Kodiak Oil & Gas Corp. Reports Second Quarter 2012 Financial Results

Kodiak Oil & Gas Corp. (NYSE: KOG), an oil and gas exploration and production company with primary assets in the Williston Basin of North Dakota, today announced second quarter and first half 2012 financial results.

Q2 2012 Financial Results
For the quarter ended June 30, 2012, the Company reported oil and gas sales of $85.8 million, as compared to $22.1 million during the same period in 2011, a 288% increase. Kodiak reported an overall 385% increase in quarter over quarter equivalent sales volumes of 1.2 million barrels of oil equivalent (BOE) for the second quarter 2012, or an average of 12,696 BOE per day (BOE/d) during the second quarter 2012, as compared to 238 thousand BOE, or an average of 2,618 BOE/d in the same period in 2011. Crude oil revenue accounted for approximately 96% of oil and gas sales in the second quarter 2012.

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For the second quarter 2012, the Company reported net income of $93.1 million, or $0.35 per basic and diluted share, compared with net income of $14.0 million, or $0.08 per basic and diluted share, for the same period in 2011. Net income for the second quarter 2012 includes an unrealized gain of $91.7 million related to the mark to market of derivative instruments used for commodity hedging and $25.9 million in deferred income tax expense. The net effect of the non cash hedging activities credit and non cash deferred income tax expense increased Kodiak's reported net income for the second quarter 2012 by $0.25 per basic and diluted share. Detailed disclosure of the Company's derivative contracts is available in its Filing on Form 10-Q for the quarter ended June 30, 2012.

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ONG: Crude Oil Weekly Technical Outlook For Sunday August 5th

We like to drop in on the staff at Oil N'Gold to see where they think crude oil is headed. And they are looking neutral at this point.....

Crude oil rebounded strongly late last week but upside is still limited below 92.94 short term top. Initial bias remains neutral and more consolidation cannot be ruled out. But after all, even in case of another decline, near term outlook remains bullish as long as 83.65 support holds. As noted before, decline from 110.55 should have finished at 77.28 already. Current rebound from there should extend and break of 92.94 will target 61.8% retracement at 97.84 and above.

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In the bigger picture, price actions from 114.84 are viewed as a three wave consolidation pattern with fall from 110.55 as the third leg. Such decline could have finished earlier than we expected at 77.28. Sustained trading above 90 psychological level will bring stronger rally towards 114.83 resistance level. And break there will resumption whole up trend from 33.2. On the downside, another fall cannot be ruled out yet. But even in that case, strong support should be seen below 74.95 and above 61.8% retracement of 33.20 to 114.83 at 64.38 and bring another medium term rise.

In the long term picture, crude oil is in a long term consolidation pattern from 147.27, with first wave completed at 33.2. The corrective structure of the rise from 33.2 indicates that it's second wave of the consolidation pattern. While it could make another high above 114.83, we'd anticipate strong resistance ahead of 147.24 to bring reversal for the third leg of the consolidation pattern.

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DeCarley Trading is Joining the Zaner Group

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DeCarley Trading has announced that they have teamed up with the Zaner Group. With their new brokerage arrangement, they are able to offer the same great rates for both full service and discount online traders with the extraordinary service our brokerage clients have grown to expect!

For over 30 years, Zaner has provided brokerage services to traders worldwide in the futures, commodities, metals, currencies, energies and forex markets. We are confident the reliable clearing through various FCMs and top notch research offered by Zaner will be great assets to our clients.

Zaner is a member of the National Futures Association (NFA) and is registered with the Commodity Futures Trading Commission (CFTC). In addition, Zaner is a member of the National Introducing Brokers Association, Illinois Chamber of Commerce and has an A+ rating from the Better Business Bureau.

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Phillips 66 Reports Second Quarter Earnings of $1.2 Billion or $1.86 Per Share

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Phillips 66 (NYSE: PSX) announces second quarter earnings of $1.2 billion and adjusted earnings of $1.4 billion. This compares with earnings and adjusted earnings of $1.0 billion in the second quarter of 2011. In addition, Phillips 66’s Board of Directors has approved the repurchase of up to $1.0 billion of the company’s outstanding common shares.

