McMoran Exploration MMR Spikes on 2nd Quarter Earnings

McMoran Exploration, ticker MMR, spiked 12.4% today on the release of their second quarter earnings.

Here is just some of the highlights from the earnings......

* Ultra Deep Development Activities. In June 2012, successfully perforated 165 feet of Wilcox sands in the Davy Jones No.1 well with electric wireline casing guns. Commenced operations on July 13 to run production tubing and expect to conduct measurable flow test during the week of July 30.

* Completion and testing of Davy Jones No. 2 expected to commence following review of results from Davy Jones No. 1. As previously reported, Davy Jones No. 2 confirmed 120 net feet of pay in multiple Wilcox sands and also encountered 192 net feet of potential hydrocarbons in the Tuscaloosa and Lower Cretaceous carbonate sections. Davy Jones is located on a 20,000 acre structure that has multiple follow on drilling opportunities.

* Expect to submit development plans for Blackbeard East and Lafitte with Bureau of Safety and Environmental Enforcement (BSEE) in the third quarter of 2012. Positive drilling results on these structures have identified formations in the Miocene, Oligocene and Eocene.

* Ultra-Deep Exploration Activities, Blackbeard West No. 2, Drilling below 21,100 feet with a proposed total depth of 24,500 feet.

* Set liner after well encountered a high pressure gas flow immediately below the salt weld in May 2012.

* Targeting Miocene aged sands seen below the salt weld at Blackbeard East.

* If successful, completion could utilize conventional equipment and technologies.

* Lineham Creek onshore prospect, Drilling below 19,000 feet with a proposed total depth of 29,000 feet. Targeting Eocene/Paleocene objectives below the salt weld.

* Highlander onshore prospect, Acquired exploratory rights to 68,000 gross acre area located in Iberia, St. Martin, Assumption and Iberville Parishes, Louisiana.

* Expect to commence drilling exploratory well in the second half of 2012.

* Well has a proposed total depth of 30,000 feet and will target Eocene, Paleocene and Cretaceous objectives seen below the salt weld in the Davy Jones wells.

* Central Gulf of Mexico Lease Sale 216/222 Results, Apparent high bidder on 14 leases, of which six were sole bids and the remaining eight were made jointly with Chevron U.S.A. Inc.

* This new acreage would enhance McMoRan's industry leading Shelf sub-salt prospect inventory.

* Second quarter 2012 production averaged 140 MMcfe/d net to McMoRan, compared with 197 MMcfe/d in the second quarter of 2011.

* Average daily production for 2012 is expected to approximate 137 MMcfe/d net to McMoRan, including 135 MMcfe/d in third quarter 2012.

* Operating cash flows totaled $11.7 million for the second quarter of 2012, net of $9.1 million in working capital uses and $16.0 million in abandonment expenditures.

* Capital expenditures totaled $147.2 million in the second quarter of 2012.

* Cash at June 30, 2012 totaled $287.1 million.

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Is Natural Gas Ready To Rally?

By: Chris Vermeulen at The Gold & Oil Guy.com

Natural gas (UNG) has recently caught my attention. While it was in a significant downtrend for the better part of a year it has recently been consolidating right under the $20 level. A look at the daily chart shows a long move down and then recently a sideways consolidation pattern. While this is typically a continuation pattern I am beginning to believe think that the next move may be up rather than an extension of the previous down trend.

* Over the last two weeks there been significant support above $18 and significant volume.

* The $20/$20.50 level has been tested multiple times and the more tests it undertakes the more likely it is to break.

* Both the 20 day and 50 day moving averages have turned upwards and UNG is trading above both.

If we zoom in a bit and take a look at the hourly chart we are presented with two scenarios

1. The rising wedge holds and UNG breaks through the $20 – $20.50 resistance level on high volume and a new long term up trend is produced

2. The head and shoulders pattern within the wedge breaks downwards and the downtrend resumes

I’m leaning towards option one but will be waiting for a breakout confirmed with volume in either case.

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The Mid Continent Sweet Spot for Oil and Refining

Wells Fargo Securities Senior analyst Roger Read explains why Tesoro and Western Refining are able to take advantage of the middle of the US for refining.



