No Relief for British Petroleum in Sight

BP plc's (BP-$28.50) first relief well has detected metal casing from the Macondo wellbore in the Gulf of Mexico. A scheduled attempt to intersect and plug the damaged well come August, however, could be delayed if the U.K.-oil major fails to address the concerns of a congressional subcommittee investigating the Deepwater Horizon spill.

Rep. Ed Markey (D-Mass.), who chairs the House Energy and Environment Subcommittee, is growing impatient with BP's remarked lack of preparedness for all things "oil spill." For example, at a House hearing held yesterday, Markey and other committee members heard BP America CEO Lamar McKay confess the company has no response plan in place, should a hurricane or tropical storm pass over the oil spill zone.

The well reached a depth of 16,275 feet on June 23 before a ‘ranging' run spotted the approximate locale of the MC (Macondo) 252 well. As explained by Kent Wells, BP senior vice president in charge of subsea spillzone efforts, electromagnetic range testing isn't an exact process. It requires:

• Placing a cable into the end of the wellbore;
• Sending out an electric current; and,
• Picking up the subsequent magnetic field signature around the wellbore.

Although the first well has closed to within about 20 feet horizontally of MC-252, drilling in rock several miles down to determine the exact location of 6-inch piping in the damaged wellbore is worse than stumbling in a darkened gymnasium -- limited to using only one hand, walking along the four walls -- to find the light switch. Nonetheless, the company remains ahead of schedule. Subsequent drilling and ranging runs will continue over the next few weeks, steered toward a target intercept depth of approximately 18,000 feet, said Wells.

Video feeds from the sea floor are showing hydrocarbon columns bubbling up from fissures removed from the drill site. There are worries the original methane gas explosion aboard the Deepwater Horizon rig has compromised the structural integrity of the well and pipe casings. Echoing this concern, Markey forwarded a letter of inquiry to BP's Tony Hayward dated June 23, demanding the chief executive provide documentation on wellbore condition and relief well efforts, including answers to:

• Likelihood that filling the relief wells with drilling mud will result in fractures and a subsequent loss of pressure;
• Measurements, images, and other documents related to the condition of the casing inside the wellbore, as well as any future plans for such measurements going forward;
• Any survey(s) to identify hydrocarbon leakage from the sea floor; and,
• All documents related to the geologic formation in which the Macondo well is located, including reserve estimates of the total amount of oil and gas contained in the target reservoir.

The goal is to drill the first relief in parallel with the damaged piping -- to within five feet horizontally and 200 feet vertically of the intercept point.

During one of his daily briefings with the press last week, incident commander Admiral Thad Allen, said "kill" operations were expected to begin the second week of August, when BP will try plugging the old well with heavy drilling mud and cement.

Given its pathetic record of transparency, whether Hayward and the board can provide assurances that hydrocarbons flowing directly into the ocean from the wellbore or the sea floor won't complicate plug activities is doubtful. Efforts to stop the spill in the Gulf are being described as "chaotic." But it's the new Bureau of Ocean Energy Management (erstwhile Minerals Management Service) charged with approval and oversight of BP's contingency plans.

Whether President Obama chooses to heed the cautions of Markey or the Ocean Bureau is entirely his call -- after all, he is the boss of the regulatory agency. This being a mid-term election year, in my opinion, the president might just err on the side of caution and request BP management to delay the intersect of the first relief well with the damaged wellbore until BP starts acting like a more responsible partner in this cleanup fiasco.

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Hurricane Alex Isn't BP's Only Worry These Days in Gulf Waters

BP plc (BP-$28.88) spokesperson Toby Odone acknowledged to reporters last week that the 45-ton blow-out preventer sitting atop the damaged Macondo wellbore was leaning, up to 15 degrees by some accounts.

We know little about the underlying geology of the spill site in the Gulf of Mexico, as BP has held that information close, claiming that it’s “proprietary” data. Scientists are clamoring for BP to publicly release geological survey data on the underlying “Lower Teriary” formations (rock layer formed 65 million to 250 million years ago). Remotely operated vehicles (ROVs) are streaming video feeds of high pressure columns of oil and gas bubbling up from fissures in the sea floor — which outside scientists fear could be flowing from stress fractures in the underground piping.

Could an already weakened sea bottom beyond the wellbore (eroded by up to 100,000 pounds per square inch of corrosive fluid pressure seeking escape upward from the leaks in the undersea piping) crack wide open like ice on a pond, spewing millions of additional barrels of oil into Gulf waters? Read More …

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

U.S. Drill Plan Impacts Transocean's Drilling Worldwide

Transocean’s (RIG - $52.00) ‘at-risk’ contract backlog from U.S. offshore Gulf operations was a nominal 6.4 percent, or $1.8 billion out of total company backlog of $27.9 billion as of June 1. However, should the Obama administration gain the upper hand in reinstating its deepwater drilling ban in offshore U.S. waters, profit-performance could be impacted on a global scale.