“We’re off to a solid start, running well in a positive margin environment,” said Greg Garland, chairman and chief executive officer. “The location of our domestic refining, midstream and chemicals facilities enabled us to access advantaged feedstocks, creating strong earnings and cash flow. The announcement of our share repurchase plan is evidence of our commitment to strong and growing shareholder distributions.”

As previously announced, Phillips 66’s Board of Directors has declared a $0.20 per share dividend, which is payable in the third quarter.

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EOG Resources Reports Second Quarter 2012 Results, Increases 2012 Crude Oil Production Growth Target to 37 Percent

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EOG Resources, Inc. (NYSE: EOG) today reported second quarter 2012 net income of $395.8 million, or $1.47 per share. This compares to second quarter 2011 net income of $295.6 million, or $1.10 per share.

Consistent with some analysts' practice of matching realizations to settlement months and making certain other adjustments in order to exclude one time items, adjusted non GAAP net income for the second quarter 2012 was $312.4 million, or $1.16 per share. Adjusted non GAAP net income for the second quarter 2011 was $299.2 million, or $1.11 per share.

The results for the second quarter 2012 included impairments of $1.5 million, net of tax ($0.01 per share) related to certain non-core North American assets, net gains on asset dispositions of $75.1 million, net of tax ($0.28 per share) and a previously disclosed non cash net gain of $188.4 million ($120.7 million after tax, or $0.45 per share) on the mark to market of financial commodity contracts. During the quarter, the net cash inflow related to financial commodity contracts was $173.2 million ($110.9 million after tax, or $0.41 per share). (Please refer to the attached tables for the reconciliation of adjusted non-GAAP net income to GAAP net income.)

With 86 percent of North American wellhead revenues currently derived from crude oil, condensate and natural gas liquids, EOG delivered strong earnings per share growth of 64 percent for the first half of 2012 compared to the same period in 2011. Discretionary cash flow increased 29 percent and adjusted EBITDAX rose 28 percent over the first half of 2011. (Please refer to the attached tables for the reconciliation of non-GAAP discretionary cash flow to net cash provided by operating activities (GAAP) and adjusted EBITDAX (non-GAAP) to income before interest expense and income taxes (GAAP).)

"EOG's financial and operating results get better and better. We are achieving this consistent string of home runs because EOG has captured the finest inventory of onshore crude oil assets in the entire United States and has the technical acumen to maximize reserve recoveries," said Mark G. Papa, Chairman and Chief Executive Officer. "EOG is the largest crude oil producer in the South Texas Eagle Ford and North Dakota Bakken with the sweet spot positions in both plays. In addition, we are uniquely positioned to market a significant portion of this crude oil at robust Brent type pricing through our own rail offloading facility at St. James, Louisiana, and to reach the Houston Gulf Coast market via the recently completed Enterprise Eagle Ford pipeline."

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U.S. Proved Reserves Increased Sharply in 2010

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On August 1, the U.S. Energy Information Administration (EIA) released its summary of the nation's proved reserves of oil and natural gas for 2010. Proved reserves of both oil and natural gas in 2010 rose by the highest amounts ever recorded in the 35 years EIA has been publishing proved reserves estimates.

Technological advances in drilling and higher prices contributed to gains in reserves. The expanding application of horizontal drilling and hydraulic fracturing in shale and other "tight" (very low permeability) formations, the same technologies that spurred substantial gains in natural gas proved reserves in recent years, played a key role. Further, rising oil and natural gas prices between 2009 and 2010 likely provided incentives to explore and develop more resources.



Oil proved reserves (which include crude oil and lease condensate) rose 12.8% to 25.2 billion barrels in 2010, marking the second consecutive annual increase and the highest volume since 1991. Natural gas proved reserves (estimated as "wet" natural gas, including natural gas plant liquids) increased by 11.9% in 2010 to 317.6 trillion cubic feet (Tcf), the twelfth consecutive annual increase, and the first year U.S. proved reserves for natural gas surpassed 300 Tcf.

