26
Jul

Thursday – NFX Beats, XOM Misses, Gas Storage To Set Record

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Stuff We Care About Watch:

  • Newfield (NFX): Beat Consensus; Raised Guidance; Great Quarter! Enough said? Actually no, they did remarkably well on cost control and you can see my Z-Note issued last night here. I added to my position here yesterday for the results (see holdings watch below) and I'll have more notes in comments during the conference call. If it's slow to react at the open (due to the XOM news) I'll be adding to my August $50s position for a trade and plan to hold yesterday's $45s for some time, rolling longer on any weakness.
  • (TSO) bounced off $50 like a shot as expected. Not as enthusiastic about repositioning puts until we see some rationality return to the crude pits.
  • (OII) announces more contract wins, this is one I definitely like as a hurricane play but more for earnings on 8/1.
  • Exxon (XOM) results miss estimates on weaker natural gas prices.  The stock is trading off substantially pre market and this should have some spill over (warranted or otherwise) into names like (MUR), (MRO), and (CVX).
  • (APA) - just missed estimates but sees growth at top end of range. Watching.
  • (SPWR) - secondary priced. General rule: sell when they sell. Maybe it's different this time but with BP deciding it's serious about solar the only thing holding these stocks at these levels are the prices of competing energy and hot money to make a buck off Al Gore's party. While some run is justified given demand this looks a bit bubbling. No action yet as I'm just rambling but I am thinking "too far, too fast" for the solars.

Oil Shot The Moon Yesterday. September crude jumped $2.32 to $75.88 as everyone dismissed OPEC's recent benevolence (that was so Monday!) and focused on news that four fewer loadings from the Bonny platform in Nigeria would occur next month and the EIA bullish global demand sentiment. That's just silly. Globex crashed shortly after the report and the market took off when it came back on line. There was little in the report you could call bullish but crude drove gasoline higher as well with RBOB ending the day up $0.04 at $2.0879. The downtrend remains intact there but crude seems determined to push on up for no more reason than traders want it to. Really silly action.


Headlines That Mattered Yesterday Watch:

  • EIA Sees Larger Than Normal 2Q07 Crude Inventory Drawdowns Due To Rising Global Demand. Comment: next month they'll cut demand back...again. I think this is a coordinated effort with the IEA to push OPEC towards raising production.
  • Large Explosions At Gas Facility In Dallas. Comment: Colorful but it was acetylene
  • Explosion at fuel depot in Spokane. Comment: again, fiery photos and no substance.

Headlines That Didn't Matter:

  • June Opec Production Up 100,000 Bopd in June.
  • McKee Hydrocracker back on line.
  • Ardmore FCCU back on line

And it steepened the backwardated market. Out months are falling further each month than just the 10 to 15 cents we had been seeing. That should be a sign that the market expects less demand, more supply, or more likely both but again, really silly action.

Round 2 Appear To Be Leaning In Favor Of Hawkish EIA Comments Vs Dovish OPEC Comments As The Rally Continues Today. September crude is up another $0.86 pre market with RBOB trading over $0.03 higher as well.

Natural Gas Report Preview

  • Heat: Cooling degree days of 72. That's down from 76 in the prior week. Just doesn't feel like July yet (and it's almost August).
  • Imports: 3.8 LNG, 9.4 Canada; up 1.9 Bcfgpd (12 Bcf) relative to the prior week (which would add 12 Bcf

Taken Together Pipes And Ships Brought A Whopping 13.2 Bcfgpd Into The U.S. Last Week.

gas-imports-072507.jpg

My Number: 80 Bcf. I have not seen a consensus number but anything over 65 puts us into record territory, which may or may not already be factored in and dismissed by the same guys who want $80 oil.  Anything over 80 Bcf and I think gas comes under further pressure. The tropics continue to heating up but nothing appears immediately threatening or even organized.

Oil Report Review - In summary that was a bearish report.

  • Oil down 1.1 million barrels. This was a slightly smaller than expected draw (range was calling for a pull of 1.4 to 1.9). Let's see, that's not bullish...
  • Gasoline up 800,000 barrels. This was much bigger than most analysts and traders expected (range was a small draw to a build of 400,000) That's not bullish either...hmmmm.
  • Imports Rally To A Record 1.65 Million Bpd. With regard to gasoline imports yesterday I wrote:

It all depends on the imports. The change in imports last week resulted in a 3.5 mm barrel swing from the prior week so it’s pretty import. Last week saw imports nose dive and as I’ve said before, it’s a logistical glitch in timings and not that no one wants to send finished product here anymore. I’d expect them to snap back half the distance to prior week’s report or to about 1.2 mm bpd. This could knock that gasoline build back up to close to 1 million barrels.

gasoline-imports-072507.jpg

  • Utilization & Production. Utilization increased to 91.7% and production crept back up to just under 9.3 mm bpd.

utilization-072507.jpg

  • Demand - Still very high at just under 9,7 mm bpd

Holdings Watch:CALLS

  • (NFX) Bought the August $45s for $3.20 ahead of the quarterly results. Last bid $3.80.

