McMoran posted EPS of $0.19, compared with an consensus estimate for an EPS loss of -$0.13. The company attributes the good performance to its deep-drilling techniques in the Gulf of Mexico, which have allowed it to boost production substantially higher than previous expectations. Production is expected to average 130 million cubic feet of gas equivalent/day in 2012, with first quarter production at 155 million cubic feet/day. The number should rise in the second half of the year following production testing of a major well.

McMoran’s shares are up nearly 5% at $13.29 in a 52-week range of $8.25-$19.26.

Apple Inc. (NASDAQ: AAPL) Reiterated Overweight at JPMorgan; Reiterated Outperform at Credit Suisse; Reiterated Buy at Canaccord Genuity.
Apollo Group Inc. (NASDAQ: APOL) Raised to Outperform with $47 target at Credit Suisse.
Federated Investors, Inc. (NYSE: FII) named Bear of the Day at Zacks.
Google Inc. (NASDAQ: GOOG) Cut to Hold at Stifel Nicolaus.
Hewlett-Packard Co. (NYSE: HPQ) Cut to Underweight at JPMorgan.
Hess Corp. (NYSE: HES) maintained Buy but cut target to $85 at Argus.
The Home Depot, Inc. (NYSE: HD) Cut to Neutral at Goldman Sachs.
Mednax Inc. (NYSE: MD) Started as Neutral with $67 target at Credit Suisse.
Netflix, Inc. (NASDAQ: NFLX) Started as Neutral at Stern Agee.
Oracle Corporation (NASDAQ: ORCL) Reiterated Buy at Canaccord Genuity.
Plains All American LP (NYSE: PAA) named Bull of the Day at Zacks.
PP&L Corporation (NYSE: PPL) reiterated Buy with $31 target at Argus.
Walt Disney Co. (NYSE: DIS) Raised to Buy at Citigroup.
Yandex N. V. (NASDAQ: YNDX) Started as Underperform at Credit Suisse.
Yingli Green Energy Holding Co. Ltd. (NYSE: YGE) Cut to Sell at Citigroup.

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That honor falls to smaller oil producers including Brigham Exploration Co. (NASDAQ: BEXP), Continental Resources, Inc. (NYSE: CLR), Concho Resources, Inc. (NYSE: CXO), Kodiak Oil & Gas Corp. (NYSE: KOG), Forest Oil Corp. (NYSE: FST), Stone Energy Corp. (NYSE: SGY), Whiting Petroleum Corp. (NYSE: WLL), Abraxas Petroleum Corp. (NASDAQ: AXAS), Approach Resources Inc. (NASDAQ: AREX), and Triangle Petroleum Corp. (AMEX: TPLM). Among services companies RPC Inc. (NYSE: RES), which doesn’t currently have any presence in the Bakken, is looking to join the bigger players up in the north country. A midstream company that is expanding its presence in the Bakken is Tesoro Logistics LP (NYSE: TLLP), a recent spin-off from refiner Tesoro Corp. (NYSE: TSO).

And last week, SemGroup Corp. (NYSE: SEMG) announced that it plans to create a new midstream company, Rose Rock Midstream LP, through a $181 million IPO. Rose Rock owns and operates a gathering, storage, transportation, and marketing business in the Bakken.

Current production from the Bakken shale is about 360,000 barrels/day and there are those who believe that figure will reach well over a million barrels/day in another five years. The US Geological Survey estimates about 4.4 billion potential barrels from the Bakken. Continental Resources’ chairman suggests that the real potential is about six times that.

Whatever the production, the problem remains how to get the oil to market. More pipelines are needed to get the oil to somewhere other than the market hub at Cushing, Oklahoma. The Bakken’s crude competes with the heavy crude coming from the Alberta oil sands for pipeline space and markets. Rail and truck transportation currently haul most of the Bakken’s crude.

A substantial portion of the Bakken’s production is transported by rail, which is far more expensive than pipeline transportation. But the high prices for crude are boosting rail transportation from the Bakken to the Gulf Coast to around 100,000 barrels/day this year. Some analysts think that number could triple by the end of 2012.

And there’s no end in sight for the transportation bottleneck. Proposed pipelines, like the Keystone XL, face opposition from environmental groups, and another proposal for a pipeline from Cushing to Houston died for lack of shipper interest.

The pipeline shortage can’t last. Moving crude by truck and rail is more expensive and far more likely to result in a massive spill than is pipeline transportation.