Read More ….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

BP's Oil Spill Costs in Gulf Accelerating -- Next Stop: $3.0 Billion

British oil major BP (BP-$29.68) said response efforts toward the oil spill in the Gulf of Mexico – including containment, relief well drilling, grants to the Gulf states, and payment claims – had soared to approximately $2 billion so far, up from $450 million on May 13.

Sanford C. Bernstein Ltd. expects the bill to rise to $3.5 billion by the time relief wells are scheduled to stop the flow of oil and gas from the sea floor in August.

Will BP bankruptcy talks resurface if the company can't turn the corner - and capture more oil than what's spilling into Gulf waters? Read More ….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

BP Walking Plank to Insolvency?

As of June 14, BP (BP-$31.71) has paid out approximately $1.6 billion – spill response, containment, relief well drilling, grants to affected Gulf states, claims paid, and federal — in costs related to the oil spill in the Gulf of Mexico. In addition, BP is financially vulnerable to substantial putative penalties, even without a showing of wrongdoing on its part.

BP shares have lost approximately $90 billion in value, or 51 percent, since the Deepwater Horizon accident touched off the Macondo field blowout in late April.

Cost to bond traders for five-year insurance protection against nonpayment (per contract covers $10 million in face value), better known as credit default swaps (CDSes) is soaring: the price to insure $10M in BP debt this morning was $575,000, up from $43,200 on April 22, the day the Transocean -leased semi-submersible drilling rig sank.

Insurance on BP’s one-year swaps is more expensive than for its five-year debt, another sign of the company’s alleged “short-term credit distress” risk. Is the U.K.-based oil major walking the plank to bankruptcy? Read More ….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

What Do Supermodel Gisele Bündchen, Suntech Power, and Yingli Green Energy Have in Common?

Does anyone remember the good old days – back in 2007 and 2008 – when über-supermodel Gisele Bündchen demanded to be paid in euros? So keen was she on avoiding the US currency because of uncertainty over its strength…. Flash forward to 2010.

Suntech Power Holdings (STP-9.33) could see a 79 percent drop in profits if the euro establishes U.S$1.25 as a new ceiling – even with hedging efforts – according to a recent Bloomberg Businessweek interview with Barclays analysts.

That the falling euro has been difficult to manage is further underscored by recent efforts at solar-cell rival, Baoding-based Yingli Green Energy Holding (YGE-$9.67):

Continue Reading at BNET ENERGY….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

BP Acting Like Three Stooges -- Why Not Learn From Them, Too?

For weeks BP and the White House had confidently told the American public that the oil spewing out of the busted wellbore from the sunken Deepwater Horizon rig was 5,000 barrels per day (210,000 gallons). An internal BP document, dated April 27, showed that number to be misleading. Rep. Ed Markey said at a House Natural Resources Committee meeting on May 26 that BP scientists actually thought the leak to be upwards of 14,000 bpd. Outside analysts estimate the daily spill rate could be much higher — up to 95,000 barrels, or nearly 4 million gallons!

"If at first you don't succeed, keep on suckin' til ya do suck seed!" ~ Curly

Is President Obama just "a victim of coicumstance?" With his poll numbers sinking — and no tangible evidence that BP is even close to plugging the spill — the Obama administration has turned to friends in Hollywood for help. Word has leaked that Avatar director James Cameron is now consulting with U.S. officials on possible solutions to the spill.

Instead of Cameron, maybe its time to call in Moe, Larry, and Curly: “At yer service, day or night, we do the job and do it right...”

View Three Stooges Video on How to Plug Oil Gusher ….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

LDK Solar Forecasting Profitable 2010

LDK Solar (LDK-$5.10) believes firmer selling prices and falling production costs will help the wafer and module maker repair compressed margins in the next few quarters.

Despite market fears that demand would drop off after incentive cutbacks in essential European markets, such as Germany and Italy, come second-half 2010, chairman and CEO Xiaofeng Peng is calling for wafer and module shipments of 1.7 GW to 1.8 GW and 200 MW to 300 MW, up from 2009 year-ending estimates of 1.1 GW and 34 MW, respectively.

“The improvement in ASP trends throughout the year should allow us to expand our gross margin in the next few quarters,” said chief financial officer Jack Lai on the recent earnings call with investors. “Recent polysilicon feedstock prices reportedly below inventoried first-quarter costs of $65 per kilogram should help to boost gross margins in the next few quarters by as much as 300 basis points, up from the 15.7 percent posted in the first quarter.”

Will innovative manufacturing gains, such as increased throughput and conversion efficiency yields, help LDK avoid the commodity cliff being predicted for solar wafer makers by many semiconductor industry pundits? Read More ….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Eurozone Currency Weakness is Latest Problem for Trina Solar and Other Chinese Module Makers

China-based Trina Solar (TSL-$15.73) is a module maker whose currency mismatches are overshadowing planned shipments of 750 MW to 800 MW for the whole of 2010 (year-on-year growth of 88 percent to 100 percent). The company has significant exposure to Europe, where it derives more than 80 percent of sales. Unfortunately, even active hedging efforts won’t shield its financials: approximately 60 percent of second-quarter euro exposure is covered at contract rates of $1.30-$1.40, according to chief financial officer Terry Wang.

