We have some earnings out today, and we also wanted to highlight an earnings release from yesterday from Valero - see link below in article. The markets are reopening today and futures are up, but we expect there to be very thin trading as power is still out in much of New York's financial district and buildings are running on generators at this time. Some buildings of financial firms were flooded or received damage so we will watch with interest the volume in the market (both the equity and commodity futures).
Phillips 66 (PSX) will go ahead and report earnings today following fellow refiner Valero (VLO) which reported earnings yesterday (see here for the press release). If the report from Valero is to be believed to be an industry-wide standard, then look for margins to tighten at Phillips 66.
Hess (HES) has moved their earnings to Friday due to Sandy and its aftermath. We will get further insight into the state of the refining market with their results and hopefully some results from the company's E&P segment. Our focus would be on how the company is doing in the shale plays they have entered, with an emphasis on the Utica where they have a decent sized land package via joint venture.
We get lots of mail with various questions but one which keeps popping up is from our readers who have read our work over the years and are curious as to where we are speculating in the junior resource area. We have cut back considerably on the junior sector over the past year or two and redirected that capital towards larger plays developing oil and natural gas fields. It has worked out, but we do still have a few decent sized positions in junior resource companies.
As it pertains to gold, our big speculation in that area is Mawson Resources (MWSNF.PK) which is a junior gold company focused on exploration of a very promising trend in Finland. The land package is huge, and to date has returned bonanza gold grades from grab samples, trenching and shallow drilling. We want to point out that this is a very small market capitalization and thinly traded both here and in Canada, but there are big players in the junior resource market backing the company and their management team always seems to find the best properties in Europe for junior companies. With the pullback ahead of the company doing actual drilling now that they have been given the green light (for most of the property) we think that better days are ahead.
Oil & Natural Gas
It will be interesting to see how the power outages and storm affects natural gas consumption for this week and the weeks ahead. We have colder weather but a larger portion of the population in the United States took a hit which will ultimately drive consumption lower, but the question is by how much. Down in the southeast portion of the country, many of us have just this week turned on our heating systems. Yes it seems late, however last year we rarely had to utilize the systems and we are well ahead of last year as far as cold days at this point. We would direct investors to listen to Chesapeake Energy's (CHK) earnings call to get more color on this. They are not a utility but generally they have pretty good insights and data on these types of situations. Look for that release on November 1, 2012 (Thursday) after market close with a conference call scheduled for 9:00 AM on Friday (see link here).
Disclosure: I am long MWSNF.PK.