PUTS

  • (FTO) Bought some more of the August $40s for $1.95. Last bid $1.40 as the refiners mounted a small recovery. It's an opener but that stinks and I'll be looking to add more as I think RBOB (and crack spreads) resume their falling path in the near term.

Odds & Ends

Analyst Watch: First Albany takes it's (AAPL) price target up from $120 to $170! (just because I'm married to energy doesn't mean I can't look at the pretty girls). (ECA) and (PPP) receive "upgrades" to neutral ratings.

Good Point Watch: Phil at PSW writes: it’s all up to XOM tomorrow who will have to justify what is now a $522Bn market cap.  XOM has gained over $50Bn in market cap since June 27th, more than the entire value of VLO ($38Bn), SU ($43Bn), OXY ($50Bn), the newly combined RIG ($33Bn) & GSF ($17.5Bn), or the total combination of SUN ($8.5Bn) + TSO (7Bn) + CHK ($16Bn) + GSF ($17.5Bn) so it will be very interesting to see how they manage to justify this runaway valuation.

Have a great (busy) day and I'll see you in comments! Don't forget to read the (NFX) note from last night!

148 Responses to “Thursday – NFX Beats, XOM Misses, Gas Storage To Set Record”

  1. 1
    zman Says:

    Cody – thanks.

    French planes landing on American ships is probably a good thing. That new president has had his arms open to the US since before being elected…

    …although pushing on Iran that way doesn’t seem to be little more than bear baiting to me. Ahmed doesn’t react well to economic pressure or military shows of power.

  2. 2
    zman Says:

    crude up $1.05, RBOB up $0.04 … heck even natural gas is back up through $6.

  3. 3
    zman Says:

    Refineries look like they’re going to get whacked with Exxon. I have no problem with them getting whacked but XOM missed due to its E&P segment’s lower natural gas price realizations. Not some problem with refining which has been doing very well.

    TSO down 3% with some volume etc…

  4. 4
    Sambone Says:

    Put in orders to buy SJH and SKF at the open.

  5. 5
    Brian08 Says:

    Z, thanks for the NFXs…Probably shouldn’t have sold those 45s at close…Hopefully the 50s will give some payback…

  6. 6
    codydog Says:

    z–the French thing is more than a technical step. It shows the French can strike a target and keep flying to a US carrier meaning, they dont have the fuel concerns about having to fly back to their own carrier. No midair re-fueling etc, its meant to show iran striking capacity and inter-operability. imho, its more than a goofy headline

  7. 7
    zman Says:

    Cody – check you email but I agree with you, pretty important news.

  8. 8
    zman Says:

    Sites acting a little hinky this morning but just hit refresh if you get a timeout. One of the things that won’t happen as often after Sept 1.

  9. 9
    Saeed Says:

    July 26 (Bloomberg) — Crude oil rose in New York and traded at a premium to London’s Brent benchmark for the first time since February after supplies dropped in the U.S. Midwest.

    Crude stockpiles in Cushing, Oklahoma, where New York’s West Texas Intermediate benchmark, or WTI, crude is priced, fell by 1.4 million barrels last week, the lowest since February, according to Department of Energy data. U.S. refineries increased runs to 91.7 percent of capacity for the same week, the highest this year.

    “The most interesting thing is the fact that WTI for September has got to a premium over Brent,” said Christopher Bellew, a broker with Bache Financial Ltd. in London. “A lot of that is normalization of crude stock in Cushing.”

    Crude oil for September delivery gained as much as $1.36, or 1.8 percent, to $77.24 in after-hours electronic trading on the New York Mercantile Exchange, a new 11-month high. It was at $76.68 at 1:02 p.m. in London after trading as high as 25 cents over Brent, the blend used to price about two-thirds of the world’s oil, around 10 a.m. in London.

    Brent crude for September rose as much as 84 cents, or 1.1 percent, to $77.16 a barrel on the ICE Futures exchange. It was at $76.79 in London, regaining its premium to WTI.

    U.S. oil stockpiles declined by 1.1 million barrels in the week to July 20, the Energy Department said yesterday. Below- average gasoline stockpiles unexpectedly increased by 793,000 barrels, aided by a resurgence in imports, which rose to a record 1.7 million barrels a day last week.

    “We expect the petrol demand to remain high also in August,” said Thina Saltvedt, an analyst at Nordea Bank AB in Oslo. “Even though refinery capacity has increased in the last couple of weeks, the U.S. is heavily dependent on imports.”

    End of Premium

    Brent briefly lost its premium to WTI because of cutbacks in refinery output and changes in the crude making up Brent.

    ConocoPhillips has reduced runs at its 227,000-barrel-a-day Wilhelmshaven refinery in Germany after high oil prices made refining uneconomic, the company’s chief executive officer, Jim Mulva, said yesterday. In June, he predicted the WTI discount to Brent would close in August.