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Crude Oil, Natural Gas and Gold Market Recap from the CME Group for Monday July 16th

The Next Major Move in Precious Metals Is Close

September crude oil showed positive reversal action on the session, mounting a come back from early morning lows to register its highest close since May 29th. While a weaker than expected report on US retail sales pressured risk appetites, the crude and product markets were able to stabilize and turn higher. A turn lower in the US dollar and reports of a US Navy ship opening fire on a boat in the UAE supported the turn higher in crude oil prices. Chatter that Chinese officials could be closer to extending another round of monetary stimulus provided an added jolt to the crude oil market throughout the session. Gains in the expiring August Brent crude oil contract also offered the WTI market a modest lift.

Natural gas prices are giving back a portion of the post inventory report gains from last week. As I have been discussing at length in this newsletter the price of Nat Gas futures is not in sync with what the current fundamentals will support. The weather is moving toward another round of very hot weather over major portions of the US but the new round of very high temperatures will not last as long as the last bout of hot weather nor will the extreme heat cover as much of the US as the last round. There will be a call on Nat Gas for cooling demand over the next several weeks but based on the latest NOAA forecast the demand pull for Nat Gas may not be as strong as it was back in June.

The gold market swung around on both sides of unchanged today and after the weak morning action that might be considered a psychological victory for the bull camp. In addition to a reversal in the dollar, gold was also benefited at times by renewed US easing talk in the wake of a much softer than expected US retail sales report. As opposed to last week, when silver periodically outperformed the gold market, gold generally outperformed the silver market today. Apparently the rest of the metals complex was undermined by residual slowing fears, while gold was able to break away from the pack and avail itself of some speculative interest ahead of this week's Fed testimony.

Posted courtesy of The CME Group

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The Next Major Move in Precious Metals Is Close

What the GLD ETF Chart tells us about GOLD

After making new highs about a year ago we have seen Silver and Gold consolidate for roughly the last twelve months. Technically, it would typically be a bullish scenario with gold from the stand point that the last 12 months’ price action was a sideways consolidation in a bullish pennant formation. However over the last year we have witnessed a series of lower highs and increasingly tested supports levels around $150 on GLD which raises caution.

With the fed pulling any extensions on further quantitative easing in the form of QE3 or other programs, the bullish case has lately been criticised. However I am still a firm believer that gold in most respects is a currency, and the only one that can maintain its value. There are very serious issues looming in Europe and across the world that are far from resolution. With few tools left in the toolbox to stimulate world economies, further easing can never be ruled out.

Silver, after breaking through strong resistance around $19- $20 in September 2011 went almost parabolic in spring 2011 prior to giving up most of its gains in the last year. There seems to be significant support around $26 on SLV, however this level has been tested quite frequently over recent months and this again raises caution. While silver owes some of its moves to its industrial application, the high correlation between the two metals is not to be ignored.

I think the long term trade will be long in both metals, but I’m waiting to see a significant breakout out of these consolidations on heavy volume to confirm a direction. I would like to see both precious metals break out of their respective consolidations and ultimately have further confirmation in the USD. Any major headlines over the next couple months involving Europe or quantitative easing may provide us with the trigger for the next big move.

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Chris Vermeulen

Make sure to also read "Gold Cycles Will Soon Forecast Where Prices Are Headed"

What the GLD ETF Chart tells us about GOLD

Gold had remained in a rough 1550-1640 range for several weeks now. Tonight, we look at the GLD ETF, which represents the Gold spot price movements.  Over the past 5 months we can see in the chart below  the clear downtrend lines.

Recently, in the past 6 weeks we have seen a series of 3 higher lows including today where a lower gap filled in and then Gold reversed upwards.

What Gold needs to do, in terms of this GLD ETF is clear the 158 hurdle on a closing basis to set up a stage for a new advance. I would expect in the intervening months to October for Gold to continuing meandering and correcting to as low as 1445-1455, my longstanding Gold worst case low targets I’ve had since last September.

Near term key levels are 150 on the downside and 158 on the upside. If we close below 150 on GLD ETF then we should be looking for my 1445-1455 areas to be hit this summer before a low. If we clear 158 on the GLD ETF, then the triple bottom at 1520 is likely confirmed and we can start tracking some upside for Gold.

David A. Banister is Chief Strategist at Market Trends Forecast.com

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Using ETF's to Invest in MLP's

If you have been thinking about taking advantage of the dividends associated with MLP's but can't decide on a ticker, maybe an ETF is the way to go. In todays video Dean Zayed, CEO of Brookstone Capital, tells us how to play this using ticker AMJ as well as a couple of others.