Total earnings for 2010 could fall more than 84 percent, if the Euro averages less than $1.25, according to Barclays Capital analysts.

The company’s guidance for gross margin in second-quarter 2010 is in the high 20 percentages. With the euro settling below $1.20 in Monday’s trading, could Trina Solar and a host of other China-based solar manufacturers face margin compressions worse than even those forecasted by Barclays Capital? Read More ….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Pivotal Meeting for Novartis' MS Drug Gilenia Next Week

The FDA has extended the review period for Novartis AG’s (NVS-$45.97) investigational multiple sclerosis (MS) drug Gilenia by three months.

Efficacy, however, is unlikely the point of contention. Regulators and physicians alike are likely concerned on scaling the balance of efficacy and the drug’s long-term safety profile. Similar to Merck KgaA’s cladribine, Gilenia interferes with the proliferation of certain white blood cells, particularly circulating lymphocytes (T cells and B-cells), which are thought to be involved in the immune-mediated and inflammatory pathological process of MS. The immune suppression activities of both experimental drugs theoretically could leave MS-treated patients vulnerable to opportunistic infections and cancers.

The Advisory Committee meeting is still planned for June 10 to discuss the benefit/risk profile of Gilenia. Assuming no new evidentiary surprises with safety, will the drug hit U.S. pharmacy shelves by year end? Read More….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Financial Transparency and Change Coming to LDK Solar? Thing Again.

That LDK Solar (LDK-$5.55), the world’s largest producer of multicrystalline solar wafers, kept up with most of its peers and blew past consensus sales and earnings estimates for first-quarter 2010 wasn’t too much of a surprise. The anticipated reduction of Feed-in-Tariffs (FIT) in Germany come July prompted customers to accelerate photovoltaic (PV) installations before that solar subsidy became financially less attractive.

Quarterly revenue rose 22.7 percent year-on-year to $347.6 million and reported net income was $7.2 million, or six cents a share, handily beating forecasts of $325.8 million and share-net of a penny, according to analysts surveyed by Thomson Reuters.

Given an improving revenue and earnings picture, will the integrated solar cell maker finally move to improve its balance sheet health – as it had repeatedly promised to do numerous times in quarters past? Read More > ….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Worried About Man-Made Disasters? Avoid Draw Muhammad Day

May 20 is being celebrated around the globe -- by infidels -- as "Draw Muhammad Day."

In honor of Draw Muhammad Day, we offer up this humble quote attributed to he who the fanatically devoted kill -- in his name -- and a shot at martyrdom and 72 virgins: "Worship God as though you see Him, and if you cannot see Him, then indeed He sees you." This quote is attributed to which religious leader:

Moses ___

Muhamad ___

Jesus ___

BP Finger-Points Blame on Transocean

Although the investigation into the oil spill disaster in the Gulf of Mexico is still in the early stages, standard industry practice is such that unless BP can prove gross negligence by Transocean (RIG-$66.10), it and minority interest-holder Anadarko Petroleum bear ultimate liability for clean-up and recovery costs for the environmental damage resulting from the spill, not to mention likely punitive damage payments to all affected parties, such as fishery and tourism industries.

In predictable fashion, the finger pointing has already begun. Read More > ….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

National Enquirer Offers Million Dollar Bounty For Alleged Obama Love Tryst Video

In March 2010, average weekly print circulation — newsstand and subscription — of the National Enquirer declined year-over-year 16.1 percent to 732,000 copies. By comparison, total paid and verified weekly circulation averaged about one million in 2007, according to media observer Audit Bureau of Circulations (ABC).

Declining circulation isn't just endemic to the Enquirer. Overall average paid daily circulation for the top 25 dailies fell 8.7 percent year-over-year for the six months through March, according to ABC. Weekday sales at the New York Times (NYT) and the Washington Post (WPO) fell 8.5 percent and 13.1 percent to 951,063 and 578,482 copies, respectively. In fact, only the The Wall Street Journal managed to eke out a gain, of about 0.5 percent.

What the Enquirer needs to pump up weekly tabloid sales is a good scandal – say, on the order of John Edwards and his love child. The Enquirer’s latest investigative controversy is a rehash of an alleged presidential cheating scandal between then Senator Barack Obama and a former campaign aide, Vera Baker (circa. 2004). The paper has offered a $1 million reward for alleged security video footage of the two entering a Wahington DC hotel together.

Can the Enquirer survive in the age of media-savvy competitors like TMZ and Perez Hilton? "Enquirering Minds Want to Know!"

Post Update: An "open-minded" reader -- (after looking at his blogroll links I suspect he probably thinks that the grand social experiments engineered by the likes of Chairman Mao and Stalin - in which millions were either slaughtered outright or starved to death very slowly -- were wonderful attempts towards the utopian plain of equality) -- had this assessment of my Nat'l Enquirer blog posting:

Ted K: I'm ashamed to say I had you on my blogroll. Not after this trash. Good luck keeping your blog going with this type "fair."

Me: Hey, Ted! What do you call a Muslim woman who previously favored western-style clothing, but after having an arm chopped off by the Iranian religious police only wears a burqa?