    Hellenic Petroleum SA, Greece’s biggest oil company, cut operations at its refinery because the cost of crude exceeded the profit from refined products, Merrill Lynch & Co. said yesterday. Preem Petroleum AB, a Swedish oil refiner, cut production this month at its refinery in Gothenburg to 75 percent of capacity.

    A “short fire” at Exxon Mobil Corp.’s refinery in Fawley on the southern coast of England had “minimal” effect on production, the company said. The refinery supplies 14 percent of the U.K.’s petroleum products.

    “There have been difficulties to keep the refinery fleet up and running at a high capacity level, and we will not be surprised if we see another refinery outage soon,” Saltvedt at Nordea said. “The shutdown of the U.K. refinery will increase the competition between domestic, U.K. demand and exports.”

    Shifts in Brent

    The share of Buzzard crude in the North Sea Forties blend rose 3 percent last week to the highest level since the field began production in January. The percentage of Buzzard, a so-called medium-sour crude, increased to 27 percent in the week ended July 22, according BP Plc, the operator of the Forties Pipeline System.

    Forties is one of the four North Sea oil grades that determine the price of dated Brent. Changes in the crudes that make up the blend can affect its quality and consequently its price.

    Statoil ASA expects to restart the Heidrun North Sea oil field this week after corrosion in a pipeline forced its closure on July 20, the company spokeswoman Mari Dotterud said. Crude from the Heidrun field loads at the Mongstad terminal in Norway. The Heidrun field produces 120,000 barrels of crude a day.

    Nigerian Supply

    Royal Dutch Shell Plc said today it has no firm date for when it can return to full production in Nigeria. About 195,000 barrels of oil equivalent a day of its production remained shut down at the end of the second quarter.

    Nigeria, Africa’s biggest oil producer, has lost a quarter of its daily output because of unrest in the Niger River delta. The nation plans to ship 19 cargoes of the benchmark crude oil grades Qua Iboe and Bonny Light in September, four fewer than are scheduled for August.

    Shell’s venture in Nigeria has restarted a limited amount of production at pumping stations feeding its Nembe Creek pipeline and the Forcados export terminal, Eurwen Thomas, a company spokeswoman, said July 24. The South Bank flow station, linked to Forcados, started pumping in April, she said.

    Thomas declined to say how much oil South Bank, which has a 36,000-barrel-a-day capacity, was producing. The Nembe Creek pipeline, shut down in May because of a leak, hasn’t reached its 77,000-barrel-a-day capacity, she said.

    Iranian Defiance

    In the Middle East, Iranian President Mahmoud Ahmadinejad said yesterday the Islamic Republic won’t yield to demands to halt its uranium-enrichment program, the official Islamic Republic News Agency reported. The U.S. and its allies should accept Iran’s right to pursue nuclear research, he said.

    The United Nations has imposed sanctions on Iran in an effort to end its nuclear research. The U.S. and Europe say Iran could use enriched uranium to make a nuclear bomb. Some analysts and traders are concerned they might attack Iran, disrupting oil exports from the world’s fourth largest producer.

    In U.S. dollars, West Texas Intermediate, the New York-traded crude benchmark, has risen 4 percent in the past 12 months. It has dropped 4 percent in euros, 6 percent in British pounds and risen 7 percent in yen.

    To contact the reporter on this story: Eduard Gismatullin in London at

  10. 10
    zman Says:

    NFX CC

    Kept the Stone employees in the Rockies assets.

    215-230 Bcfe 2008 > 10% growth

    N.Sea
    Seven Sea 47 mmcfepd/ limited by equipment, exceeded pore drill, 80%wi
    more than a dozen buyers looking

    First oil lifting at Abu (Malaysia) yesterday. Saying at least 15,000 peak soon (the at least is new), will add another 6-8,000 bopd next year.

    more to come- stock rallying hard.

  11. 11
    Alan Says:

    WNR had a total volume of 1800 after 10 minutes! No one was trading it at all. Have they bought up all of their stock?

  12. 12
    zman Says:

    Refiners getting whacked today with XOM

    OII actually up Strong!!!

    XOM down 3% with NFX up 4.5% and rallying still.

    NFX Q&A coming.Outlining the really nice new hedges.

  13. 13
    zman Says:

    NFX CC

    $500K savings per well due to pad drilling at Stiles Ranch.

    They have booked 220 Bcfe here – think they add 200 to 400 Bcfe.

    Woodford Shale – moves to pad drilling later this year. Cattle pilot 40 acre downspacing. Started fraccing Monday and will take 6 days. Thye’re doing serious science on this – listening devices and a listening well drilled to determine frac efficiency. They were drilled below cost and that’s before moving to pad drilling

    2 recent wells were drilled in 20 days, below the recent 6 months drilling at 30 days and the 40 days they started the play with . Drilling for $2mm now and turn to sales for $5 mm .

