25
Mar

Tuesday – APC & CHK Boosting Guidance

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Commodity Watch:

  • Crude Oil: May crude closed down $0.98 at $100.86 after a low volume and generally directionless day of trading. At the end of the day, fear of a weakening economy and a strengthening dollar won out despite the fact that the equity markets were driven higher by "it's not so bad after all" sentiment. This morning crude is trading +/- $0.30.
  • Early read on Wednesday's Inventory Report (from the Bloomberg survey)
      • Crude: up 1.5 mm barrels. Remember, could be a downward surprise here, even a draw on stocks due to weather related export problems from Mexico.
  • Natural Gas: rallied $0.26 to $9.33 on another cooler than normal weather forecast. This morning gas is trading up another about another dime.

Holdings Watch: The Wiki and Holdings Pages Have Been Updated.

CALLS:

  • (SU) - Added April $100 calls (SUDT) for $2.35. The stock had taken more than its fair share of a beating and with the further decline of oil looking imminently suspect I added the oiliest name in town to the books. This will likely be a pretty quick trade. 
  • (HAL) - Added the April $37.50 calls (HALDT) for $1.00. I had no service exposure at the time and was looking for a gas leverage way to step back into the group.

PUTS: No trades. 

Stocks Of Interest Today:

(CHK) Announces 8 New Shale Plays & Boosts Guidance - read last night's post about it here. Conference call at 9 EST.

(APC)  Boost 2008 Guidance At Analyst Meeting:

  • 2008 Guidance goes from a range of 205 to 210 mm BOE to 207 to 212 (volumes from continuing ops in 2007 were 221 mm BOE)
  • and increased '08 Capex by $400 mm (comes from the recent sale of Kaskida so no need for added debt, just a little less paid down)
  • and boosted reserve growth towards 10% YoY
  • and announced upcoming sanctioning of two deepwater discoveries (Jubilee offshore Ghana and Tonga West in the Gomex).
  • ...more from the conference slides in a bit...

 

Crack Spread Watch:

Key Takeaways From The Following Margin Graphs:

  • Margins continue to languish in all regions.
  • Refiners look cheap on a forward basis but earnings estimates continue to fall.
  • The price of oil outpaced the price of gasoline for the 5th time in 20 years last week. I tried to graph this but you'll have to trust me as the government data didn't line up nicely and had a lot of skipped in it but the point is that that doesn't happen very often that the price of a gallon of refined product costs less (on the wholesale level) than a price of a gallon of oil. There was a nickel spread as of early last week which has since reversed itself.
  • I will continue to avoid the refining group until I see: 1) utilization plunge for an extended period or 2) gasoline demand accelerate or 3) oil prices fall without a commensurate drop in RBOB pricing. 

crack-spread-032108aaa.jpg

Odds & Ends

Analyst Watch: slow day other than Dalhman Rose initiating coverage of the offshore driller space with a buy rating. 

SEC Re Reserves: Still no update on timing as to when the SEC may revise the reserve reporting rules.

 

 

 

91 Responses to “Tuesday – APC & CHK Boosting Guidance”

  1. 1
    zman Says:

    HK bid up nicely on the CHK news. CHK conference call about to get underway.

  2. 2
    PackMan Says:

    Z –

    Impact of VLO warning on other names ?

    Thx

  3. 3
    zman Says:

    CHK Conf Call Notes #1:

    Haynesville Shale: Reserve Potential: 7.5 Tcfe (if they only stay with their current 200,000 acres) to 20 Tcfe (if they get to 500,000) net CHK
    * tried to keep it quiet
    * HK did out them (acreage values going up)
    * compared to their Barnett acreage – 8 Tcfe net
    * compared to their Fayetteville Shale – 10 Tcfe net
    * 3 horizontal wells have done very well – much better wells than in any other first wells in a shale play
    * will not disclose per well metrics due to competitive reasons.

    Yesterday’s PR was the most important press release in CHK’s history. ~ Aubrey McClindon.

    Colony Wash – expect 2 Tcfe adds here
    * 5 Bcf per well (5% liquid cut)

    Oil Shale Plays:
    Believe > 1 billion barrel in aggregate reserves of oil from the 5 plays in 4 states. Still acquiring acreage so little detail.