Proved reserves reflect volumes of oil and natural gas that geologic and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. It should be noted that the 2010 summary was delayed due to budgetary restrictions that limited EIA's survey data collection efforts.

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Silver Suffers The Most From Bernanke And What Is Next

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While the exchange traded funds for gold and copper fell today due to investors expressing disappoint at the modest response of the Federal Reserve to declining economic growth, it was silver that was off the most.

SPDR Gold Shares (GLD) fell in trading today by 0.89%. IPath Dow Jones Copper (JJC) dropped 1.89%.  Plunging the deepest was iShares Silver Trust (SLV), off by 2.14%.

Traders were hoping for more aggressive action by Federal Reserve Chairman Ben Bernanke. But that will not come until after the November elections in the United States. Remember that Quantitative Easing 2 did not begin until November 2010, though it was announced at the Jackson Hole economic policy summit in August of 2010.

Silver is in what would seem to be the “sweet spot” between gold and copper.  Almost all of gold is used for investment or decorative purposes.  Almost all of The Red Metal goes for industrial needs.   For silver, it comes almost down right in the middle between commercial and a commodity for investments or jewelry.  The charts below show the trading relationship for each of the exchange traded funds when paired against each other.

Even though silver has a much higher industrial usage, the SLV moves along with the GLD.   As a result, it soared during Quantitative Easing 2.  Obviously, the charts reveal that most of the trading is from speculators as the JJC should move in an inverse relationship with the GLD.  That is due to gold being used almost entirely for non-industrial end uses while copper is used almost industrial for industrial uses.

Up slightly for the week as traders thought more dramatic economic stimulus efforts would result from the Federal Open Market Committee meeting  other than an extension until the end of the year for Operation Twist, the SLV is down for the last month, quarter, six months and 52 weeks of market action.  Year to date, the SLV is off by 1.48%.

For the last year, however, the SLV is down 33.35%.  Volume was up today, with the SLV below its 20 day, 50 day and 200 day moving averages.  In the most obvious trend, it is trading much lower under its 200 day day moving average at 11.67% down than underneath the 20 day moving average, beneath it by only 0.17%.  The only move worth noting in the technical indicators for silver were the long engulfing green bodies last week after Treasury Secretary Geithner’s  gloomy testimony on The Hill and more bad economic news from the US peaked buying as traders thought Quantitative Easing 3 was coming.

If traders long on silver are looking for help from Bernanke, it will not be coming until after the November election, though it could be announced when he speaks later this month at Jackson Hole.

Chris Vermeulen


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Murphy Oil Announces Preliminary Second Quarter 2012 Earnings

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Murphy Oil Corporation (NYSE: MUR) announced today that income from continuing operations was $295.4 million ($1.52 per diluted share) in the 2012 second quarter, up from $280.0 million ($1.44 per diluted share) in the second quarter 2011.

The increase in 2012 earnings from continuing operations was mostly attributable to improved downstream results compared to the prior year’s quarter. Net income in the second quarter of 2012 was also $295.4 million ($1.52 per diluted share) compared to net income of $311.6 million ($1.60 per diluted share) in the second quarter of 2011. Net income in the 2011 second quarter included income from discontinued operations of $31.6 million ($0.16 per diluted share), which related to operating results of two U.S. refineries that were sold in the second half of 2011.

For the first six months of 2012, income from continuing operations was $585.5 million ($3.01 per diluted share), an improvement from $518.5 million ($2.66 per diluted share) in 2011. For the six month period of 2012, net income totaled the same $585.5 million ($3.01 per diluted share), but net income of $580.5 million ($2.98 per diluted share) for the first six months in 2011 included income from discontinued operations of $62.0 million ($0.32 per diluted share).


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Devon Energy Earns $477 Million in Second Quarter, Crude Oil Production Increases 26 Percent

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Devon Energy Corporation (NYSE:DVN) today reported net earnings of $477 million for the quarter ended June 30, 2012, or $1.18 per common share ($1.18 per diluted share). This compares with second quarter 2011 net earnings of $2.7 billion, or $6.50 per common share ($6.48 per diluted share). A one time gain of $2.5 billion resulting from the divestiture of assets in Brazil enhanced the company’s second quarter 2011 earnings.