Answer: "Educated!

There you go -- How's that for transparency and fairness? Oh, my mistake -- only President Obama has a lock on those virtues.

Read More at BNET MEDIA > ….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

More Calls For CEO Blankenship's Resignation at Massey Energy

It has become a ritual at Massey Energy’s (MEE-$35.77) annual shareholder meeting for interest groups to stage protests and call for the resignation of chairman and chief executive Don Blankenship. Environmentalists and union activists have long alleged that Blankenship habitually fights against needed regulation of strip mining (gutting mountain tops for coal removal) and enforcement of safety rules that protect the miners – a disdain motivated by his desire to maximize the coal operator’s profits, according to his detractors.

An explosion at a West Virginia coal mine last month killed 29 miners and is expected to interrupt metallurgical coal shipments and sales through year-end 2010. Could Blankenship face additional calls to resign – this time from members of the board of directors?

Read More at BNET ENERGY > ….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

"Spill, Baby, Spill" - Or Not, Says BP

British energy giant BP ($49.78) initially accepted responsibility for the April 5 explosion aboard the offshore drilling rig Deepwater Horizon. However, with efforts to shut down the well failing, and more than 5,000 barrels (210,000 gallons) of oil per day still spewing out of the broken pipe – and recovery costs climbing to $6 million a day and beyond – the British energy giant might be having second thoughts about paying all “legitimate and objectively verifiable claims.” In television interviews this week, BP executives noted that the disaster, in which 11 workers died, wasn’t directly BP’s fault, as drilling contractor Transocean was operating the rig on its behalf.

The spill is disastrous to the locals in coastal towns. The fishing industry in Louisiana could be impacted to the tune of $2.5 billion, and Florida’s tourism losses are expected to total around $3 billion, according to Sierra Club executive director Michael Brune.

How much will this spreading oil slick – potentially rivaling the 1989 Exxon Valdez spill into Prince Edward Sound, Alaska – ultimately cost BP, less insurance? Read More > ….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Can Bristol Myers' Drug Pipeline Save Company?

Bristol-Myers Squibb (BMY-$25.31) derives almost 47 percent of its revenue from two key products: Plavix (sales of $6.1 billion in 2009), a platelet aggregation inhibitor for the prevention of stroke, heart attack and vascular disease, and the anti-hypertension drug Avapro ($1.3 billion). Chief executive officer Lamberto Andreotti says the company’s ambitious go-to-market model will mitigate expected erosion in sales and share-net earnings from the lost marketing exclusivity of these cardiovascular drugs come 2012. Read More >….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Forget Fed Loans -- Think Cool Cup Holders at GM

General Motors (GM) denies a deliberate intent to mislead the American public with recent televised advertisements, countering that terms of its accelerated repayment of government loans terms had been fully disclosed. To the contrary, having forfeited the confidence of the American public when it relied on taxpayer funding for its long-term survival, the company is desperate to improve its image — and sell more cars. Read More >….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Could Bristol-Myers' Growth Flatline Post-Plavix?

In 2009, Bristol-Myers Squibb (BMY-$24.50) derived almost one-third of its total sales, or $6.1 billion, from the blood-clot inhibitor Plavix (clopidogrel), co-marketed with French drug maker Sanofi-Aventis (SNY). Can growth from existing drugs help mitigate revenue and earnings lost to generic copycats when the drug maker's best-selling cardiovascular drug loses market exclusivity come 2012? Read More >….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Novartis' Search In a Post-Diovan World Continues

Findings from ASPIRE (Aliskiren Study in Post-MI Patients to Reduce Remodeling), one of 14 trials evaluating Novartis AG’s (NVS-$51.97) Tekturna’s potential benefits beyond blood pressure reduction, showed that although addition of the hypertensive drug did help limit changes to the heart’s shape and function in patients after heart attack (post-myocardial infarction), the results were not statistically significant.

The collective findings in the post-MI population do not support dual-agent suppression of Tekturna with other drugs inhibiting the renin-angiotensin system at this time, concluded Dr. Solomon, presenter of ASPIRE trial.

Going forward, what does this mean for Novartis’ attempt to boost sales when blockbuster BP drug Diovan loses market exclusivity? Read More > ….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Talk of Oil Drilling at Chesapeake Energy Nothing But Gas

Chesapeake Energy’s (CHK-$23.50) near-term outlook calls for a shift in some production to oil and natural gas liquids, such as propane and butane. The number two natural gas producer will initially focus drilling activities on unconventional shale prospects, such as its holdings in the Granite Wash formations of the Texas Panhandle and western Oklahoma.

In the various Granite Wash plays of the Anadarko Basin, Chesapeake is the largest leasehold owner with approximately 190,000 net acres and is also the most active driller and largest producer. Speaking at recent energy conferences, chairman Aubrey McClendon identified particularly prolific gas- and oil-rich areas — with reservoirs potentially loaded with upwards of 90 barrels per million cubic feet — that have become the two highest rate-of-return plays in the company.