    On the Barnett and Fayetteville increased drilling activity it is to make sure they get more of their acreage in HBP (held by production) status.

  4. 4
    Sambone Says:

    8:32 am EST

    ICE Brent Up Over $1/Bbl On Dollar And Margins

    By Lananh Nguyan
    Of DOW JONES NEWSWIRES

    LONDON — ICE Brent crude oil futures rose over $1 a barrel Tuesday in London, helped by a generally weaker U.S. dollar and a recovery for refinery margins and equities.

    Market activity remained volatile as participants looked for a price trend, weighing a sharp downward correction last week with the recent surge through record-high levels.

    At 1220 GMT, the front-month May Brent contract on London’s ICE futures exchange was up $0.88 at $100.74 a barrel after hitting an earlier intraday high at $100.95 a barrel.

    The front-month May contract on the New York Mercantile Exchange was trading $0.44 higher at $101.30 a barrel.

    The ICE’s gasoil contract for April delivery was $6.75 lower at $921.75 a metric ton, and Nymex gasoline for April delivery was up 398 points at 268.10 cents a gallon.

    “We seem to be strengthening on the back of weakening dollar and strong stock markets, so (the oil market is) still economy-led for now,” an energy broker in London said.

    —By Lananh Nguyen, Dow Jones Newswi

  5. 5
    zman Says:

    Packman – I had not seen it as I have been tackling CHK and APC. Can’t be great. I’ve been avoiding the group like the plague. Looks like some of it is unique to VLO via unplanned outages but they are also point out the margins you see here every Tuesday saying things like “throuput margins on gas significantly lower than 1Q07” Not pretty. SUN has been up a little may fall back harder now.

  6. 6
    zman Says:

    CHK going into Q&A – everything going really well.

    Aubrey Quote: “we’re probably not going to need a lot of LNG down the road. don’t see a glut either but more balance. Could need to build a liquefaction plant (joking)”

    Going to take some CHK on the open.

  7. 7
    zman Says:

    ZTRADE: Added the CHK May $50 Calls for $1.30. See last night’s post regarding CHK’s new plays and today’s comments for the additional conference call notes. CEO Aubrey is saying things like “this is the most significant press release in the 19 year history of our company and he’s not a hypester. Sees the new Haynesville Shale play as the biggest in their history.

  8. 8
    zman Says:

    ZTRADE: Added the CHK $47.50 April calls for $1.45.

  9. 9
    zman Says:

    Go HK Go !!!

  10. 10
    zman Says:

    HAL liking the idea of 2 big E&P companies taking activity up.

    Onshore drillers should start moving up.

  11. 11
    Dman Says:

    Z – # 10: any worth a look aside from HAL?

    Reaction to CHK seems mute: back to the old ways??

  12. 12
    zman Says:

    CHK is a gift up $0.80. They just outlined gas plays which add another 10 Tcfe, vs the 10.8 Bcfe they have on the books now plus another 6 Tcfe or so from the oil plays.

    Market is softening and oil is back down through $100.

    CHK conf call just ended and it overlapped APC’s analyst meeting which is good for timing if you aren’t in yet. Don’t think its back to the old ways of no response but instead think analysts need time to digest + uncertainty on the market. I probably jumped the gun on my trades this morning but if I’m right I won’t care in the next few days.

  13. 13
    zman Says:

    Dman – pondering that “aside from HAL” question now. Maybe BJS

  14. 14
    Dman Says:

    Z – 1st line of #12 already playing out & I’m scrambling all available calls!

  15. 15
    Sambone Says:

    9:40 am EST

    Nymex Crude Inches Higher As Dollar Weakens

    By Gregory Meyer
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures inched higher in early trading Tuesday, supported by a weaker dollar and expectations of a drawdown in gasoline stockpiles for a second week straight.

    Light, sweet crude for May delivery was recently up 11 cents, or 0.1%, at $100.97 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange rose 52 cents to $100.38 a barrel.