Transportation problems aside, the Bakken is booming now and is likely to continue growing for years.

Paul Ausick

Allergan Inc. (NYSE: AGN) Cut to Neutral at Piper Jaffray.
DaVita, Inc. (NYSE: DVA) Raised to Overweight at Piper Jaffray.
Dendreon Corporation (NASDAQ: DNDN) Raised to Neutral at Credit Suisse; Cut to Neutral at Baird; Cut to Hold at Needham; Cut to Underperform at BofA/ML.
Entropic Communications, Inc. (NASDAQ: ENTR) Cut to Neutral at JPMorgan.
Hess Corporation (NYSE: HES) Reiterated Buy with $95 target at Argus.
McDonald’s Corporation (NYSE: MCD) Raised to Overweight at Piper Jaffray.
Seagate Technology PLC (NASDAQ: STX) Raised to Hold at S&P Equity Research (late Wednesday call).
Skechers U.S.A. (NYSE: SKX) Called Bear of the Day at Zacks.
Sprint Nextel Corporation (NYSE: S) Raised to Hold at Stifel Nicolaus.
Stillwater Mining Company (NYSE: SWC) Kept as Outperform but cut target to $22 at Credit Suisse.
Time Warner. Inc (NYSE: TWX) Reiterated Outperform with $40 target on Focus List at Credit Suisse.
Whole Foods Market Inc. (NASDAQ: WFM) Maintained Outperform as Bull of the Day at Zacks.

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JON C. OGG

Cisco Systems, Inc. (NASDAQ: CSCO) Raised to Buy at Goldman Sachs.
Citrix Systems, Inc. (NASDAQ: CTXS) Raised to Overweight at Morgan Stanley
Corning Inc. (NYSE: GLW) Reiterated Buy with $26 target at Argus.
Cooper Tire & Rubber Co. (NYSE: CTB) Maintained Underperform as Bear of the Day at Zacks.
Dillard’s, Inc. (NYSE: DDS) Maintained Outperform as Bull of the Day at Zacks.
The Dow Chemical Company (NYSE: DOW) Raised to Buy at BofA/ML.
Emdeon Inc. (NYSE: EM) Cut to Market Perform at William Blair.
Equinix, Inc. (NASDAQ: EQIX) Raised to Buy at Citigroup.
Gap, Inc. (NYSE: GPS) Raised to Buy at Jefferies.
Hess Corporation (NYSE: HES) Cut to Hold at Deutsche Bank.
Intrepid Potash, Inc. (NYSE: IPI) Raised to Buy at BofA/ML.
ManTech International Corp. (NASDAQ: MANT) Cut to Underperform with $34 target at Credit Suisse.
Sanmina-SCI Corp. (NASDAQ: SANM) Reiterated Buy with $15 target at Argus.
Siemens AG (NYSE: SI) Cut to Hold at S&P Equity Research.
Sunoco Logistics Partners. L.P. (NYSE: SXL) Raised to Outperform with $93 target at Credit Suisse.
Wendy’s Company (NYSE: WEN) Started as Buy at Janney Capital.

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JON C. OGG

Alcatel-Lucent (NYSE: ALU) Raised to Buy at UBS.
Arch Coal Inc. (NYSE: ACI) Started as Buy at Soc-Gen.
Celestica Inc. (NYSE: CLS) Raised to Buy at Deutsche Bank.
eBay Inc. (NASDAQ: EBAY) Raised to Buy at BofA/ML.
First Solar Inc. (NASDAQ: FSLR) Maintained Neutral but raised target to $135 from $100 at Credit Suisse.
Hess Corporation (NYSE: HES) Raised to Buy at BofA/ML.
Hudson City Bancorp (NASDAQ: HCBK) Cut to Underperform as Bear of the Day at Zacks.
KB Home (NYSE: KBH) Raised to Hold at S&P Equity Research (late-Wednesday call).
Lululemon Athletica Inc. (NASDAQ: LULU) Cut to Neutral at Stern Agee.
PerkinElmer, Inc. (NYSE: PKI) Raised to Outperform as Bull of the Day at Zacks.
Renren Inc. (NYSE: RENN) Started as Outperform at Credit Suisse.
Tanger Factory Outlet Centers Inc. (NYSE: SKT) Started as Outperform at Credit Suisse.