    Possibley elimnating a frac stage saving 400K per well.

    3 to 3.4 Bcfe ($2/mcfe ultimate)

    Caney Interval test – 3 stage frac 1mm/d first month, 500mcfgpd five month later with a short lateral.

    2nd Caney well flowed over 1 mm/d and is at 500mcfgpd but still cleaning up.

    Translation: these are my notes but that’s all great stuff.

  14. 14
    bill fraser Says:

    http://biz.yahoo.com/bw/070726/20070726005105.html?.v=1

  15. 15
    lman Says:

    NFX – bring it on.

  16. 16
    zman Says:

    Thanks Bill – it’s very vogue to do MLP’s right now.

    NFX CC – first half of call went great, stock up 4.6% as we go into Q&A.

    OII still strong.

  17. 17
    zman Says:

    NFX Q&A

    150 ish wells next year in Woodford.

    Cattle Pilot wells,
    avg cost from independent wells ($5.5mm)
    long list of things they can do to cut costs here. That 20 day drill time is simply incredible and obviously saves $.

    The lateral portions have come down from 10 to 14 days to in some cases 3days!

    3D – being acquired, complete last piece early ’08

    Malaysia – No intention to sell. 4 fields under development. Good local relationships. More to do on deepwater.

    China – rember not selling China, just the production. Working on new contracts.

  18. 18
    zman Says:

    OII up 2.5%
    NFX up almost 5%

    BJS and NBR continue to get hurt,

    FTO falling, WNR catching up on the downside.

  19. 19
    bill fraser Says:

    DO YOU HAVE AN OPINION ON REGENCY

    Regency Energy Partners L.P.

  20. 20
    zman Says:

    More NFX call:

    Monument Butte: extended contract with Flying J refiner for another year, also just entered TSO and Holly.

    Woodford ? – less than expected production at only 115. It was the switch to pad dcilling, just logistics….

    I’d bet my hat Keybanc/McDonald upgrades tomorrow.

    up 6.4%

  21. 21
    zman Says:

    Bill – Not right now but I can look at after the close.

  22. 22
    bill fraser Says:

    >ConocoPhillips has reduced runs at its 227,000-barrel-a-day Wilhelmshaven refinery in Germany after high oil prices made refining uneconomic

    SO AS CRACKS FALL SO WILL GASOLINE PRODUCTION

  23. 23
    bill fraser Says:

    WITH BACKWARDATION NO INCENTIVE TO BUY OIL SO INVENTORIES WILL FALL

    THE OPPOSITE ENCOURAGES INVENTORY BUILDS AS SEEN IN NG

  24. 24
    zman Says:

    More NFX Call:

    $2.5 B capex next year

    Woodford Shale: leasing plans: want to own ever acre they can in the core. Rig count coming down a bit as they go to pad but that will rise in 2008 as they move into development.

    Joe Almon from JP Morgan asking redundant questions as usual. Same as he does on every call he doesn’t listen. sheeswshs.

  25. 25
    Denise Says:

    Anyone know anything about mgt changes at tra? tnh $3 dividend low ng would think other ferts would bounce.

  26. 26
    jimbo Says:

    More from CrownWeather.com. Some models predict cyclone developement…
    “…Our attention turns to the far eastern Atlantic where Infared Satellite Imagery showed a healthy tropical wave about to exit the coast of Africa within the next 24 hours. The reason why I mention this tropical wave is because some of the computer forecast guidance are forecasting this wave to turn into a tropical cyclone over the next several days as it tracks westward towards the Leeward Islands. The GFS model forecasts that this wave will be a strong tropical cyclone near 15 North, 48 West by next Thursday. After that, the long-range GFS model forecasts this system to track east of the Bahamas on August 6th and then near the coast of North Carolina on August 9th…”

  27. 27
    zman Says:

    Off NFX call – In a word: Love-in. Analysts are no doubt raising numbers and getting on their squawk boxes to drive it from here. Any weakness and I take more $50s.

    71 Bcf – welcome to record storage!

  28. 28
    zman Says:

    Coming out of some NFX $45s now. 100% since yesterday is too good to miss. Will add $50s later but that gas number could pull it all in a bit.

    TRADE: out NFX $45 between $6.10 and $6.20

  29. 29
    zman Says:

    Denise – sorry no help TRA – NG is there biggest cost though and should be supportive. Mgt change = I don’t know impact.

  30. 30
    zman Says:

    FBR reiterates outperform on NBR – talk about long and wrong.

  31. 31
    Attacking Mid Says:

    I’m back to trading the ever-manic-depressive SU. No real reason for it to be down today, so I picked up some calls. Also bought some UPL calls, as I keep seeing it show up on lists as recommended buys. I figure a hurricane threat any day could send NG back up and drag UPL along with it.

    AM.

  32. 32
    lman Says:

    zman,

    thanks for your insights on NFX!