    The Nymex contract had traded as low as $99.66 a barrel overnight, but pushed back into positive territory as the dollar lost ground against rival currencies. In the absence of recent developments upsetting world oil supply, the greenback’s moves have correlated strongly with the price of oil, a dollar-denominated commodity consumed largely outside the U.S.

    “The main driver for the turnaround appears to be renewed weakness in the dollar, which has fallen sharply against all of the major currencies,” said Addison Armstrong, an analyst at TFS Energy Futures in Stamford, Conn.

    Front-month April reformulated gasoline blendstock, or RBOB, futures rose faster than crude, up 2.76 cents, or 1%, to $2.6688 a gallon. Heating oil futures were recently down by 3.32 cents, or 1.1%, to $2.9299 a gallon.

    Analysts said the two oil products’ opposite price moves may reflect the beginnings a long-anticipated seasonal reversal in prices as expectations of summer demand for gasoline pick up and winter ends.

    Adding support to gasoline prices, Valero Energy announcement Monday that a 83,000-barrels-a-day gasoline cracking unit its Delaware City, Del., refinery continued to operate at a reduced rate. The unit is expected to start ramping back up Thursday.

    Analysts surveyed by Dow Jones Newswires forecast that forthcoming U.S. government data will show that U.S. gasoline stockpiles fell last week by 1 million barrels. The data, from the Energy Information Administration, is due at 10:30 a.m. EDT Wednesday.

    The analysts also predict EIA data will show crude oil stockpiles rising by 1.5 million barrels, while stocks of distillate, which include heating oil and diesel fuel, fell by 1.5 million barrels.

    The oil market is also likely to watch the data closely for demand trends in the U.S., which consumers nearly a quarter of the world’s oil production. Most recent data showed total oil U.S. oil demand was down by 3.2% in the last four weeks compared with a year ago.

    —By Gregory Meyer, Dow Jones Newswires

  16. 16
    zman Says:

    D – its a marathon, not a sprint. I went in a little heavy but still not swing for the fence level. I just don’t do that as I like to be able to fight another day if I’m wrong.

  17. 17
    uop Says:

    Z:

    txs z, nice pop on HK, sold 1/2 of the 17.5s, the 20s are still red. stock at 18.9 and might move up more.

  18. 18
    zman Says:

    Reef – you around? CHK sounded as positive about the Haynesville shale as anything he’s ever talked about. Won’t talk well specifics but said he thinks those first horizontal wells (3 completed so far with 4 rigs running now) came in better than any first horizontal wells in any shale play’s beginning. That’s a bold statement and leads you to believe that the rate is > 5 mm/d. How does overpressure act differently in a shale play than in a conventional reservoir?

  19. 19
    zman Says:

    Morning uop – the $20 HK are a bit risky. If the stock will just take out 19.10 I think we could see a run. If it doesn’t do it soon I can get out of them a little better than even and will roll longer.

    The 17.50s are a double plus and here, if it doesn’t break out soon, I’ll cut in half and let the rest ride.

    CHK sounded a little miffed about their unnamed competitor outing them on the play. CHK is the real long term play here but it’s nice to see HK benefiting.

  20. 20
    uop Says:

    Z:
    NG companies moving up: reason??

    DVN strong

  21. 21
    zman Says:

    NFX caught an upgrade this am. Just watching that one at present.

    DVN up b/c I said I was going to get in and have not yet, lol.

    Whole sector looks strong compared to the broad market. One of the few areas that’s showing organic volume growth and sustained strength in pricing in an otherwise land mine riddled economic environment.

  22. 22
    zman Says:

    GDP – Goodrich Petroleum, one I don’t follow closely up 16% as they’ve drilled a well into the Haynesville as well. Jefferies and Southcoast saying the stock should be catalyzed by CHK’s news.

    Raymond James gave HK a nod saying they too have acreage in the area.

  23. 23
    zman Says:

    I’d point out that HK has about twice as much acreage as does GDP.

    Broad market taking oil and the majors down. Acting like a brake on the E&Ps which want to run.