What McClendon, crowned “Mr. Gas” in a 2008 Fortune article, forgot to mention, however, is that profitable retrieval of these oily reservoirs will require much higher natural gas prices.

Read More: Chesapeake Energys’ Move to Oil Needs Higher Gas Prices

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Solar Module Acquisition Better for LDK Solar or Chairman?

By controlling each node of the manufacturing value chain — and locating its new polysilicon plant adjacent to its existing low-cost (wages) wafer facility in Xinyu City, China — LDK Solar (LDK-$8.43) was confident it could reduce overall production costs, improve product quality (such as conversion efficiency rates), and enhance its core competitiveness in an increasingly crowded (and commodity-like) market for solar wafers.

In 2009, aggregate annualized production was about 6,000 metric tons — significantly lower than forecasted nameplate capacity of 16,000 metric tons. In addition to construction delays, costs for the silicon plant ha approached $2 billion — well above the forecasted budget of $1.2 billion.

In the fourth-quarter of 2009, LDK reported wafer average selling prices (ASP) of US$0.83 per watt, down from US$2.24 per watt in 2007. The significant decline in wafer prices forced the company to write down the carrying values of its inventories by almost US$500 million in the last two years.

Despite its inability to capture wafer cost advantages through the ownership of more of its upstream supplier chain, chairman and chief executive officer Xiaofeng Peng insists LDK should move downstream. In February LDJ purchased a crystalline module manufacturing plant owned by Peng for $21.5 million.

Is the decision best for LDK or Peng? Read More > ….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Cabot Oil Still Has "Gas" in its Future

Cabot Oil & Gas (COG-$39.63) is showing early success from its Haynesville Shale assets located in East Texas, with its first horizontal well currently producing at 19 million cubic feet (Mmcf) per day, according to chairman and chief executive officer Dan Dinges.

Cabot’s asset portfolio is spread principally between low-risk/long reserve-life (27 years) Appalachian assets (Marcellus Shale) and high-volume/rapid-payout (estimated reserve life of 13 years) prospects in the Gulf Coast (East and Southeast Texas). Although most of its of its 2010 capital budget is geared toward expanding takeaway pipeline capacity and ramping up production at its core Marcellus holdings in Susquehanna county, PA, management has still budgeted about $181 million of capital funds for drill-bit activity on Haynesville Shale prospects in East Texas.

Dinges said at a recent energy conference that the company expects drilling results from three other Haynesville Shale wells during this quarter.

But other stuff is happening that could derail the company’s ambitious drill program this year.

Read More > ….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Chesapeake Energy Looks Toward 'Oily' Future

“The economics just compel you to look for oil rather than natural gas right now,” Chesapeake Energy’s (CHK-$24.09) chairman and chief executive officer Aubrey McClendon told attendees at Hart Energy’s annual Developing Unconventional Gas conference in Fort Worth last week.

McClendon admitted on the company’s February earnings call that $5.00 per million BTU pricing on the New York Mercantile Exchange (NYMEX) equates to $3.50 gas at the wellhead, once differentials like gathering and compression costs are included in the cost calculus. “Even $3.50 gas at the wellhead does not create enough cash flow in the industry to maintain today’s drilling price — even for the best-managed shale plays,” he said.

Why is the nation’s second largest natural gas producer suddenly priming the drill-bit for oil? Continue Reading > ….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Denbury Resources Asset Sale Doesn't Change Outlook

Denbury Resources Inc. (DNR-$17.95) announced its intent to sell certain of its oil and natural gas properties (acquired in the merger with Encore Acquisition) for $900 million to Quantum Resources Management, a privately held Houston-based company. As expected, the properties to be sold are located primarily located in the Permian Basin in West Texas and southeastern New Mexico.

The leader in carbon dioxide-based, tertiary-recovery of aging oil fields said it would use the proceeds to pay down debt acquired in the $4.5 billion acquisition of Encore.

Although welcome news, the post-merged company would still be left with long-term debt of some $3 billion, or almost 40 percent of total capitalization. In addition, there is limited pipeline infrastructure to support planned CO2 -recovery operations in acquired Rocky Mountain assets. What now? Read More >….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Making Commercial Sen$e of Genzymes' apo-B Inhibitor Mipomersen

Mipomersen is an antisense inhibitor of apo-B protein synthesis, the first drug of its type. Genzyme (GENZ-$51.83) intends to first seek approval in the U.S. and Europe for mipomersen in those patients with homozygous familial hypercholesterolemia (HoFH), a rare genetic disorder affecting one in a million people, in the first half of 2011.

Investigators believe mipomersen could be a valuable addition to the drugs used in the management of HoFH and could prove useful in the management of other high-risk, patients with severe hypercholesterolemia (resistant to existing lipid-lowering drugs)

Recent trial results, however, have raised questions about mipomersen’s safety and tolerability, as 76 percent and 12 percent of patients in the mipomersen-treated group had injection-site reactions and increased liver enzymes of three times or more the upper limit of normal (with MRI findings of increased intra-hepatic fat content too).

