduled for completion this summer achieved a new record for BEXP ... it is also the second highest Three Forks Sanish (TFS) test in N Dakota. The Strobeck 27-34 (63% NRI; Mountrail County) flowed 2,021 boepd during the first 24 hours from the TFS. BEXP's prior record was 1,433 boepd from the Bakken. The highest report TFS test is XTO's (XTO, $35.85, Buy) Boucher 41X-21 well in Williams County at 2,571 boepd.br /br /span style="font-weight: bold;"Demonstrates that longer laterals, more frac stages is working ... /spanthe Strobeck is 3 miles away from BEXP's Adix well which tested 892 boepd from the TFS from 11 frac stages in a 5,500' lateral. The Strobeck was completed with 20 frac stages, but 18 are effectively stimulated, in a 9,000' lateral. In effect, BEXP achieved more than double the production with 50% more frac stages. Also, the Strobeck well will be accretive to '09 reserves and will benefit from PUD-recognition. Last year the company booked only 4 million barrels in the Bakken, representing 17% of total reserves. Firm estimates that Strobeck's reserves would approximate 600 - 700,000 barrels if first month production averaged 600 bopd. This is possible considering the high initial production rate. span style="font-weight: bold; color: rgb(51, 204, 0);"Add in the two offset locations, even with a haircut, and Bakken reserves could be up 30% from this test alone./span A 600,000 barrel well would achieve 25% threshold returns at $50 WTI assuming a $7 basis differential and $6.6 million well cost.br /br /span style="font-weight: bold;"Next two catalysts imminent ... /spanJefferies expects to hear results from the Figaro 29-32 #1H (75%) in the Rough Rider area and possibly a second well in Mountrail County, the Anderson 28-33 #1 (55%), by the earnings call in the first week of August. Both wells will have 9,000' laterals and will be stimulated with 20-24 frac stages. Stimulation is scheduled for the Figaro in late-July and the Anderson in early August. Both wells would be accretive to '09 reserves.br /br /span style="font-weight: bold;""Rough Rider" delineation underway ./span.. the Figaro is particularly important because it is in the largely undeveloped area West of the Nesson Anticline, where BEXP has one-half of their ND Bakken acreage.br /br /Reiterates Buy and $6.50 tgt on BEXP.br /br /span style="font-weight: bold;"- KeyBanc/span notes that while they believe it is more important to see how this well will produce over time, they expect the wells' IP to grab investors attention, as it is one of the strongest TFS wells to date (although a 20 stage frac was put into the well). They expect this to be a positive read-through for other TFS players, including Whiting Petroleum (WLL-NYSE), Continental Resources (CLR-NYSE), Encore Acquisition (EAC-NYSE), Newfield Exploration (NFX-NYSE), Kodiak Oil amp; Gas (KOG-AMEX) and XTO Energy (XTO-NYSE) - to name a few.br /br /Couple of other wells to watch for. In addition, later this month, the Company plans to complete the, Figaro 29-32 #1H well, located in McKenzie County, ND. This long lateral Bakken well is expected to be completed with 20 isolated fracture stimulations. BEXP has also commenced drilling of the Brad Olson 9-16 #1H well, located in Williams County, ND in BEXP's Rough Rider Area. This well will be drilled to a total depth of 20,000 feet and is planned to be completed with 24 frac stages. Firm notes that this well is estimated to cost $6.25 million to drill and complete. In the Rough Rider Area, the Company controls ~100,345 net acres.br /br /span style="font-weight: bold; color: rgb(51, 204, 0);"- Last but not least...Raymond James is upgrading BEXP to Strong Buy from Underperform./spanbr /br /span style="color: rgb(255, 0, 0);"Notablecalls:span style="font-weight: bold;" /span/spanspan style="font-weight: bold;"I think BEXP will have 25-30% upside in it today (close to a full point)/spanbr /br /Positive news + similar catalysts on the horizon for the next couple of weeks. Nice combo./divdiv class="blogger-post-footer"img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/29297569-7766070143394078976?l=notablecalls.blogspot.com'//div