  24. 24
    Dman Says:

    Z – #16 point taken… didn’t mean to suggest I’m betting the farm or anything. I tend toward the longer dated calls, so if I take 1 or 2 month calls it seems (to me) like I’m being a gunslinger… but objectively it’s a defined risk.

    If the market gets distracted & throws CHK off a cliff I’ll scale in. I’m a bit light in the E&P department so this development (value of CHK jumps but price barely moves) is what I’ve been waiting for to get in.

    Interesting that a whole lotta seemingly non-onshore-gas plays are hopping (OII !!??). It’s like the market is thinking: “oh yeah, energy. I forgot”

  25. 25
    zman Says:

    “oh yeah, energy. I forgot”

    That’s priceless and quite probably the title of tomorrow’s post. Thanks!

    Oil at 99.20 – “oh yeah, the economy. I forgot”

  26. 26
    reefguy Says:

    z- just got here, renewing DL. Overpressure is key to the unconventional. Normal gradient is about .43-.49 #/ft. Fort worth barnett is about .53. Best marcallus about .54.
    These numbers above .49 are right at the top of the pressure envelope; meaning not to costly from a tubular or drilling fluidsaside, but energize the reservoir for optimal flow and recovery

  27. 27
    zman Says:

    Reef – thanks, had not seen numbers on how overpressured it was. Varies across the play, HK said it was less so at Elm Grove.

  28. 28
    reefguy Says:

    z- did you listen to conf. call?

  29. 29
    zman Says:

    yes I did, those are my notes in the first few comments above.

  30. 30
    zman Says:

    Should have gone with my gut on SUN re #5 above.

    SWN outpacing CHK in perf today despite the fact that CHK just said they are doubling activity in SWN’s backyard. Hmmm.

  31. 31
    Sambone Says:

    T Boone is on CNBC I understand

  32. 32
    zman Says:

    just checked, guess he was already on…anybody hear his comments. His favorite name SU is continuing to recover nicely today.

  33. 33
    zman Says:

    HK finally above $19. Needs to break $19.12 for an all time high and a big breakout signal. Volume is at normal day’s level now but people are bing a little cautious given the morning breakout which is understandable. I think we see $20 but not today.

  34. 34
    zman Says:

    CHK approaching HOD.

    NG up a dime; oil back over 100

    Big cap E&P running.

    Service outpacing.

  35. 35
    zman Says:

    Tuesday’s are always quiet but this must be Spring Break for a lot of folks.

  36. 36
    ram Says:

    VLO issue possibly affecting COP? Steel is also running today.

  37. 37
    zman Says:

    Ram – agreed. Hitting XOM too but not CVX. Go figure. Anyway, you knew the warnings had to be coming out of the independent refiners soon. I was surprised to see SUN and the rest running the last few days but again, gasoline is outperforming crude so maybe that turn is coming. I’m still staying away. As to COP, it had a good day yesterday and should resume course soon although they may have to warn themselves.

    By the look of the E&Ps today you’d think CHK had just said everybody else had found 16 Tcfe of reserve potential.

  38. 38
    uop Says:

    ram:
    missed VLO issue and effect on COP, what is this?

  39. 39
    zman Says:

    VLO warned they will miss their 1Q numbers over a combo of greater than expected downtime and lower margins. The margins should be no surprise to anyone, anyone that reads this site at least as I’ve said repeatedly that numbers will need to come down further. COP and other majors (and anyone with a downstream segment) are feeling the drag of the “news” today.

  40. 40
    ram Says:

    ZMAN – Why would CHK still have about 46M shares of short interest? That’s almost 4 days to cover.

  41. 41
    ram Says:

    HK has abot 18M shares short. I wonder if these guys and gals are going to get squeezed?

  42. 42
    uop Says:

    z:

    HK moving closer to 52 week high of 19.13

  43. 43
    uop Says:

    HK is flying

  44. 44
    zman Says:

    Ram – CHK shorts have been around a long time, part of it is hedges against their convertible debt holders. Part of it is from people who hate to see E&P companies outspend cash flow and who probably think NG is $5 too high.

    Re – HK – did not know it was that high, seems like they will be in some pain tonight.