Two experts on antisense inhibitors of apo-B protein synthesis, R. Dermot Neely (Royal Victoria Infirmary, England) and John J Kastelein, (Chairman of the Department of Vascular Medicine at the Academic Medical Centre Amsterdam), share their insights on the commercial prospects of mipomersen. Continue Reading > ….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Denbury Resources Profiting from Greenhouse Gases

Denbury Resources (DNR-$16.87) has completed its $4.5 billion purchase of Encore Acquisition Corp.

The Plano-based oil company makes its money by injecting carbon dioxide into depleted petroleum fields to recover lost production, and the integration of Encore will more than double the potential of its enhanced oil recovery (EOR) assets.

Anticipated tertiary production from Encore properties in the Rocky Mountains (Montana and Wyoming) fits nicely into Denbury’s overall EOR program, said chief executive officer Phil Ryhoek, and will provide production growth in 2015 and beyond, about the time when the company’s Gulf Coast tertiary fields are expected to hit production peaks.

Can Denbury Resources profit from greenhouse gas emissions? Read More > ,,,,

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Making Commercial Sense of Isis Pharmaceuticals' Cholesterol Drug Mipomersen

Isis Pharmaceuticals (ISIS-$10.31) sold development and marketing rights of its flagship antisense drug mipomersen to Genzyme in January 2008. Mipomersen, a first-in-class apo-B synthesis inhibitor, works by decreasing the production of apo-B, a protein critical to the synthesis and transport of LDL and VLDL cholesterol — the “bad” lipids involved in the buildup of plaque in the arteries and the development of heart disease — through the bloodstream.

Whether mipomersen rises to $1 billion-plus blockbuster status or remains a niche drug with $250 million peak sales will depend on how the FDA feels about approving the drug for use in a broad pool of high-risk patients (refractory to existing lipid-lowering therapy) with uncontrolled LDL.

Continue Reading > ….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Bearish on China Sunergy

With its domestic market becoming even more crowded with silicon, solar cell, and module makers, China Sunergy (CSUN-$3.91) is looking abroad to stabilize margins. In first-quarter 2010, management expects domestic shipments to be only 35 percent of forecasted 68 - 75 MW (down from 56 percent of total 2008 shipments).

Adding scale and market share — at least near-term — will pressure margins. It is difficult to comprehend how recent downstream acquisitions of solar module makers will stabilize margins — as predicted by chairman Lu. Positioning itself as a player in new markets, like Ontario and Italy, will require even more aggressive price breakpoints: Blended ASP during the fourth quarter declined year-on-year 57.5 percent to US$1.26 per watt. Read More >….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Anchors Away for Crude Carriers' Common Stock?

Crude Carriers (CRU-$16.30) is using all of its approximately $254 million in proceeds from its recent IPO to immediately purchase one 2006-built Suezmax vessel, the Miltiadis M II, at a price of $71.25 million. This is to be followed by the acquisition of two new-built, very-large crude carriers (VLCCs) for $96.5 million each, with expected delivery dates in late March and June 2010.

After hitting eight-year lows, spot rates for most VLCC and Suezmax carriers reversed in the fourth quarter. Is now a good time for a new oil tanker venture to set sail?

Read More at BNET Energy > ….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

No Fun in Sun at Solarfun Power Holdings

Solarfun Power Holdings’ (SOLF-$6.54) finance officer Gareth Kung stressed on the fourth-quarter earnings call that 50 percent of shipments to German-based customers were, in fact, installed in other European end markets. Contrary to expressed optimism, however, megawatt volumes installed in these other markets may prove too small to offset lost sales in Germany through (at a minimum) 2012.

In particular, proposals to decelerate subsidies or delayed feed-in-tariff initiatives in markets outside Germany signal less – not more – visibility in growth for channel demand of Solarfun’s PV modules: Continue Reading > …

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Chesapeake Energy's "Clean and Green" Campaign Fails to Convince Critics

If environmentalists have their way, the flame in Chesapeake Energy’s (CHK-$23.79) “green” logo would be snuffed out. Critics howl that the energy company’s drilling method (like all shale exploration companies), known as hydraulic fracturing, used to extract its gas deposits is toxic.

Thanks to dead cows, water-well explosions, and contaminated groundwater from drilling, Chesapeake Energy’s effort to market natural gas as an environmentally friendly option to “filthy coal” hasn’t gained much traction lately. Now comes word of another public relations disaster for the company: its wastewater wells apparently caused a series of small earthquakes at the Dallas/Fort Worth airport.

Read More at BNET Energy > ….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Burger King Launching New Assault on Breakfast

Burger King (BKC-$19.60) has yet to win any of the breakfast sandwich battles – whether they be against McDonald’s or Dunkin Donuts. Management is hoping that the national rollout of Seattles “Best Coffee” (lesser-known line of Starbuck’s premium-coffee brands) in its U.S. stores and launches of BK’s Breakfast Muffin sandwich and Breakfast Bowl will attract traffic to the otherwise struggling fast-food chain.

With $1 billion in debt maturing and comparable same-store sales still in free-fall, the company needs to put more than just flame-broiled sizzle and discounted sales of its signature Whopper sandwiches on its balance sheet.