Zacks Bull and Bear of the Day Highlights: Allion Healthcare Inc., Embarq, EnCana, XTO Energy and Chesapeake – Press Releases

Zacks Market Commentaries — Fri, 19 Jun 2009 12:46:39 +0000

For Immediate Release

Chicago, IL - June 19, 2009 - Zacks Equity Research highlights Allion Healthcare Inc. (ALLI) as the Bull of the Day and Embarq (EQ) the Bear of the Day. In addition, Zacks Equity Research provides analysis on EnCana (ECA), XTO Energy (XTO) and Chesapeake (CHK).

Full analysis of all these stocks is available at http://at.zacks.com/?id=2676.

Here is a synopsis of all five stocks:

Bull of the Day:

Allion Healthcare Inc. (ALLI) is a national provider of specialty pharmacy and disease management services focused on HIV/AIDS patients. The company recently reported better-than-expected 1Q09 net income of $3.5M, or EPS of $0.13, compared with net income of $1.1M and EPS of $0.06 in 1Q08.

Organic growth in 1Q09 of the company's core Specialty HIV was 9% y/y, with the aggregate number of Specialty HIV prescriptions filled in 4Q08 tallying 265,455, an increase of 3.7% y/y.

We believe current initiatives, such as the partnering with large AIDS service organizations in Seattle, for example, bodes well for increased volume growth over the short term. We maintain our BUY rating at current levels.

Bear of the Day:

We maintain our Sell rating for Embarq (EQ), the fourth largest local telephone service provider in the U.S., as access line loss continues to erode traditional voice revenue, largely resulting in decreasing consolidated sales in the last quarter (below our expectations). Line losses have been accelerated with deactivations among business customers due to weak economic conditions.

EQ has received shareholder approval as well as the required state regulatory authorization for its consolidation with CenturyTel under an $11.6 billion merger deal (expected to close in 2Q 2009). We believe that the local phone business in North America, in particular service offered by regional carriers, has significant challenges ahead as consumers and business customers migrate to alternative solutions including VoIP, wireless and cable offerings.

Lower revenue forecasts for the second quarter of 2009 coupled with sustained access line losses support our thesis. We also believe pricing pressure and the need to invest further in broadband infrastructure may strain balance sheet conditions, considering EQ's limited liquidity and significant debt level.

Another Natural Gas Build – Analyst Blog

Zacks Market Commentaries — Thu, 18 Jun 2009 21:35:20 +0000

The storage overhang in the U.S. natural gas market shows no sign of easing. With domestic production continuing to outpace recession-hit demand, despite the sharp retrenchment in the rig count, the commodity appears to be on track to exit the summer injection season with an all-time high storage build. Today's bearish report is expected to stall, if not altogether reverse, the emerging strength in natural gas prices over the last few days that pushed it above the $4 mark.

To play this natural gas outlook, we continue to rely primarily on select E&P players such as EnCana (ECA), XTO Energy (XTO) and Chesapeake (CHK), who have the bulk of this year's production hedged at attractive prices and have access to resource-rich assets can be profitably operated in the current low-price environment.

We remain wary of land drillers such Nabors (NBR) and natural gas centric service providers such as BJ Services (BJS), given the extent of excess capacity in the sector that is expected to weigh on dayrates and margins well into next year. As such, we remain unconvinced of the sustainability of recent gains made by the land drillers and other onshore U.S. centric service players.

The Energy Information Administration (EIA) reported today a bigger-than-expected 114 billion cubic feet (Bcf) weekly addition to natural gas stockpiles for the week ended June 12th. This takes the current storage level to 2.44 Trillion cubic feet, which is up 32.1% from last year's level and 22.6% above the five-year range (as clear from the nearby chart from the EIA). Current stocks are 622 Bcf above this last year and 472 Bcf above the five-year average.