    Uop – me like HK, would be nice to have a close over 19.12 (the old all time high)

  45. 45
    uop Says:

    natgas price is up today and T. Boone made bullish comments about the ratio of natgas to crude price high and an expectation for it to return to the mean which would imply natgas prices around $14 vs the current $9.50.

  46. 46
    ram Says:

    What company is the largest supplier of oil pumps?

  47. 47
    zman Says:

    guess T Boone has bailed on his recent short of NG, lol. Love how all these CNBC experts talk their book for the masses. That argument makes the same sense now as it did two months ago when he said he was short gas (back in the low $8s). I like T Boone, I really do. No disrespect intended but you’ve got to do better than talk the BTU exchange rate on the two fuels for me to get on board with double digit NG prices when we have some of the highest unit volume growth on tap in modern history for gas supply.

  48. 48
    uop Says:

    z:
    missed DVN run

  49. 49
    uop Says:

    HK gogo

  50. 50
    zman Says:

    you mean the ones you see going up and down in the field or the semi-sub kind? I honestly don’t know but its not a bad idea with all the renewed talked of revitalizing old oil fields.

    Uop – Re DVN, yes, for today,(can’t kiss all the girls!) but that one I’m looking at long term for news. Will buy it after the inevitable set of red days that are in our near future.

  51. 51
    zman Says:

    HK tapped $19.40 – there’s got to be a little squeeze action going on.

  52. 52
    uop Says:

    HK at 19.41, wow

  53. 53
    ram Says:

    I believe the up and down in the field kind.

  54. 54
    zman Says:

    ram – you mean pumpjacks. I think there’s too much of an aftermarket for them but I could be mistaken. Anyone?

    Ah, CHK finally breaking on out.Long way to get back to the recent (pre BS high)

  55. 55
    uop Says:

    Z:
    I sold my HK options almost at the top,
    now they are dropping,

    might buy again

  56. 56
    ram Says:

    If you could imagine, the largest supplier of oil pumps/hardware to energy companys. They would probably have $2 billion in backlog and be a U.S. company. I’m guessing on either NOV or FTI – could be somebody else.

  57. 57
    zman Says:

    nice uop…I’d expect it to follow CHK around a bit …. still have that news on the 2 horizontal wells around the corner.

    ram – probably, I need to do some reading on how the oil shale wells are being completed and produced. Could be a good play there too. Not long ago people thought you couldn’t get oil out of a shale…not easily or economically anyway. New day dawning.

  58. 58
    ram Says:

    When you mean horizontal well – is that like you were going straight down and found some oil and realized when you made a right turn and several hundred feet later you have 100 times what you had anticipated in the first place?

  59. 59
    Denise Says:

    test

  60. 60
    Denise Says:

    Good afternoon-
    Seem to be having trouble posting-3rd try
    Z-thank you for the insight on HK-enabled me to stick with my long and add to it last week

    Mr K update-went to 5-5
    He is back to shorting-mostly retail and homebuilders

    Also was thinking of adding to my Hal-hate to buy up any reccent thoughts anyone-saw you bought some calls Z

  61. 61
    zman Says:

    Ram – by Horizontal they are talking about a well that is drilled vertically down to the depth of the zone, the horizontal along it. Say you have a shale at 10,500′ to 10,700′. If you drill a vertical well through it you get 200 feet of pay. If you drill a horizontal, you could put a lateral length, say 2 to 3,000′ all in the zone and perforate and frac along that length. Then think about going the other direction (dual lateral) or in three directions (tri-lateral). All the sudden, you’ve drilled one well from the surface but have horizontals branching out in multiple directions, doing a much better job of draining the reservoir. More costly to drill yes, but the idea is that you get more reserves for your buck. That’s the laymens version and Reefguy and Wyoming, and jy and host of others who are on break this week could talk in a LOT more detail if you’d like.

    Denise – did your prior attempts contain links?

  62. 62
    Denise Says:

    Was trying to post a public Mr K for everyone

  63. 63
    ram Says:

    Thank you – I have a better visual.