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CME Crude Oil, Natural Gas and Gold Report for Friday July 13th

August crude oil prices established a higher high during the initial morning hours, helped by a rebound in risk taking sentiment in the wake of an as expected Chinese GDP report. While China's second quarter growth slowed to a pace not seen in three years, the reading appeared to inspire greater speculation for more economic stimulus. That is seen as a force bolstering the demand prospects for crude oil. The market also appears to be supported by reports of tighter North Sea supplies and greater US sanctions against Iran.

August natural gas prices traded in a tight overnight range as they consolidated yesterday's upside reversal action. This came after the market soldoff in reaction to yesterdays EIA storage data that showed a slightly larger than expected injection of 33 bcf. Total storage stands at 3,135 bcf or 19.7% above the 5 year average. Over the last four weeks natural gas storage has increased 191 bcf. Some traders viewed the EIA storage data as a positive because the weekly injection was about one third of the longer term average injection for this week of the year.

Gold traded nearly flat, but remained on course for a second consecutive week of losses as worries about the euro zone debt crisis and the absence of stimulus measures in the United States buoyed the dollar and its safe haven appeal. Spot gold was little changed at $1,570.14 an ounce, heading for a weekly decline of 0.8 percent.

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Gold Cycles Will Soon Forecast Where Prices Are Headed

Gold and stock market forecaster have been using cycles in price that repeat every certain amount of trading days to help them spot key reversal areas in the financial market. Almost everything in life seems to go in cycles and commodity prices and the stock market are no different.

As we all know the market is very difficult to forecast when using only one set of analysis like cycles. Analyzing price action, volume, market sentiment, market breadth, trends and inter-market analysis are the other key areas which one must understand before they can be in the zone (ZEN) with the financial market and properly forecast future prices.

This report will show you just how well cycles work if applied and traded properly.

How to Buy Dips and Sell Rips in Gold Using Cycle Analysis

The chart below is of gold and shows its short term trading cycles. I will admit this chart is hard on the eyes and as ugly as they get to bear with me.

Three different cycles have been applied to the chart using a short, intermediate and long term cycle wave length. The general idea here is that you want to trade with the underlying trend, then use these short term cycles to profit from weekly price swings.

Gold has been in a down trend for a year so the focus should be on shorting the bounces. Focusing on selling short gold during a time with 2 or more cycles are topping as you stand a great chance of the price moving in your favor within 1-3 days.

Once the price starts to move in your favor you want to scalp to profits once the short term (green) cycle drops near a reversal level. Once this takes place I always tighten my stops to breakeven, lock in some profits and continue to wait for another cycle to reach the bottom at which point I take more profit off the table and tighten my protective stop once again.

As you can see this is not the perfect system but it makes money, and if you apply more analysis to the market you can lock in more of these moves using intraday charts, volume, and sentiment levels.

How to Find Market Cycles

You must have an analysis tool that can read the market and find cycles within it. Once you know how many days the most frequent cycles are occurring you can then use a custom cycle indicator to overlay them on the charts as seen in the gold chart above. The visual overlay is the key to spotting market reversals and areas to add to a position or trim profits. Look at the chart below for a visual of how I find my cycles.

Gold Cycle Forecast Conclusion:

In short, gold overall remains in a down trend. But from looking at the gold chart and its short term cycles I have a feeling we will be seeing price trade sideways this week and a bounce next week.

The next week will be very interesting as these cycles will actually give us an early warning if the overall gold market is about to bounce or sell off. The question is what the cycles do in the next few days while gold flirts with support…

It does take some time/experience to read the cycles and get a feel for how they move so don’t worry about it if you don’t fully grasp the idea from this short article. 

Find out more on cycles and trading at The Gold & Oil Guy.com

Chris Vermeulen

Rising Production in the Permian Basin

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The Permian Basin, a long time oil and natural gas producing region in west Texas and eastern New Mexico, is showing signs of new life. The active rig count has grown from 100 rigs in mid 2009 to over 500 rigs in May 2012. According to data from the Texas Railroad Commission and the New Mexico Energy, Minerals and Natural Resources Department, oil production from the Permian has increased fairly steadily over the past few years, reaching the 1 million barrels per day (bbl/d) threshold in late 2011, the first time since 1998.

Sources: U.S Energy Information Administration, based on Baker Hughes, Railroad Commission of Texas, and New Mexic

Growing oil production in the Permian Basin and other Texas plays, most notably the Eagle Ford shale, may be starting to strain existing takeaway capacity and is creating a need for Texas oil to serve more distant refineries. While new pipeline projects are scheduled to come online, current transportation constraints have caused Permian crude oil, which is priced in Midland, Texas, to sell at a significant discount to WTI beginning in January 2012.