Friday, June 23, 2006

Oil's Goin' Down! (um, when?)

Fadel Gheit of Oppenheimer was just interviewed on CNBC's Squawk Box about the Anadarko acquisition of Western Natural Resources and Kerr-McGee. Oppenheimer, incidentally, also sponsored this morning's ticker stream during the show. Back to APC, they're using none of their own cash on the deal, it seems. Apparently, they're taking a loan out a value equal to their own market cap to make the deals. I find that very unusual.

But here's the real story: he mentioned that the oil companies in general are planning around oil moving to $45 a barrel. It's a lower target than what I heard on Bloomberg the other day, but it appears that the analysts are agreeing on a range.

APC's already down 10% in pre-market trading on the news, making the market cap drop below the loan value. KMG is up to 68.91 right now, and the sale price is offered at 70.50. It will be interesting to see how the price moves after the opening bell. A nimble trader might get an opportunity to ride a quick inefficiency.

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