  64. 64
    uop Says:

    Z:

    oil and NG action overpowers att the UNG PUTS,

    with the coming spring up north,
    maybe aprUNG roll into MAY,

  65. 65
    reefguy Says:

    PQ up over 9%

  66. 66
    Dman Says:

    CHK analysts in hiding? What does it take to flush ’em out?

  67. 67
    zman Says:

    Denise – apologies for that, saw Google was having trouble communicating with the site earlier. Should be ok now.

    Ram – there are some great cartoon diagrams of this I can post if I can just find them.

    uop – sorry for the delay, was on a call. probably a good idea re UNG. You know I took the money and ran last week on my Aprils (sold for a small gain on the 20th).

    PQ – I know, I dropped the ball there.

    Dman – most were at the APC meeting but the delayed reaction to good news is common to this one.

  68. 68
    ram Says:

    Hey, ZMAN, have you noticed that on HK they are discounting the bid side with over three weeks to go? How rude.

  69. 69
    Dman Says:

    OII action: absent any news or analyst comment to explain today’s updraft, I looked for technical factors. At $61, OII is sitting exactly on the upper line of a declining trend since January 7 and has flirted with breaking out of it today. All it has to do is waffle sideways for a day or so & the trend will be broken.

  70. 70
    zman Says:

    ram – THEY don’t play nice, lol.

    Dman – good observation…looks poised.

  71. 71
    zman Says:

    Denise – it was lucky timing on the HAL buy…onshore gassy leveraged service going to be getting more attention after today. HAL hasn’t really worked yet for me.

    Reef sent me this in an email re gassy service:

    Service companies and suppliers. Tubulars, Fracs, sand(small mess 100 high quality very short supply) devices to mix and pump large fluid and sand slurrys at high volumes. Hal, Schlumberger and BJ are competitors for fracs. Top drive, 1500-2000 hp rig to drill 12000 foot verticals and 4000′ laterals with large hook load capabilities. Barnett rigs probably do not fit pistol. frac pressures at 12000′ likely to be in excess of 8500#. Much more HP per well per frac stage to achieve slufrry densities.

    I had mentioned BJS earlier in a comment as well.

  72. 72
    zman Says:

    potential rising gas-field activity plays:

    fracs – HAL, BJS, SLB
    evaluation – CLB
    proppant (particles used in the frac) – CRR (nice chart)

  73. 73
    reefguy Says:

    z-The proppant story is becoming key. You need very tiny(100 mess) well rounded grains to fit into the very tiny fracture systems in these plays. Rugose sand grains and varying sizes lets shale deform around the grains reducing perm and flow capacity.

  74. 74
    zman Says:

    Reef – thanks for that, I’m going to get some CRR. It’s been beaten up a bit of late.

  75. 75
    ram Says:

    Is Jefferies analyst Subash Chandra a somebody in the E&P arena?

  76. 76
    zman Says:

    He used to be at Morgan Keegan and he’s pretty smart. Probably a bit more swing than some of the other middle sized brokerages.

  77. 77
    ram Says:

    Petrohawk Shares Hit Record on La. Hopes
    Petrohawk Shares Surge to All-Time High on Hopes for Drilling Site in Northwestern Louisiana
    March 25, 2008: 02:21 PM EST

    NEW YORK (Associated Press) – Petrohawk Energy shares have hit a new high, with investors banking on the oil and gas producer’s newly promising position in northwestern Louisiana.

    On Monday, rival Chesapeake Energy said its Haynesville Shale site near Shreveport “could potentially have a larger impact on the company” than any previous project.

    Jefferies analyst Subash Chandra notes Petrohawk “has substantial acreage” _ about 50,000 acres total _ in the same area. “We estimate the Haynesville is worth $10 per share” to Petrohawk, he adds.

    Petrohawk shares are up $1.49, or 8.5 percent, to $19.09 in afternoon trading. Earlier, the stock set a new record of $19.41.

  78. 78
    Dman Says:

    CLB waking up …

  79. 79
    ram Says:

    Apparently this is still not the horizontal well discovery. HK could really start to make the shorts nervous.

  80. 80
    uop Says:

    Z:

    some blogger in Phil’s world asks me: what does Z say about heating days?/
    Are the building or dropping ?

