9/24T8:45 News & Notes

GS Goldman Sachs: Buffet Interview on CNBC
Says not a time thing but a price thing... 'price is right. terms are right, people are right, and I decided to write a check'... 'If I did not think the government was going to act I would not doing anything this week I would be pulling back'... says it would be a mistake if the government walks away from Paulson proposal... not saying Paulson plan eliminates all the problems, but it keeps us from going of the precipice... says the market could not have taken another week like we saw last week... says it is everybody problem; economy is like a bath tub, 'you can't have cold water in the front and hot water in the back'... says collapse of institutions involved would have halted industry... 'no plan will be perfect buy I am happy Paulson has the imagination to step up and do something'... notes money market fund move by Paulson was a very important stroke... believes things will get worse if Congress doesn't approve a plan, or a plan close to the Paulson proposal... says every major institution is trying to de-leverage and you need someone to leverage up and the only one that can do that is the U.S. government... says if the government does it right they 'will make a lot of money'... says should not pay what the institutions paid or what they are carrying on their books but whart they are worth; 'I will bet that they will come out with a profit'... says he is not buying any instruments because he does not want to leverage up... says private sector can not save the system because they can not borrow as cheap as the U.S. government... says should not write executive pay out of the Paulson plan but the oversight board shpould be very strict on managers... throws his support behind Paulson... first investment Buffet has made in an Investment bank since Solomon back in 1987 which did not work out well; believes this deal is much better.

Credit Suisse initiates the Oil and Gas Services with an Overweight
Credit Suisse initiats the Oil and Gas Services with an Overweight saying they believe world commodity fundamentals, customer cash flows and continued low reinvestment rates are supportive and that the sector has years of growth ahead of it. They say the commodity correction and stock trajectory has been startling to say the least, but they are convinced it has created opportunities to buy shares. The firm initiates Baker Hughes (BHI) tgt $85, FMC Technologies (FTI) tgt $69, National Oilwell Varco (NOV) tgt $77, Smith (SII) tgt $80, and Weatherford (WFT) tgt $40 with Outperforms. They also initiates BJ Services (BJS) tgt $22 with an Underperform and Schlumberger (SLB) tgt $104, Halliburton (HAL) tgt $44, Cameron (CAM) tgt $51, Exterran (EXH) tgt $42, Global Industries (GLBL) tgt $10, and Oceaneering (OII) tgt $72 with Neutrals.

Libor's accuracy becomes issue again - WSJ
WSJ reports the accuracy of a widely used interest rate, seen as critical to judging the health of the financial markets at a precarious time, is coming under question for the second time this year. Doubts about the Libor center on whether banks are understating what it costs them to borrow dollars in stressed financial markets. Libor's reliability became an issue again this week when banks paid higher interest rates to borrow using collateral than they did for unsecured loans... Concerns about Libor's accuracy emerged out of the rates being paid in another market used by banks to get cash. The Federal Reserve's term auction facility, one of numerous efforts the Fed has been using to fight the credit crunch, allows banks to borrow, but they must put up collateral. Because of that, banks should be able to pay a lower interest rate than they do when they borrow from each other because those loans are unsecured. In other words, the rate for the Fed auction should be lower than Libor. But on Monday, the rate for the 28-day Fed facility was 3.75%, which was much higher than Libor. On Monday, the one-month dollar Libor rate was 3.19% while Tuesday's rate was 3.21%. The Fed facility should be lower, said Scott Peng, a Citigroup U.S. rate strategist. The "market needs some accurate transaction-based measure of interbank lending."

Money-market rate climbs as bank funding constraints worsen - Bloomberg.com
Bloomberg.com reports the cost of borrowing in dollars increased after banks paid a record premium for cash at yesterday's Federal Reserve auction, underscoring the shortage of funds available on money markets. The one-month London interbank offered rate, or Libor, for dollars rose 22 basis points to 3.43%, the highest level since January, the British Bankers' Association said today. Financial institutions paid 3.75% at the 28-day Fed term auction facility, or TAF. That's 57 basis points more than yesterday's one-month rate, the widest spread since the TAF program began in December. "We've seen quite a bit of upward pressure in the past couple of weeks and the fact that the TAF came in at over 50 basis points above yesterday's one-month Libor will no doubt add to that,'' said Barry Moran, a Dublin-based money-market trader at Bank of Ireland. "It's a bit of a lottery as to where Libor will set.'' Demand for central bank loans backed by collateral surged this week as financial institutions hoard cash and balk at lending to each other on concern more banks will fail. Libor loans aren't secured and typically command rates above those of secured loans of similar maturities.

CLR Continental Resources announces additional well completions in North Dakota Bakken shale (42.88 )
Co announces initial production results for four wells that it recently completed in the northern portion of its North Dakota Bakken acreage, including its fifth well targeting the Three Forks/Sanish formation. The Omar 1-1H in Williams Co. flowed at an average rate of 1,126 barrels of crude oil equivalent per day from the TFS formation during its seven-day production period test. The Omar 1-1H was drilled as a single lateral on 1,280-acre spacing. Also in the northern portion of Continental's North Dakota acreage, the co completed three wells targeting the Middle Bakken zone. The co completed the Bliss 1-16H in Divide Co., the Skar 1-21H in Divide Co., and the Overlee 1-30H in Burke Co. for average rates of 476, 394 and 198 boepd respectively in their seven-day production period tests. The three wells were completed as single laterals on 1,280-acre spacing.

Fed sets $30 bln swaps lines to ease credit strains - Reuters
Reuters reports the Federal Reserve said on Wednesday that it had set up $30 bln worth of new currency swaps with central banks in Australia and Scandinavia, marking its latest bid to ease global credit market strains. The action comes on top of $247 bln that has already been committed to currency swaps with other major central banks, as authorities battle a global credit crunch sparked by the collapse of the U.S. subprime mortgage market last year. "These facilities, like those already in place with other central banks, are designed to improve liquidity conditions in global financial markets," the Fed said. "Central banks continue to work together during this period of market stress and are prepared to take further steps as the need arises," it said in a statement. The Fed said it had established temporary reciprocal currency swap lines of up to $10 bln each with the Reserve Bank of Australia and Sweden's Riksbank, and $5 bln swaps with Denmark's Nationalbank and Norway's Norges Bank. It said the swaps were specifically aimed at addressing elevated pressures in U.S. dollar short-term funding markets. The swaps have been authorized until January 20, 2009, the Fed said.