  33. 33
    zman Says:

    TRADE: TSO August $55 puts off the table at $6. That’s right at double what I paid for them on 7/20!

    AM – welcome back man! things have been hopping around here. I just came out of NFX 45 calls for a nice 1 day double, and I’m looking to take down some more of the 50s before the close. Good to have you back!

    Jimbo – thanks…keep us posted.

  34. 34
    zman Says:

    Iman – glad it worked for you! sorry to hear about your radio show.

  35. 35
    Brian08 Says:

    WNR, HOC, FTO heading towards LODs…

  36. 36
    p.wilmington Says:

    Still holding the TSO short. So with $50 broken, where is support? $45?

  37. 37
    codydog Says:

    z–how do oils react to trading collars? does it create an exodus?

  38. 38
    zman Says:

    FTO and WNR @ LOD, stocks looks broken on the daily.

  39. 39
    zman Says:

    P – TSO – yeah they got their bounce and I’ll be out for their earings in August but yeah, $45 is the next nice round number and I’d expect as bigger bounce off it.

    Cody – what do you mean?

  40. 40
    codydog Says:

    when trade limits are imposed, do energy names get more volatile than industrial names?

  41. 41
    zman Says:

    Which trade limits are you referring to?

    FTO HOC and WNR really cracking lower now.

    NBR and BJS taking a dive for the mat. I don’t think it’s too late on either account.

  42. 42
    jimbo Says:

    Side bar: following some closed end funds. Some great funds which usually sell at a premium are now discounted. Looks like a lot of money exiting.

  43. 43
    Lije Says:

    Z – was this the intraday pop you were looking for in NFX.. the Aug 50 calls are 1.65 bid, 1.75 ask on my screen and earlier this morning they were priced at 1.95, 2.10 around the same price level… that being about $50

  44. 44
    Brian08 Says:

    Wow NFX getting pasted…Somebody musta not liked something they said(?)

  45. 45
    zman Says:

    Took a big position in the $50s for a buck on this dip. Don’t know who said something stupid about that call (I have an idea) but man what a gift!!!!

    Morning Nicky!

  46. 46
    zman Says:

    Brian – there were two analysts on the call of obviously dubious mental stature. Maybe it was one of them but I rather think it was a bit of profit taking that got out of hand on a down 250pt DOW day.

  47. 47
    zman Says:

    Re #46 above:

    That should read TRADE: NFX $50s for $1. What a gift!

  48. 48
    Eric C Says:

    Z- I hear you on the NFX gift. I picked up the NFX 50’s for $1 at the open and doubled my money. After the drop I picked up the same calls at the same price and it looks like I’ll double my money again before lunch!!! Thanks again.

  49. 49
    zman Says:

    Brian – like you were saying yesterday about having a thesis you understand. With that big sell off the charts didn’t tell you to get in and they certainly don’t tell you what to do in the even of a interday selloff. That’s when the thesis, in this case NFX rocks, keeps you buying through a dip. Check out the rally now! I’m up 55% in 10 minutes on a much bigger position than by $45 which I sold earlier for a double! I would never have grabbed it like that if I weren’t on top of the story!

  50. 50
    codydog Says:

    z–can you scream something when this happens again?

    I’m a bit tied up in bidu & isrg, but am happy to play in energy names too

    as a side note, tier 1 broker told me that real LBO funds not talking about cancelling deals at all, so some sense this is media hysteria being whipped up for summertime fun, he said if 1 deal closes, you’ll see a stream of closings and its back to work

  51. 51
    zman Says:

    setting stops on NFX $50s @ $1.50 because 10 minutes and up 50% is a stupid thing to waste. Plus it lets me go take a leak without worrying about it.

  52. 52
    Sambone Says:

    My stops are hitting in TLM and CHK

  53. 53
    Brian08 Says:

    Z– Yup, I missed out at it at 1.00 because I couldn’t react quickly enough to what was happening…Something didn’t smell right in the state of Denmark on that sell-off!! I’ll get ’em next time…

    FTO is taking it in the shorts today!! And so is HOC, never was able to get into that one, but it seems OH SO RIGHT!!

  54. 54
    zman Says:

    Cody – I’ll try they’re back it off again now and as I set a stop limit and not a stop they went right by me. Only unp 35%. This is really crazy and I have no doubt it goes higher if the broad doesn’t just tank.

    Like I said, no one could be upset with that call but the JP Morgan guy has had surprising feats of mental obscurity in the past so never say never.

  55. 55
    zman Says:

    In other news my FTO $50 puts are now trading bid $12, not bad from my $2.90 cost back on 7/12 in the refining focus piece.

  56. 56
    zman Says:

    Eric C – Congrats, just saw your post!

    you know how to reserve your spot, right? lol.

  57. 57
    Eric C Says:

    Z – Re #59 Yep! Just did it!

