In an effort to throw out some information on the oil and gas industry, I thought I’d write up a quick on on pumping units.

Pumping units provided the linear motion to the production string required to produce the liquid emulsion that is made up of water, crude oil and natural gas, among other elements.  Other common names for pumping units are beam pumps, sucker rod pumps (SRP), pump jacks, horse head pumps, and nodding donkeys.

Pump jacks are commonly referred to by their model, which is fairly common between manufacturers.  For instance, a 16-53-30 pumping unit is smaller than a 57-76-54 unit.  The model number is denoted by the rated torque …

Take a step back and look at what’s happening in our country.  We’ve got two political parties that are taking pot shots at each other, saying what ever needs to be said to get elected. We’ve got media outlets that have taken sides, one way or another, along with those in Hollywood who spill out phrases like “…I will be terrified if so and so gets elected” or “…I am truly scared as to what will happen if that man gets elected”.

Terrified? Really?

Houses are being shot up because of political affiliation.  Cars are being vandalized because of a bumper sticker.  The common folks in our country have never been so …

Last Friday OPEC announced a cut of 1.5 million barrels of daily crude oil production as part of an effort to stabilize crude oil prices.  Evidently the commodity did not react as expected, shedding more than 7% more after the news.

It seems that the stability of the global economy is trumping anything OPEC can do to prop up the price of crude.  There is still a lot of money leaving the energy markets, either by force or lack of confidence.

Unfortunately, with every down day in the crude market, the foresight of alternative energy comes more into question. Everyone with a vested interest …

Evidently Boone is about as good at gambling in the market as Tom Kivisto, and it seems that there is no one out there who is willing to question his decisions.

Three years ago Pickens donated $165 million to Oklahoma State’s athletic department in an effort to buy OSU’s way back into contention in the Big 12 Conference. Brand new indoor practice facilities for every sport on campus, a revamped football stadium, press facilities, etc. It was all worth doing, and Pickens was going to foot the bill to do it.

Just to make sure everyone knew he was serious, he allowed the school to take out a $10 million …

Sometimes you have to go with your gut, and when your gut ends up being right, you get this warm and fuzzy feeling that you may actually know a thing or two.

Frequent readers of The Corner Office Blog know that I’ve been bearish of Chesapeake Energy (CHK: chart, web, Y!) due to their huge amount of debt (and the pilfering of shareholders to pay off that debt by diluting the stock) when commodity prices were at record highs.

I’ve owned CHK before and have made money off the stock, but when credit started tightening over the last year to 18 months, I knew CHK would end up with a target on its back just due to the debt alone.

Well, it seems the debt has come back to haunt Chesapeake, along with an in-house trading philosophy that ended up costing the company $1.6 billion on paper, and forced CEO Aubrey McClendon to sell all of his own companies shares involuntarily.

Here’s how it all went down.

Chesapeake was making money hand over fist when commodity prices were high, just like any other player in the field.  Then, their trading operations made the gamble that the run on oil and gas wouldn’t continue.  So the company bought options and other financial vehicles to lock in the current rates (around $120/bbl for oil at the time) to protect from what they saw as an expensive downside risk (also known as hedging).

So what happened?  Oil continued to rise to a high of just over $145/bbl in July of this year.  That’s actually a good thing for Chesapeake, right?  Not necessarily.  Since Chesapeake hedged their oil at $120, they were only getting paid $120 for every barrel they pumped, not $145 that was the current market price.  Again, they’re still making boo-coo bucks at $120 oil, but they could have been making more.

The fact that they could have been making more shows up as a loss on the balance sheet.  All in all, Chesapeake could have made as much as $1.6 billion more if they had not hedged their oil and gas at lower prices.  So this goes as a loss on the books for the second quarter.

What effect does the debt have?

Creditors typically want to see that their their loans are safe, and as such they write in certain conditions that if met, they reserve the right to call the note.  Sort of like having a margin call if you can’t maintain the margin requirements.

I’m really trying hard not to get too worked up over politics, as it’s really not good for one’s health.  But after watching both of the last two (lame) debates, and seeing a bunch of television clips on the nightly news, I’ve come to realize two things:

There is no way to escape politics unless you turn off the TV.
Most people aren’t actually listening to what the two presidential candidates are saying.

John McCain keeps telling everyone that “…American’s are hurting” when addressing the economic problems here in the United States.  Hurting?  Really?

Taking a fastball to the ribs leaves …

After watching the price of crude oil start rebounding prior to the market open this morning, and seeing that futures were taking off, I put in a low-ball order for more Provident Energy (PVX: chart, web, Y!).  After seeing the price action after the first 2 hours, and not getting filled, I raised my bid for a small 100 share lot to $6.15.  That order filled about a half hour later.

I think a majority of the CANROYS are oversold due to the nuclear fallout from Wall Street, and …

I’ve been perplexed by the market these last couple weeks, so much that I’ve started wondering if what we’re seeing happen right now is actually for real.

Is this a complete melt down of our financial system that would cause a collapse of the stock market, or could this be the most golden of all buying opportunities?

By in large, I think the stock market will be ok, so long as the government doesn’t try and step in and strong arm a fix for this mess that stems well beyond the stock market.  So is this a buying opportunity then?  Yes, I think so.

I thought I was doing pretty well when …