Due to the pronounced seasonal nature of natural gas consumption, stockpiles are built in the summer months and consumed in the winter heating months. As such, we have natural injections in the summer, as at present, and withdrawals in the winter. The storage level at the end of summer injection period has a direct bearing on natural gas prices in the winter heating months.

Current expectations are for a reversal in domestic production in the coming months as the lagging effect of the sharp drop in domestic drilling activity. Partly offsetting the production drop is the expected ramp up of LNG imports this year. If weekly injections do not drop materially from the trend established over the last many weeks, then we may actually get to a new record of close to 4 Tcf in storage at the end of the current injection period.
Read the full analyst report on "ECA"
Read the full analyst report on "XTO"
Read the full analyst report on "CHK"
Read the full analyst report on "NBR"
Read the full analyst report on "BJS"
Zacks Investment Research

Shale Gas to the Rescue – Analyst Blog

Zacks Market Commentaries — Thu, 18 Jun 2009 19:22:22 +0000

The Potential Gas Committee (PGC), a respected panel of academics and experts supported by the Colorado School of Mines, has painted an optimistic picture of the nation's long-term natural gas supply situation. In its latest biennial report released today, the committee pegs the nation's total natural gas resource potential at 2,074 trillion cubic feet (Tcf), up 35% from their last estimate in 2006.

A minor explanation is in order to correct reporting by the mainstream press about PGC's estimate of the nation's natural gas `reserves' at 2,074 Tcf. These are not proved reserves as are declared by E&P players every year, but a much broader classification that includes proved, probable, possible and speculative reserves. The proved reserves tally for the U.S., according to the Energy Information Administration as of year-end 2007, was around 237 billion cubic feet.

As such, it is far from certain that all or most of the estimated resource potential will actually get produced. But the bigger point here is that the U.S. has plenty of natural gas resources, much more than was previously estimated.

The 35% jump in the PGC's estimate primarily reflects greater appreciation of the resource potential of new prolific shale gas fields in Texas, Louisiana and Pennsylvania. These are not new discoveries in the sense of exploration success, but more in the sense of evolutionary improvements that have enabled the industry to tap the enormous resource potential of natural gas trapped inside shale rock.

The Barnett Shale field in Texas is the most developed of these shale plays, while the Haynesville Shale play in East Texas/North Louisiana is currently being developed. Another very prospective shale play at a very early stage is Marcellus shale in Pennsylvania. The massive resource potential and lack of exploration risk in these shale plays make them very attractive assets for exploration and production companies.

In the current low natural gas price environment, largely a result of recession-hit and plentiful supplies, we have favored E&P players that have access to such plentiful resource-rich assets, such as the shale plays, and have attractive hedges in place. Chesapeake Energy (CHK) and EnCana (ECA) are the second and third largest acreage holders in the Haynesville shale, while EOG Resources (EOG) and XTO Energy (XTO) also have significant presence in this major play.
Read the full analyst report on "CHK"
Read the full analyst report on "ECA"
Read the full analyst report on "EOG"
Read the full analyst report on "XTO"
Zacks Investment Research

Zacks Analyst Blog Highlights: EOG Resources, XTO Energy, Transocean, Diamond Offshore and NeurogesX. – Press Releases

Zacks Market Commentaries — Thu, 11 Jun 2009 13:06:17 +0000

For Immediate Release

Chicago, IL - June 11, 2009 - Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: EOG Resources (EOG), XTO Energy (XTO), Transocean (RIG), Diamond Offshore (DO) and NeurogesX (NGSX).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=4579.

Here are highlights from Wednesday's Analyst Blog:

Exports & Imports Still Falling

In April, we exported $121.1 billion, a 2.3% decline from March exports of $123.9 billion. We imported $150.3 billion a 1.4% decline from March imports of $152.5 billion. Put another way, in April we exported $0.806 for every $1.00 we imported, in March we exported $0.812 for every $1.00 we imported. However, in April of 2008 we exported just $0.713 for every dollar of imports.

One non-oil area that also deteriorated in April was the trade deficit with China, which expanded to $16.8 billion from $15.6 billion in March.

