Energy Stock Trader: Thursday Outlook

by: Steve Zachritz

Earnings Watch:

Teekay Shipping Corp. (NYSE:TK): Earnings of $1.12 vs expectation of $1.13. Revenues were higher than expected, and the company commented that rates have been above historic averages and are expected to remain firm through the 2H07.

Petrohawk Energy Corp. (NYSE:HK): Good quarter. Beat of $0.17 vs $0.12.

• CFPS rose 123% YoY
• revenues were in line up 103%
• strong production growth
• the bottom line beat with a top line meet was attributable to a drop in LOE. LOE fell to $0.55/mcfe (remember that these guys have been divesting higher LOE properties as a matter of course).
• In fact total operating costs declined 26% YoY on a unit basis.
• Hedges cover 73% of expected production with average floor prices $7.32 per mmbtu and $63.05 per barrel.
• Guidance appears to be in line. I'll have more after the conference call.

Storm Cat Energy (NYSE:SCU)

• Production from the PRB is at 9.6 MMcfepd, up from 8.0 MMcfepd at year end
• 4 Rigs running in the Powder now, drilled and completed 20 wells in 1Q07, still on track to drill 150 wells there this year.
• 75 days out from drilling in the Fayetteville shale. Drilling locations are staked and the company continues to add acreage. Plans to drill 4 to 6 company wells now. Last plan I saw said 14.
• Elk Valley, Alberta, dewatering of 10 wells continues. Associated gas is increasing.

Natural Gas: Thursday's gas inventory INJECTION could top 100 Bcf.

• HDD -- fell to 39 from 49 in the prior week when an injection of 87 Bcf of was reported.
• CDD -- registered a slightly warmer than normal 17 but it really shouldn't have much of an effect just yet. In general I've found that owners of the newer, better insulated homes with more energy efficient heating and cooling units are the early adopters of AC in the Spring. The rest of the U.S. will sweat a little and hold out as long as possible before flipping that switch.
• In the year ago period 85 Bcf was injected so we might eat into the YoY storage deficit but not meaningfully so.
• The over/under for gas prices is likely to be 100 Bcf.

Oil retreated yesterday on a much bigger than expected build in crude stocks. Both gasoline and distillates climbed more than expected as well.

• Crude: A 5.6 million barrel build in crude stocks was well above the highest estimate yesterday. Funny that it comes on a day that the LOOP files for permission to increase it's storage facilities by nearly 5 mm barrels.
• Gasoline: as I wrote yesterday, the over/under on gasoline stocks would be a build of 400,000 barrels -- and what do you know, we got exactly that. Odd coincidence. And gasoline drops (as it was the first build in gasoline stocks in 13 weeks), but then rallies throughout the afternoon to close up $0.0264 on the day. This morning pre market trading has June RBOB up another $0.03 to $2.26. What gives? Blame MEND for abducting four U.S. workers.

Gasoline Imports -- Finally starting to show up on U.S. shores. After stiff competition from the Carribean and Europe, gasoline imports appear to be slowly increasing. Given that several non U.S. refineries in the western hemisphere have now returned to service and the duration of high U.S. wholesale prices, I'd expect imports to continue to climb.

Gas imports 10 05 2007

Analyst Watch: Atwood Oceanics Inc. (NYSE:ATW) to hold at Jefferies. EnCana Corp. (NYSE:ECA) and Carrizo Oil & Gas Inc. (NASDAQ:CRZO) price targets increased at RBC.

Holdings Watch Changes:


• Teekay Shipping Corp. (TK) -- added June $65 for $1.40. What greater evidence of high traffic can there be than sharply rising imports.


• Tesoro Corp. (TSO) 115 puts for $2.10 because: 1) I'm a glutton for punishment and 2) I honestly think we've saw the peak in RBOB prices at $2.35 at the end of April.