Continue Reading at BNET Food > ….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Novartis Crazy to Buy Vanda Pharma?

Shares of Vanda Pharmaceuticals (VNDA-$11.80) rallied 15 percent in the last two days after rumors resurfaced that partner Novartis AG might be interested in a takeover. The drug maker has a total market capitalization of $328 million – less than the value of the companies' drug pact, worth an estimated $465 million. Whether a merger makes financial sense, however, will ultimately depend on the sales performance on Vanda's drug of mutual interest -- the schizophrenia treatment Fanapt.

Is Fanapt more than just another “me-too” second-generation antipsychotic? Continue Reading > ….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Hey Burger King, Where's Herb?

Comparable same store sales at Burger King (BKC-$17.90) operations in North America (more than 7,500 stores) declined three percent versus a year ago.

Consumers are eating out less in this economy — and when dining out they are choosing less expensive restaurants. With the price-value proposition shifting to the value side, Burger King needs to figure out how to retain customers — and their loyalty – in an industry dominated by burger pricing wars.

Patrons at a BK restaurant in Concord, NH, keep coming back for more – as much for a singing server as the food. Of course, such an inexpensive loyalty program makes no sense to management: and Chuck Murphree was told to do it management’s way – no more singing.

Maybe management would prefer another "Where's Herb?" disaster (circa 1985)? Read More > ....






Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

First Solar Forgets an Understanding Is NO Signed Deal

Chief executive Rob Gillette confidently predicted on the fourth-quarter 2009 earning call that demand for larger-scale utility projects, particularly in North America, India, and China, will provide sustainable, long-term growth for First Solar’s (FSLR-$109.00) products. But lack of financing, planned cuts in subsidies, and regulatory issues could eclipse estimated manufacturing demand by quite a bit.

Investors ought be reminded, too, that a Memorandum of Understanding is not a signed agreement.
Read More > ….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Are Hot Dogs From Kraft Foods and Sara Lee Choking Risk For Kids?

A new policy statement from the American Academy of Pediatrics (AAP), published in the February 22 online issue of Pediatrics, takes a closer look at preventing choking among children. Their startling find is on average, a child will die every 5 days in the United States from choking on food. Fear-mongering for political ends, or plain truth in advertising?

The AAP is now calling on food manufacturers of hot dogs and other high-risk foods to affix “choking hazard” labels to packaging, and urging that companies redirect some research and development expenses toward the redesign of foods, such as drafting new shapes, sizes, and textures less to get wedged in a kid’s passage airway.

Some hot dog brands, such as Oscar Mayer (Kraft Foods) or Ball Park Franks from Sara Lee, already have warning labels about choking. Not enough is the apparent sentiment vocalized by the policy paper’s lead author Gary Smith.

It turns out, though, that the AAP took that data from a paper almost thirty years old! Read more at BNET Food > ….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

First Solar Turns To New World for Solar Growth

In 2009, First Solar (FSLR-$105.90) generated almost 65 percent of its $2.06 billion in sales from German photovoltaic (PV) projects, from roof-top panels to arrays of solar panels on farms, according to its annual regulatory filing. In 2010, the cadmium-telluride (CdTe) thin-film module manufacturer will still derive about 40 percent to 50 percent of module sales from German customers, despite best efforts to open windows to other sunshine markets. Most of its business from Germany will be front-loaded, CEO Robert Gillette said on the fourth-quarter ending 2009 earnings call, to beat the planned June 1 feed- in subsidy cuts.

Contrary to optimism expressed by First Solar management on its earnings call, installation volume capacities in other European markets, such as France (12 percent of its business) or Italy (6 percent of sales), were too small to absorb lost mega-watt sales from Germany.

“For the big players, there is no real way around Germany, to be honest,” SES Research analyst Karsten von Blumenthal told Reuters.

First Solar expects to ramp up aggregate manufacturing capacity to 34 production lines by 2012, with annual worldwide production capacity of approximately 1.8 gigawatts. Longer-term performance could be hampered by obstacles in other markets outside Europe.

Continue Reading > ….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Avoiding Cannibals at Johnson & Johnson

As patients with auto-immune disorders cycle through anti-TNF therapies and the failure pools increase, there is ample room for Johnson & Johnson’s (JNJ-$63.45) Simponi and Stelara to grow prescription share in their respective markets without cannibalizing sales of the healthcare conglomerate’s flagship drug Remicade (infliximab) sales. As the two drugs expand their labeling to address unmet needs in other markets, their orbits will eventually collide with each other and with Remicade.

However, can Simponi (golimumab) and Stelara (ustekinumab) evolve as dominant therapies and steal share over time from Amgen’s Enbrel (etanercept) and Abbott’s Humira (adalimumab) instead? Read more > ….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Petrohawk Energy Promises Free Cash Flow By 2012

Petrohawk Energy (HK-$22.16) is nursing a mighty hangover after awaking from a 2 ½-year buying binge — $5 billion spent on acquiring leasehold interests in unconventional pay zones, specifically the Haynesville Shale, Fayetteville Shale, and Eagle Ford Shale plays. Petrohawk is like the U.S. Treasury in some respects, having funded its expansive appetite with paper — common stock outstanding has almost doubled since 2006 to 300 million shares — and deficit spending: At September 30, long-term stood at approximately $2.4 billion, roughly 73 percent of stockholder equity. And, interest expense to service this debt totaled $174 million through September, up from $88.4 million in all of 2006, according to regulatory filings.