While the very strong rebound in oil prices (more than doubled from their lows) is good news for E&P companies like EOG Resources (EOG) and XTO Energy (XTO), it is probably even better news for the deepwater drillers like Transocean (RIG) and Diamond Offshore (DO). It is not good news for the rest of the economy, and by extension the rest of the market.

The current price level of oil is not yet fatal to hopes that the economy might recover, but it sure does not help matters. It is one more factor that suggests that if we get an end to the recession in the second half of the year that it will be extremely anemic, with unemployment continuing to rise well into 2010, and most likely clearing the 10% level before this year is over.

NeurogesX Momentum Continues

NeurogesX (NGSX) stock has been on a tear lately. With the drug now approved in Europe and nearing approval in the U.S., the market is clearly coming to grips with the power of Qutenza.

Even though the shares are up over 100% since the beginning of the year, several significant catalysts remain. We expect the company to secure a pan-European commercial partner for Qutenza in the next few months. U.S. regulatory approval will probably be delayed until November 2009, but management should be able to quickly complete and file the 20-patient topical anesthetic tolerability program in July. Upside could come if the FDA does act positively in August.

And finally, we expect Qutenza to become available in both the U.S. and EU in early 2010. Peak sales in the PHN indication are at least $250 million, with upside to that figure based on off-label use in HIV-DSP and PDN.

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Zacks Investment Research

Exports & Imports Still Falling – Analyst Blog

Dirk Van Dijk — Wed, 10 Jun 2009 18:28:10 +0000

The sharp improvement we have seen over the last year in the trade deficit looks like it is coming to an end. As the chart below (from http://www.calculatedriskblog.com/) shows, a year ago we were consistently running trade deficits in excess of $60 billion a month. But since the start of the year, deficits below $30 billion have been the norm. In April, the deficit was $29.2 billion, up from $28.5 billion in March. A year ago the deficit was $62.2 billion.

However, a very large portion of the improvement that we have seen over the last year has been due to the falling price of oil. In April, the price of imported oil averaged $46.60 -- today oil is trading over $70 a barrel (there is not an exact one-for-one correspondence between the price of imported oil and the quoted price of WTI or Brent, but it is close). This means that the oil portion of our import bill should expand significantly in May and June.

This is not a good omen for the second quarter GDP report. Keep in mind that net exports added almost two full percentage points to growth in the first quarter. In other words, had the trade deficit not improved, we would have seen the economy sink at a 7.7% annual rate in the first quarter rather than at a 5.7% rate.

Thus while the deterioration in April was minor, the absence of that positive will be a negative for GDP. With the trade deficit likely to slip back further in May and June due to oil, it may turn into a significant negative.

The improvement in the trade deficit over the last year has come the "wrong way." It is due to a reduction of imports rather than from an expansion of exports. Both have been plunging, but over the last year, imports have declined by 30.7% while exports have "only" fallen 21.8%. The reduction in imports was largely, but not entirely, due to falling oil prices.

In April, we exported $121.1 billion, a 2.3% decline from March exports of $123.9 billion. We imported $150.3 billion a 1.4% decline from March imports of $152.5 billion. Put another way, in April we exported $0.806 for every $1.00 we imported, in March we exported $0.812 for every $1.00 we imported. However, in April of 2008 we exported just $0.713 for every dollar of imports.

One non-oil area that also deteriorated in April was the trade deficit with China, which expanded to $16.8 billion from $15.6 billion in March.

While the very strong rebound in oil prices (more than doubled from their lows) is good news for E&P companies like EOG Resources (EOG) and XTO Energy (XTO), it is probably even better news for the deepwater drillers like Transocean (RIG) and Diamond Offshore (DO). It is not good news for the rest of the economy, and by extension the rest of the market.

The current price level of oil is not yet fatal to hopes that the economy might recover, but it sure does not help matters. It is one more factor that suggests that if we get an end to the recession in the second half of the year that it will be extremely anemic, with unemployment continuing to rise well into 2010, and most likely clearing the 10% level before this year is over.