  58. 58
    MMarkkk Says:

    dumped some of my NFX 50’s at $2.20…bought yesterday at 0.65. Gotta love it. didn’t have time to pick up during today’s dip. I’ve got some more of the 50’s and some of the 55’s set for sale when it goes back up later today (hopefully). I’m going to keep a good portion for later, though, as I see this puppy going higher.

    I missed out on some of the 55’s yesterday at 0.10 but got them at 0.15. Tried to get a sell in on some this morning but missed it. Darned “day job” keeping me busy! I usually put in orders in the morning before work and then review at lunch. too much time in between. I’ll have to take a few days off and work “real time”. Maybe I can quit my day job. Nahhh, the benefits are still too good to walk on right now. but once I hit 50 next year, different story.

  59. 59
    zman Says:

    MMarkkk – Glad to hear it. Did you get a chance to listen to the NFX CC?

  60. 60
    apbd Says:

    Dr. William Gray, op-ed in WSJ today, ” hurricanes NOT caused by Global Warming ”
    Take THAT Al Gore.

  61. 61
    zman Says:

    apbd – hahahahahahahahah! Thanks for the laugh. And to think I just converted my truck to run on rainbows!

  62. 62
    MMarkkk Says:

    z- only portions; I follow part of their new development activity in the Woodford so I was most interested in that. I agree with your comments…not much to be down on. Great results and a great story. Their cost reductions and production growth are going well. Moving up the learning curve in the Woodford and still tweaking the science. I expected good results and they delivered. I wish this wouldn’t have fallen on a Thursday with NG storage numbers AND the XOM reporting AND the nice little 250 drop on the general market. I’ve been a non0believer in the bull run of the overall market…just too much bad news out there and too many things that don’t add up. Yet the market keeps “melting up”. When it corrects, and it will, it will not be pretty. I’ve got lots of defensive positions built in so I’m kind of hoping it does take a big drop so I can put some of my hoard of cash to work. But after I get these NFX call’s closed and banked.

  63. 63
    zman Says:

    NFX back down to up 1.8%.

    USO getting smacked down here, definitely part of it. People should take a closer look at the NFX hedge position before taking profits.

  64. 64
    zman Says:

    CODY – here’s another NFX opportunity. I think it’ll be above this level come later or tomorrow at worst but if oil crashes who knows…I’m pretty shocked it’s falling to flat again.

    M – could agree more with that whole paragraph if I tried.

  65. 65
    zman Says:

    CODY – THIS IS ME SHOUTING! 😉

    and here’s the caveat. XOI down 50 (can’t remember the last time that happened) but there are going to be lots of bargains around and everything could get thrown out with the baby, bathwater etc.

    XOI now through it’s 50 day sma.

  66. 66
    zman Says:

    TRADE: Sold some FTO 40s that I had thought were toast for $3.20, nice 121% gain since their acquisition way back on June 27.

  67. 67
    Eric C Says:

    Z- Unbelievable!!! I did not want to be a pig on the NFX 50’s so I got out the second time at 1.35. But now I could not resist a third run and got back in at $1.00 I hate to leave my laptop as I am on vacation but family comes first. This vacation is already paid for as of this morning!!!

  68. 68
    Brian08 Says:

    Z- I’ll take the baby, they can have the bathwater…Glad I got in the 50s this time!!

  69. 69
    zman Says:

    Bidding more NFX $50s

  70. 70
    codydog Says:

    z–haha….spreads are making it tough to trade…i guess dealers dont like being ATMs to retail

  71. 71
    zman Says:

    careful fellas – USO diving off a cliff. About time I say but not while I’m doing a quick NFX trade!

    Eric – go have fun with the kids and wife man!

  72. 72
    MMarkkk Says:

    NFX down below 48 and then above 49 all in 20 minutes????? what the heck?

  73. 73
    MMarkkk Says:

    Z – is Phil happy with XOM’s down day? he seems to be such an XOM hater (along with all other major integrated oil/gas firms). His delusions of XOM’s ability to control the market burns me up and makes me laugh all at the same time. I’ve exchanged messages with him a few times but we are worlds, if not universes, apart. His world and my world can’t co-exist!!

  74. 74
    zman Says:

    I missed the next set of NFRX $50 calls b/c I’m too cheap for my own good. Stock’s making a stand up almost 3% again from flat when I YELLED AT CODY. Oh well, it was pretty big and 40% up now for an hour so I can’t really complain

  75. 75
    codydog Says:

    some of phils posters seem to be pretty upset – could it be they’re in complicated trades they dont understand?

  76. 76
    codydog Says:

    zman — i’m having a problem getting into options trades due to the spreads,

  77. 77
    Brian08 Says:

    Z – I’m very disappointed, I only got 40% in 37 minutes!!! 🙂

  78. 78
    zman Says:

    MMarkkk – I think his reaction is as you’d expect. Otherwise no comment on P’s thoughts on “Big Oil”. I think you know where I stand but if not:

    Big Oil is not evil, it’s not under taxed, it’s not even so ubiquitous that you can call it Big Oil.

