Our calculations show a shortfall of $68 million for the expected 2005 capital expenditure program.   Raising capital was an inevitability and the $100 million looks to be more than enough.  ATPG  is ramping up a very aggressive program, but they have produced in the past. 

On the 2Q2005 conference call (date to be determined) we hope management will give more color on what the general corporate purposes are.  Plus, what the extra $32 million in  proceeds will be used for. ATP does have a high debt to cap ratio.   

Most important to this board is the possible effect on oil prices.   An article on Yahoo Singapore! believes the effect will be minimal as demand should weaken in China thus offsetting the lower oil prices a stronger Yuan will cause.

According to a July 5th update, inside energy buyers outpaced sellers in June.  Though the analyst quoted did say that the volatility in commodity makes him wary in the near-term, he did believe that the buying supported a long term bullish outlook.   

Three times the amount of oil production is expected to be shut-in by Emily as by Dennis. 

XNG - Is made up of major pipeline companies and large independent E&Ps
OSX -  Oil services (ETF equivalent is the OIH)
XLE -  Heavily weighted to the major integrated companies (ETF equivalent is the IYE)

If the index posts a monthly gain of greater than 3% it will appear GREEN and a loss of 3% will appear RED.

The "Big Sandy" prospect was a little bit of a problem child.  Hoping to hit multiple pay sands, specifically the Upper Woodbine, CRK announced earlier that this formation was uncommercial earlier in the year.  The Big Sandy was south of the Hammon discovery. The effect of the Big Sandy dry hole is two fold.  The first is immediate with the dry hole cost but, the second is what effect will the results have on the drilling program in Polk County. 

                          Company                     Ticker          Type                       Time   
Tuesday  7/19   Lone Star Technology       LSS          Oil Service             10:00 AM     est.   
                        Noble Corp.                     NE            Offshore Driller      10:00 AM
                        XTO Energy                     XTO          E&P                        4:00 PM
Thursday 7/21  Cooper Cameron              CAM          Oil Service              8:30 AM
                        McMoran Exploration       MMR         E&P                       10:00 AM
Friday 7/22       Schlumberger                  SLB           Oil Service              9:00 AM
                        Occidental                      OXY           Integrated             11:30 AM

What effect if any would a floating yuan have on oil?  Wu Lei and Liu Xue-Jun believe the effect would be significant and not very good for the US economy. 

Key points from new presentation:

Is demand slowing in China? 

]]> Mon, 11 Jul 2005 07:46:29 -0400 Michael McAllister The Denver Business Journal highlights drilling activity in Colorado.  With the majors focusing on International projects the search for domestic natural gas has been passed onto Independents and private companies.  This article has some bullish data points for land drillers and the companies that service the rigs.

Complete Story »]]> DRQ GW HC LSS MVK NR PTEN UCO Michael McAllister http://seekingalpha.com/article/505-barron-s-and-the-oil-service-stocks?source=feed 505 A couple of mentions of the oil service sector appear in this week's Barron's (paid subscription required).  Alan Abelson's Up & Down Wall Street column discusses (with a friend with a pseudonym) the pros and cons of the drillers in particular.  Key points below:

Spencer Jakab's Wave of the Future deals with other oil service stocks, focusing on what one might consider to be the majors of the sector.   The thesis echos, Harry from above, the cycle will be stronger and longer than in the past.   It will also be more global. Stocks mentioned below:

But private warnings also point to a worsening long-term outllook, with Saudi
officials saying that the Organisation of the Petroleum Exporting Countries will
be unable to meet projected western demand in 10 to 15 years.

Initially we felt that  the US was overreacting, UCL's assets are not going to swing the balance of energy power into the Chinese favor...there are some UCL patents but they are not technological breakthroughs and the only R&D I could think of was UCL's inability to drill in the Gulf of Mexico. 

The New York Oil ETF will track light sweet crude oil (WTI) as it trades on the NYMEX.  It was only a matter of time before someone would figure out how to get the retail investor involved in the red hot oil market.  We used to say that buying a group of E&Ps and/or oil service names would basically create a commodity proxy as the correlation between the commodity and equity would usually be high. 

We here in the States are having a hard time competing with the seemingly insatiable appetite for commodities that China has now and expected to have in the future.  Obviously the world is getting smaller and we are getting more enmeshed.  What if China was your neighbor?  Check it out it might not be pretty.