Devon’s second quarter 2012 financial results were impacted by certain items securities analysts typically exclude from their published estimates. Adjusting for these items, the company earned $224 million or $0.55 per diluted share in the second quarter 2012. The adjusting items are discussed in more detail later in this news release.

Strong Oil Growth Drives Production Increase

Devon continued to deliver strong oil production growth in the second quarter 2012. In aggregate, oil production averaged 149,000 barrels per day, a 26 percent increase compared to the second-quarter 2011. This increase is largely attributable to growth from the company’s Jackfish and Permian Basin projects.

Total production of oil, natural gas and natural gas liquids averaged 679,000 oil equivalent barrels (Boe) per day in the second quarter. A number of production interruptions primarily related to natural gas processing facilities reduced the company’s second quarter production by 16,000 Boe per day. The most significant occurrence was maintenance downtime at Devon’s Bridgeport facility in North Texas which reduced natural gas liquids production by approximately 10,000 barrels per day in the quarter. Due to the low natural gas liquids price environment, the second quarter was an opportune time for plant maintenance activities. Other minor disruptions at third party facilities in the Permian Basin, Mid-Continent and Gulf Coast regions also contributed to the reduced volumes. In spite of these issues, which have now been resolved, companywide production increased three percent compared to the second quarter 2011.

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Heat Wave Can't Get You $8 Natural Gas in 2012

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From the staff at EconMatters.......

The Energy Department reported that natural gas in storage grew by 26 billion cubic feet to 3.189 trillion cubic feet for the week ended July 20. The inventory level was 15.8% above the five year average of 2.754 trillion cubic feet, and 18% above last year's level.

Low natural gas prices in the U.S. this year has not only tanked the stocks of many gas weighted producers, but also dragged down profits of U.S based oilfield services companies as a result of reduced gas drilling activity (See Chart Below). However, since hitting a 10 year low of below $2/mmbtu in April, Henry Hub benchmark prices has surged 69% hitting $3.214/mmbtu on Monday, July 30, the high of the year.



The latest bullish sentiment is fueled mostly by forecasts for more unusual heat this summer to increase air conditioning use. In addition, there's also an increase in usage/demand as lower natural gas prices have also attracted many utilities to switch from coal to natural gas for power generation. According to the EIA, electricity generated using natural gas was roughly even with coal for the first time ever in April. Historically, natural gas typically supplied just over 20% of the domestic electricity needs.


These positive indicators have prompted at least one article at Forbes to predict $8.00/mcf natural gas by "the approaching winter", that means another 160% rise in about four months.

Well, EIA did raise its estimate for domestic natural gas consumption this year, expecting demand to climb 3.3 bcfd, or 4.9%, from 2011 to 69.91 bcf daily driven mainly by a 21% jump in utilities coal-to-gas switching for power generation in 2012, offsetting declines in residential and commercial use, primarily due to a weak U.S. economy.



Nevertheless, the problem is natural gas starts to lose its cost advantage to coal at around $2.40 to $2.50 per mmbtu. So the current $3.20/mmbtu levels, if sustained, could take away one significant bullish swing factor in the natural gas fundamentals--demand from the power gen sector. If that happens, it is very likely there could be another record storage level before "the approaching winter," let alone $8/mmbtu.



The natural-gas market this year is now outpacing even the returns in oil and copper (i.e. Every dog has its day). However, our observation is that the NYMEX natural gas market a lot of times could be in a somewhat irrational "trend trading" mode driven mostly by traders totally disregarding the fundamentals. The current run-up seems to be in one of those "trend-trading" momentum, and likely will not last long after reality sets in. For now, we see Henry Hub continue to hover within the $2-$3/mmbtu range in the next twelve months barring a super sized hurricane knocking out production in the U.S. Gulf.

Check out more articles at EconMatters.Com

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