“Today we stand with an excellent liquidity position sufficient to execute our 2010 drilling program,” chairman and chief executive officer Floyd Wilson proclaimed to analysts on the February 1 operations call. Management also anticipates turning free cash flow positive (operating cash flow less capex) come 2012.

Wilson gave a similar speech in May 2006. Can he deliver this time around? Read More >….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Revlimid Keeps Celgene Healthy

Celgene (CELG-$60.11) chief executive Sol Barer predicts Revlimid will win regulatory approval as front-line treatment for newly diagnosed multiple myeloma (MM) patients in both U.S. and European markets. However, to win broader labeling and expand its European footprint, Celgene’s best-selling product will need to show a six to eight month difference in progression-free survival to be considered significant, said oncologists surveyed by Pharmawire.

Wall Street analysts are falling all over each other to trumpet the growth prospects for the drug with approved maintenance dose settings. But what happens to Celgene if final results of the MM-015 trial fail to reveal significant differences between induction with its flagship drug Revlimid and without it? Continue Reading….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Southwest Airlines "Cop Out" in Kevin Smith Feud

Before backpedaling in a tweeted apology, Southwest Airlines (LUV-$12.29) insisted in a public retort that airline employees removed movie director Kevin Smith from a flight last Saturday for violating the carrier’s “Customer of Size" policy, which calls for a large passenger to be bumped from a full flight if the customer cannot comfortably lower the armrest and infringes on a portion of another seat.

Will the film auteur settle for the airline’s mea culpa or prolong his manipulated cause célèbre another week, when his new film “Cop Out” is released? Read More at BNET Media….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Petrohawk Energy's Gas Reserve Valuations in Dispute

Petrohawk Energy’s (HK-$22.78) experienced significant growth in production and reserves in 2009, chairman and chief executive officer Floyd Wilson said. Proved reserves (98% natural gas) grew 122 percent to 2.75trillion cubic feet equivalent (Tcfe), most of which was added through drill-bit activity in its Haynesville Shale. The company exited 2009 producing 600 Mmcfe per day, up from an approximate exit rate of 366 Mmcfe per day in 2008.

The volume of gas resources claimed by operators is not in dispute. Evidence presented at the 2009 meeting of the Gulf Coast Association of Geological Societies (GCAGS) held in September 2009 suggests, however, that formation damage during fracture stimulation treatment, in effect, reduces reservoir performance and resultant valuations.

Continue Reading at BNET Energy….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Will Petro-Canada Acquisition Sink Suncor Energy?

Suncor Energy (SU-$30.05) is a long way from achieving the significant synergies envisioned from its all-stock C$19.63 billion acquisition of Petro-Canada last August: Net debt increased to 4.8 times cash flow from operations at year-end 2009, from 1.8 times in 2008. Return on employed capital, excluding major projects in progress (such as its Firebag bitumen in-situ mining operations) plummeted to 2.6 percent, from 22.5 percent in the prior year.

Can Suncor control operating costs and get its debt paid down towards the $10 billion range by the end of 2010? Continue Reading ….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Murphy Oil Spudding For Ethanol Prospects

Despite significantly weaker margins realized in 2009, Murphy Oil (MUR-$50.75) intends to add a combined 80 new gas stations to its network of Murphy USA sites, located at Wal-Mart supercenters, and its stand-alone Murphy express outlets. In 2009, the company added 26 new filling stations.

The integrated energy company derives about 69 percent of annual sales ($19 billion in 2009) from its U.S. refining and marketing operations.

Chief executive David Wood said on the recent fourth-quarter earnings call that the company was open to opportunities to expand its presence in the ethanol refining business, as the one plant Murphy Oil acquired last year only covers about a quarter of the volume needed in ethanol-blended gasoline that Murphy sells through its own retail network. Read More….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

McMoran Exploration: What's in Davy Jones' Locker?

Positive drilling results at its Davy Jones prospect could be a boom for McMoran Exploration (MMR-$16.80). The Gulf Coast energy company had proved oil and gas reserves at year-end 2009 totaling 271.9 Bcfe (billion cubic feet of natural gas equivalents), compared with 344.8 Bcfe in 2008. The reserve depletion primarily reflected delays in bringing shut-ins (as a result of the September 2008 hurricanes in the Gulf) back into production. Estimates of the size of the discovery range from 2 trillion to 6 trillion cubic feet of natural gas, rivaling the largest gas finds ever made in the Gulf.

Nonetheless, it is worth reminding folks that assumptions to date have been based on sketchy data from well logs. In addition to appraising the actual hydrocarbons in place, the company still hasn’t defined the extent of the reservoir field or the recoverability of the reserves in the tapped reservoir — its flow rates.

Read More….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.