    I’m not saying P believes that either but I know some people out there who do.

    I have good friends in and around the business and I own a working interest in a few oil wells. I don’t think I’m evil for doing so. I threw in P’s comment in the morning post about the scale of XOM’s recent swollen stock price b/c it’s a fact that they’ve ballooned in market cap which raises the bar pretty high and you can’t afford to miss estimates under those circumstances.

    If they’ll come in a little more I’ll consider a trade there but really the Majors aren’t my bag man. Too big, too many moving pieces for me.

    I like the little guys who day in and day out are making their way in the oil field, finding and exploiting new plays and then I make money off their hard work. That is pretty much me.
    Z

  79. 79
    zman Says:

    TRADE: NFX 50 calls – half out at $1.80. There’s 80% for you in 1 1/2 hours. Letting the House Money roll for a bit as I think they’ll be higher in the am.

  80. 80
    MMarkkk Says:

    Agree that trading Big Boys is tough to do…too many macro impacts. I’ve traded one or two but only in extreme cases that are too good to pass up.

    NFX is much more fun!! Wow. Today is a heck of a day

  81. 81
    Attacking Mid Says:

    You and me both, pal…

    MMarkkk Says:

    Z – is Phil happy with XOM’s down day? he seems to be such an XOM hater (along with all other major integrated oil/gas firms). His delusions of XOM’s ability to control the market burns me up and makes me laugh all at the same time. I’ve exchanged messages with him a few times but we are worlds, if not universes, apart. His world and my world can’t co-exist!!

  82. 82
    scoop006 Says:

    Z Entry point HAL?

  83. 83
    zman Says:

    Yet another big down leg in oil. If it’ll get a pump I’ll take a little EOG $70 action for a trade.

  84. 84
    zman Says:

    Afternoon Scoop,

    Can you tell me the broad market is going to do. They already had great earnings and the $37.50s certainly look tempting. I own a little, down 40% now but I could own quite a bit more comfortably.

    USO just tanking.

  85. 85
    zman Says:

    Oil keeps going lower, gasoline off 1.3 cents. I don’t know about you fellas but I miss Nicky for the play by play here.

  86. 86
    codydog Says:

    hearing cracks moving up quickly

  87. 87
    zman Says:

    Cody – I’d like to see an explanation on that. They don’t move up independent of oil and gas prices.

  88. 88
    codydog Says:

    someone playing? i dont know – the mkt is always right.

    we all forget that energy is a a small mkt compared to bonds or s&p, you dont need all sorts of money to kick it

  89. 89
    zman Says:

    RRC also on the watch list. Good quarter but they’re down today with most everything else. No trade just watching and may do a little work on it tonight.

    CRK – Mark – any thoughts there. Low cost, big growth, stock’s been taken to the wood shed.

  90. 90
    zman Says:

    Cody – were you speaking of crack spreads? That’s a calculated number and doesn’t move much independent of oil, gasoline, heating oil. Who said that?

  91. 91
    codydog Says:

    sep gas cracks was what was mentioned

  92. 92
    zman Says:

    Cody — hmmm. I don’t see it but ok, maybe a little. can’t see rising quickly on today’s moves.

    HAL: bidding below on the $35 and $37.50 calls.

  93. 93
    zman Says:

    NBR breaking $30 to the downside.

    BJS – down a buck.

    TRADE: HAL $35 for $1.90

  94. 94
    zman Says:

    Bidding VLO August 70 CALLS for a trade.

  95. 95
    sane Says:

    Wow gone for the day and I miss all of the action. 🙁

    Sane

  96. 96
    zman Says:

    NFX – giving yet another chance at cheap calls in advance of what should be some pretty flowery analyst commentary in the morning notes.

  97. 97
    zman Says:

    wow DJIA down 420, 3%.
    xoi off 75, 5%!
    oih off 8, 4.5%!
    xng off 21, 4%!

  98. 98
    zman Says:

    TRADE: NBR puts sold, up 69%.

  99. 99
    Sambone Says:

    Stopped out of DVN

  100. 100
    zman Says:

    They’re just killing all E&P now. Going to be some good bargains.

  101. 101
    zman Says:

    OT: SNE probably gets hosed tonight. $50 puts for a buck would be interesting if I did that sort of thing.

  102. 102
    zman Says:

    Cheap is working again. HAL and VLO rallying nicely.