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JON C. OGG

The pre-salt finds offshore of Brazil could total as much as 30 billion barrels. Brazil’s Petroleo Brasileiro (NYSE: PBR), Royal Dutch Shell plc (NYSE: RDS-A), Repsol YPF SA (OTC: REPYF), Hess Corp. (NYSE: HES), and Exxon all have a stake in that massive find. But even that find won’t make a big difference in the price that consumers pay at the pump.

In the first place, Exxon’s new find represents less than 3% of the company’s proved reserves of 24.8 billion barrels of oil equivalent at the end of 2010. The company pumps about 4.5 million barrels of oil equivalent every day, so even if it could get every drop out of the new find, that’s about five months worth of production. Put another way, the new find can supply US consumption for about 35 days. In reality, only about half of the total 700 million barrels will ever get extracted.

The more important point is that finds ultra-deepwater fields is very expensive to produce, and will get more expensive as companies adjust to the new safety regulations imposed following last year’s disaster. As you would expect an executive to say, “This isn’t exactly $50 a barrel oil.”

Consumer expectations of any lowering of gasoline pump prices as a result of finds like this are pure fantasy. Virtually every recent oil discovery of any size has been made either in the deepwater offshore or in the frozen Arctic, and sometimes both. It will never get cheap to develop those finds.

There is no more cheap oil. Blaming OPEC or speculation for higher oil prices merely shifts the discussion off the main point. If consumers want lower oil prices, then they’ll have to use less oil in order to stretch out global reserves, both known and unknown.

Or, as they say, the only cure for high oil prices is high oil prices. Finding more oil, even large amounts of it, will never lower the price because we’ll never be able to find enough of it to keep up with demand.

Every crude discovery in deep water or inhospitable climates drives another nail into the coffin of cheap oil. That’s the message from Exxon’s new find.

Exxon shares are up nearly 2% in the first hour of trading this morning, to $81.56, in a 52-week range of $55.94 to $88.23. The inability of OPEC to agree on increasing production probably has more to do with that rise than does the new discovery. WTI Crude has jumped over $100/barrel again on the report from OPEC.

Paul Ausick

Anheuser-Busch InBev (NYSE: BUD) Cut to Neutral at BofA/ML.
Atmel Corporation (NASDAQ: ATML) Reiterated Buy and raised target to $17 at Gleacher & Co.
Dow Chemical Co. (NYSE: DOW) Raised to Buy with $49 target at Argus.
Eastman Chemical Co. (NYSE: EMN) Maintained Outperform as Bull of the Day at Zacks.
Hess Corp. (NYSE: HES) Raised to Buy at Argus.
Intel Corporation (NASDAQ: INTC) Reiterated Outperform with $28 target on Focus List at Credit Suisse.
JA Solar Holdings Co., Ltd. (NASDAQ: JASO) Cut to Sell at S&P Equity Research (late Wednesday call).
Lithia Motors, Inc. (NYSE: LAD) Maintained Buy as Value stock at Zacks.
McDonald’s Corporation (NYSE: MCD) Cut to Neutral at Piper Jaffray.
Micron Technology Inc. (NASDAQ: MU) Started as Neutral at JPMorgan.
OpenTable, Inc. (NASDAQ: OPEN) Raised to Buy at BofA/ML.
PMI Group, Inc. (NYSE: PMI) Called as Bear of the Day with $1.75 target at Zacks.
P.F. Chang’s China Bistro, Inc. (NASDAQ: PFCB) Cut to Neutral at Piper Jaffray.
Time Warner. Inc (NYSE: TWX) Reiterated Outperform with $40 target on Focus List at Credit Suisse.
Trimble Navigation Limited (NASDAQ: TRMB) Raised to Overweight at JPMorgan.