Read the full analyst report on "EOG"
Read the full analyst report on "XTO"
Read the full analyst report on "RIG"
Read the full analyst report on "DO"
Zacks Investment Research

Following 100% Success Rate on Initial Drilling Program, Vortex Resources Corp. (VTEX.OB) Exercises Option on Fifth Well

QualityStocks — Mon, 17 Nov 2008 13:53:51 +0000

Today before the bell, Vortex Resources Corp. announced that it is exercising the option to drill its fifth well in Adams-Baggett Field in Crockett County, Texas. The decision to move forward and drill a fifth natural gas well was made after the successful drilling of three wells in the Adams-Baggett area. Results from the fourth [...]

Caxton Associates Hedge Fund | Exclusive 13F Holdings Analysis

Richard C. Wilson — Fri, 26 Sep 2008 04:33:43 +0000

Caxton Associatese

Caxton Associates Hedge Fund Holdings

This post is being written as part of HedgeFundBlogger.com's Investment Securities Tool which analyzes the holdings of hedge fund managers.

Up next in the macro hedge fund tracking series we have Caxton Associates, ran by Bruce Kovner. Taken from Wikipedia, Kovner's bio is as follows: "Kovner's first trade was for $3,000, borrowed against his MasterCard, in soybean futures contracts. Realizing growth to $40,000, he then watched the contract drop to $23,000 before selling. He later claimed that this first, nerve-racking trade taught him the importance of hedge fund risk management. In his eventual role as a trader under the legendary Michael Marcus at Commodities Corporation (now part of Goldman Sachs), he purportedly made millions and gained widespread respect as an objective and sober trader. This ultimately led to the establishment of his current company, Caxton Associates, in 1983, which today manages over $10 billion in capital and has been closed to new investors since 1992." Year-to-date, Caxton Associates was up 5% as of a few weeks ago.

So, now that we've got a background on Kovner and Caxton Associates, let's take a quick look at his portfolio highlights. Keep in mind that this is merely a brief summary of Caxton's top holdings. Due to the time sensitive nature of the 13F material, I wanted to get this information posted before the next set of filings come out in November.

Top 20 Holdings by % of portfolio
1. Compania Cervecerias Unidas (CCU) - Increased position by 72934%, from 25,000 shares to 18,233,668 shares
2. Electronic Data Systems (EDS) - New Position
3. Activision (ATVI) - New Position
4. Monsanto (MON) - Increased position by 41 %
5. Rockwood Holdings (ROC) - Increased position by 68.8%
6. W-H Energy Services (WHQ) - Increased stake by 195%
7. Occidental (OXY) - Increased stake by 65%
8. ChoicePoint (CPS) - Decreased position by
9. DirecTV (DTV) - Decreased stake by 25%
10. W.R. Grace (GRA) - Boosted stake by 8%
11. Qualcomm (QCOM) - Boosted stake by 44.6%
12. Coca Cola (KO) - Decreased position by 12.5%
13. Rural Cellular (RCCC) - Increased stake by 12.4%
14. Research in Motion (RIMM) - Boosted stake by 8.7%
15. Service Corporation (SCI) - Increased position by 32%
16. Nucor (NUE) - Boosted position by 37%
17. (ANST) - New position
18. XTO (XTO) - Boosted stake by 150%
19. Stewart Enterprises (STEI) - Increased position by 12%
20. Gilead (GILD) - Decreased position by 26.7%

Kovner's Caxton Associates definitely disassociate themselves from the rest of the macro pack when it comes to the equity side of their portfolio. While their portfolio does hold typical energy and technology names often seen in other hedge fund portfolios, they also hold seemingly obscure names that I have yet to see pop up in any other funds I track. So, Kovner and his team may have discovered some diamonds in the rough here. In particular, I want to focus on his top holding: Compania Cervecerias Unidas (CCU). In the quarter prior to the filing, he held just 25,000 shares of this name. Then, over this past quarter, he ratcheted up his holdings in the name big time. He increased his position by 72,934%, bringing it all the way up to his firm's top holding, with a market value of over $642 million at the time of the filing. Needless to say, they bought this name with conviction. And, although I've seen numerous other funds buying up shares of Latin & South American beverage companies, this is the first fund I've seen pick up this name. So, definitely keep an eye on it.