  103. 103
    Brian08 Says:

    Re: #103…Yeah I’ve been just watching my CHK get taken to the cleaners over the past 5 days…Is it b/c of the record storage levels?? I don’t have access to live NG quotes but talked to a buddy of mine who does and he said it was hanging tough at a little below 6…

  104. 104
    zman Says:

    Brian – it’s more the broader market than gas prices. Gas closed up 2 cents today at $5.94

  105. 105
    codydog Says:

    monster rally now – i really dont get how phil’s posters are making money with their mis-matches and mis hedged positions – imho, there are gonna be some mihghty sad folks over there

  106. 106
    Brian08 Says:

    Guess they aren’t following RULE 1 of investing, “have a thesis”…And they’re certainly violating RULE 2, “when all else fails go back to RULE 1″…

  107. 107
    codydog Says:

    does anyone look at sensitivity analysis of phil & co’s trades? i get the impression they buy and sell stuff and when the mkt moves theri way, they unload it. imho, a hedged portfolio needs to be prepared for a black swan event or face disaster. they dont really seem to be dollar hedged or event hedged or maybe I missed it.

  108. 108
    zman Says:

    Cody,

    Not to defend P, because he’s very capable of doing that himself, but he works pretty hard at this and his long term track record is great.

    In my case, I bet only 3 to 5% of the people here are trading my stuff and if they came in on my comments at the end of the NFX call and bought they hate my guts right now. Just my thought.

    I do the best I can and tell you guys what I’m doing pretty much concurrent with doing it as far as trades go. Maybe his service isn’t for you. I hope mine is.

    On the NFX trades earlier, as far as screaming there will be live email notification (available) of trades that are timely for members. Not every trade b/c that would be VERY annoying but on cases where I think I really know what I’m talking about I’ll fire them off to your email if you so desire.

    Anyway, hope you find this site useful and I like your suggestion of a white board. It may be a tab on the new site but this structure I think will remain. They’re targeting Sept. 1 for site integration and redesign but I’ll keep you posted as I learn myself what it’ll look like.

    Z

  109. 109
    scoop006 Says:

    Z Is EOG worth a nibble?

  110. 110
    zman Says:

    Scoop,

    I’d rather own NFX today. I look at it early and while I love the company, it’s so oil centric trade (and before everybody says it’s a gas company I know, I know, I know but it trades with oil or the large cap E&P or the majors which trade with oil). In a nutshell, I think oil goes lower (didn’t really get that rally yesterday) and so I’m waiting a little longer. Earnings are in August and if it keeps dropping I’ll add to my opener position there, maybe at a lower strike but not today.

  111. 111
    codydog Says:

    z–i dont know phil and he certainly seems a sincere, hard working guy – I wasnt adversely commenting, just observing that the mismatch hedges have to be resulting in losses for many of his posters who dont get it.

  112. 112
    codydog Says:

    oh yeah, i;ve got some small HK and CHK stuff hoping NG rallies hard. someday, while i’m not too old.

  113. 113
    zman Says:

    Yup HK and CHK are performing with the group right now – crappy. I’ve got them too.

    As far as adversely commenting, let’s try to stay on this board’s activity.

  114. 114
    Alan Says:

    FTO, HOC, VLO, TSO all down 2% to 5% and WNR (my puts) UP? any insights anyone?

  115. 115
    Lije Says:

    z – I don’t think you focus much on wholesale power providers, but do you have any thoughts on CEG

  116. 116
    zman Says:

    Sorry Lije, no comment there.

    Alan – it’s been down all day but caught a steep late day rally. I came half out on 7/24 up 70%. This one trades high to the group multiple and often gets popped as it’s pretty illiquid.

  117. 117
    andy Says:

    just tried your sne puts for a buck finally joined u w/nfx at 1.40. after they wouldnt take my 1.10 offer. i understand where cody is coming from re phil. a little too much bragging for me. lets see what these down days do.

  118. 118
    andy Says:

    forgot to ask u have opinion on txco

  119. 119
    zman Says:

    As always, thanks Nicky! Above and beyond while on vacation.

    Re natural gas, your thinking its rolling over. I’m impressed the push to record gas storage headline didn’t kill it back today, especially with oil coming off a bit. Makes you wonder how much of the gas storage event is already priced in by the drubbing gas has taken over the last 2 months.

    Listen to conf calls this week, it’s interesting to hear how many of the hot plays that have helped to generate this surplus aren’t economic above, say, $5.50 gas.

  120. 120
    scoop006 Says:

    Z Thanks for today’s leadership.
    It was fun and profitable.

  121. 121
    zman Says:

    Andy – RE commment #104: The SNE was just a musing. I did not play. I think Phil said not to. Hope I don’t brag too much.

    TXCO haven’t paid attention to that one in a while. Anything interesting/should I?

  122. 122
    zman Says:

    Scoop – No leadership, just telling you what I’m doing and thinking. 🙂

    You guys are great, great community, lots of good ideas. I gotta go for a swim now. Back in a couple of hours.

  123. 123
    codydog Says:

    z–yeah, its no secret the tanks are full and the playahs are short. the NG mkt holding just under the 6 level suggests to me, the short covering is slowly trickling in.

  124. 124
    Art Says:

    Z,With the initial production from the Independence Hub and the eventual 1 Bcf/d, an increase of 10% from the GOM, how in the world can the price of NG rally? Just wondering. Thanks, Art

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