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JON C. OGG

ABB Ltd. (NYSE: ABB) Raised to Outperform at Credit Suisse; Raised to Buy at Deutsche Bank.
Bank of America Corp. (NYSE: BAC) Maintained Underperform as Bear of the Day at Zacks.
The Bank of New York Mellon Corporation (NYSE: BK) Cut to Equal Weight at Morgan Stanley.
Barrick Gold Corporation (NYSE: ABX) Raised to Buy at Stifel Nicolaus.
Chevron Corp. (NYSE: CVX) Started as Buy at Jefferies.
The Children’s Place Retail Stores, Inc. (NASDAQ: PLCE) Cut to Neutral at JPMorgan.
Coca-Cola Femsa (NYSE: KOF) Raised to Buy at BofA/ML.
ConocoPhillips (NYSE: COP) Cut to Hold at Deutsche Bank; Raised to Buy at S&P Equity Research.
eBay Inc. (NASDAQ: EBAY) Raised to Buy at Stifel Nicolaus.
Evergreen Solar Inc. (NASDAQ: ESLR) Cut to Sell at Wunderlich.
EI DuPont de Nemours & Co. (NYSE: DD) Maintained Outperform as Bull of the Day at Zacks.
Hess Corporation (NYSE: HES) Raised to Outperform at Credit Suisse.
Intel Corporation (NASDAQ: INTC) Maintained as Strong Buy and Value at Zacks.
Itron, Inc. (NASDAQ: ITRI) Cut to Sell at Wunderlich.
Juniper Networks Inc. (NYSE: JNPR) Reiterated Buy and $49 target at Argus.
LM Ericsson Telephone Co. (NASDAQ: ERIC) Raised to Buy at Deutsche Bank.
National Oilwell Varco, Inc. (NYSE: NOV) Raised to Buy at Citigroup.
Patterson-UTI Energy Inc. (NASDAQ: PTEN) Raised to Neutral at Goldman Sachs.
Urban Outfitters Inc. (NASDAQ: URBN) Cut to Market Perform at William Blair.
Yum! Brands Inc. (NYSE: YUM) Reiterated Buy and Raised target to $62 at Argus.

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JON C. OGG

The next refiner report will be Hess Corp. (NYSE: HES) on April 27th. Hess is expected to post EPS of $1.95 on revenue of $9.45 billion. On May 3rd, Marathon Oil Corp. (NYSE: MRO) reports earnings, and analysts are looking for EPS of $1.41 on revenue of $21.84 billion. On May 4th, Tesoro Corp. (NYSE: TSO) is expected to report EPS of $0.65 on revenue of $5.83 billion. Three more refiners report on May 5th. Frontier Oil Corp. (NYSE: FTO) is expected to post EPS of $0.98 on revenue of $1.75 billion; Western Refining Inc. (NYSE: WNR) is expected to post EPS of$0.29 on revenue of $1.66 billion; and Holly Corp. (NYSE: HOC) is expected to post EPS of $1.38 on revenue of $2.11 billion. Hess, Marathon, and Holly also have crude production operations.

As for Valero, the company reported EPS of $0.30 on revenue of $26.3 billion. In the same period a year ago, Valero reported an EPS loss of -$0.14 on revenue of $18.5 billion. Analysts were expecting EPS of $0.30 on revenue of $22.3 billion.

In early March, Valero lowered its guidance for the first quarter from $0.47 to $0.15-$0.30. The company also said it would take a $0.61/share charge on hedging losses, which it did. Refining throughput margins increased by $3.93 in the first quarter of 2011 compared with the same period a year ago.

It’s not just margins, however, it’s also down to the spread. The difference in cost between WTI crude and Brent crude gives refiners with inland refineries a huge cost break compared with refiners along the US Gulf coast. The lead indicator on crude pricing is now Brent, not WTI.

Gulf coast refineries mostly pay Brent, or what are called waterborne, prices for crude while inland refineries pay WTI prices because there is no pipeline to carry the less expensive WTI from storage in Cushing to the Gulf Coast. Moving WTI crude to the coast by rail or truck is possible at the current spreads, but prices paid by the refiner are closer to Brent than WTI because of the increased transportation cost.

Here’s how Valero states it in their earnings report: “Combined with our heavy and sour crude oil processing capabilities, more than 80 percent of Valero’s refining capacity can process feedstocks that price below waterborne light-sweet crude oils.” And that’s what puts profits on the board for Valero and the others.

The refiners face two issues. First is volatility, where the Brent price could drop to significantly closer to the WTI price. Second, US drivers could stop buying gasoline.

The former is not likely to happen soon, but could be on the horizon for June. Investors have been playing the WTI/Brent spread by going long on Brent and short on WTI then following US economic data to move in and out of the spread bet.

Less driving happens slowly when it happens at all. While there is some evidence that drivers are staying off the road as prices climb to $4/barrel and more, it’s not happening in very great numbers yet.

Valero said that it expects a strong second quarter based mostly on the wide spread between WTI and Brent. The company also expects to boost its capacity utilization.

At market open this morning, Valero shares are down about -1%, to $28.83, within the 52-week range of $15.49-$31.12.

Paul Ausick