Additionally, I want to point out his holdings in Rocwood Holdings (ROC), W-H Energy Services (WHQ), and Service Corporation (SCI). These are three other names I am seeing for the first time amongst the hedge funds I track. And, he was adding across the board to all three names. Caxton added to WHQ the most, increasing their position by 195%.

Now, turning to the 'hedge fund favorite' names that tend to pop up in numerous hedge fund portfolios that I track, we see Caxton holds positions in Qualcomm (QCOM), Research in Motion (RIMM), XTO Energy (XTO), Occidental (OXY), and Gilead (GILD). Caxton was out adding pretty moderately to all these names. OXY and XTO are easily two of the favorite equity energy plays amongst various hedge funds. And, you have to wonder how they affected their portfolio, given the volatile ride energy stocks have seen as of late. Turning to tech, we see that Caxton, like so many other funds, enjoy large positions in both QCOM and RIMM. As I've noted before, QCOM is easily a top five most common equity holding among the hedge funds I track. And, just like energy, technology stocks have been whipsawed around a lot recently. So, although Caxton was out adding this past quarter, we'll have to see if they were still adding to these names come the next 13F filing.

We already knew hedge funds (and macro funds in particular) had a rough July. And, it's easy to see why, with the heavy commodity exposure many of them had. What we don't yet know is how they've rebounded (if at all). Lastly, I just want to re-emphasize that since Caxton is a macro fund, they obviously have the majority of their positions in the commodity, currency, futures, or other markets. But, at the same time, they still have a sizable chunk of money in the equity markets.

Caxton Associates' full 13F filing listing every position can be found at the SEC.

Guest post by Market Folly

Please check here next week for some further analysis on specific holdings of leading hedge funds.

Analysis #1: Tontine Capital Partners - 13F Hedge Fund Holdings
Analysis #2: Lone Pine Capital - 13F Hedge Fund Holdings
Analysis #3: Tremblant Capital - 13F Hedge Fund Holdings
Analysis #4: Maverick Capital Management 13F Holdings Analysis
Analysis #5: BP Capital Management 13F Holdings Analysis
Analysis #6: Blue Ridge Capital 13F Holdings Analysis
Analysis #7: Clarium Capital Management 13F Holdings Analysis
Analysis #8: Greenlight Capital David Einhorn 13F Holdings
Analysis #9: Soros Fund Management LLC 13F Holdings Analysis

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Tags: Caxton Associates Hedge Fund, Caxton hedge fund, Caxton Hedge Funds, Caxton Associates LP LLC Inc., hedge fund holdings of Caxton Associates, SCI, NUE, RIMM, RCCC

Striker Oil & Gas Inc. (SOIS.OB): Riding the Energy Boom to Profits

QualityStocks — Tue, 02 Sep 2008 01:18:20 +0000

Striker Oil & Gas (SOIS) develops, explores and acquires crude oil and natural gas reserves, operating along the Gulf Coast of Texas and Louisiana, as well as in East Texas and Mississippi. It is speculated that Striker has potential oil and gas reserves of $400 million in Texas and Louisiana. That equates to 32.5 billion [...]

Will the Hunts buy silver again after selling Hunt Petroleum?

Alex Stanczyk — Mon, 23 Jun 2008 02:33:30 +0000

Will the Hunts buy silver again after selling Hunt Petroleum? Filed under: Gold & Silver, US Stocks — peterjcooper @ 10:41 am This week XTO Energy finally agreed to buy Hunt Petroleum for $4.2 billion after a long legal tussle between Hunt family heirs. The firm was founded by the late billionaire HL Hunt whose sons [...]