  81. 81
    zman Says:

    CLB probably sees an uptick in work from others but not CHK, they do their lab work on the shales in house. Still, I think they see upward momentum here.

    Thanks for that note Ram. That’s an additional 20,000 acres from 2 weeks ago and I doubt Subash just flubbed the number. $10 a share is easy to get to with 50,000 acres. Say 65% of it is prospective, that gives you over 500 drilling locations on 60 acre spacing. At 3 Bcfe a well that’s 1.6 Tcfe versus the 1.1 Tcfe HK has booked now. $10 per share well = $1.9 B vs 1.6 Tcfe. Yeah, that’s more than fair.

  82. 82
    zman Says:

    uop – tell them that you will get a discount if you get them to subscribe. Prices for new subs go up on 3/31. or you can tell them that HDDs are slowly falling, a bit slower than normal.

  83. 83
    uop Says:

    Z:

    does my subscription price go up after 3/31 ?

  84. 84
    scoop006 Says:

    I have it on good authority Cramer will have VERY positive comments about APC tonight.

  85. 85
    gaamblor Says:

    Isn’t the CHK and HK news terribly bearish for long term NG prices?

    It seems like everyone is finding tons of cheap NG and no new demand is going to be created

  86. 86
    zman Says:

    uop – absolutely not. at least 12 months from the original sign up, probably longer if you want it.

    scoop – hope so, my calls have been whacked there.

    gaamblor – great ? and one that was posed on the Q&A on the HK call. Aubrey said look for a more balanced market with little need for LNG imports. He said that getting rid of incoming LNG (and I think he said lower Canada but it was garbled) along with rising electricity gas-fired gen would balance it out as gas production rose … also, other areas are facing increasing declines… I think its a bit of a hedge on his part and that it augers for prices closer to the $6 to $8 range than the $8 to $10 range we seem to be seeing.

  87. 87
    zman Says:

    beer-thirty!!!

  88. 88
    ram Says:

    Speaking of APC, not as much action like CHK or HK. The “Cramerica affect” would be nice for APC.

  89. 89
    zman Says:

    ram – agreed, if anybody watches him tonight let me know what he says.

  90. 90
    zman Says:

    Hackett of APC on Cramer now. thx scoop

  91. 91
    Wyoming Says:

    Z,

    I think what is being discussed is what we refer to as Artificial Lift. Another means of bringing liquids to surface when the reservoir pressure is not enough or when fluids enter the wellbore “smothering” gas production. There are many different methods:

    Pumping jacks (horse head) – Lufkin LUFK and probably NOV. Basically this is like the old time water wells on the farm with sucker rods connected to a pump downhole which brings liquids to surface. A stuffing box and slick rod at surface keeps the fluids contained and the oil is pumped to a stock tank. As in “stock tank barrel”. You will find more mom and pop companies involved with these wells as the majority are strippers.

    ESP – Electric submersible pumps. SLB bought Camco which had a REDA division. BHI has a Centrilift division. I am sure WFT has bought somebody during their history, just nobody knows (joke). These are basically big sump pumps dropped down to an optimal level for drawdown.They are run with the production tubing and a big cable to supply power. Usually in fields where there is a lot of produced water and commercial oil volumes, California, West Texas, Indonesia, Offshore. Need to have a good electrical supply and well count, usually.

    Gas Lift – WFT, SLB, BHI and a slew of mom and pops. Not as efficient as ESP’s. Requires a compressor to inject gas down the backside of the tubing where a series of valves allow open and close allowing gas to enter the tubing to lighten the hydrostatic head in the tubing. The lighter the pressure from the fluid column, the more oil or gas can enter the wellbore. The gas is separated at the wells facilities and cycled back down the backside with excess down the sales line. Pretty common in Barnett.

    Miscellaneous – progressive cavity pumps has liquids pumped down annulus (backside) to power the pump bring fluids to surface inside the tubing. Plunger lift uses gas volume build up in the backside of the tubing to blow a plunger to surface lifting fluid in the tubing above the plunger. It then sinks slowly to the bottom until enough pressure builds up to blow it back up.

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