10
Jun

Tuesday Morning – E&P WIOWIO Update

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In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Stocks We Care About Today
  4. WIOWIO - E&P Names - tomorrow: Oil Service
  5. Odds & Ends

Holdings Watch: Wiki tab updated.

  • (WFT) - Entered the WFT $45 June Calls (WFTFI) for $2.05 for a quick trade. (WFT) is like a well run mini-SLB. 
  • (WFT) - Entered the WFT $47.50 August Calls (WFTHW) for $3.10.
  • (HK) - Added the HK $35 June Calls (HKFG) for $2.10 for a quick trade. I continue to hold the September $20 calls-- and the common here as well.

Commodity Watch:

  • Crude oil closed off $4.19 at $134.35, not much of a retracement of the recent move up and inspired by a dead cat bounce in the dollar. This morning crude is trading up over $3 on:

 

  • IEA Cuts Demand Growth Forecast. The International Energy Agency now expects 2008 global crude demand to rise 800,000 bopd over 2007, down from its most recent forecast of a 1.03 MM bopd rise. The cut is attributable to several countries' removal of fuel subsidies.
  • IEA Cuts Non-OPEC Supply Forecast. The IEA also trimmed its expectation of non-OPEC supply growth for 2008 to 460,000 bopd from 680,000 bopd. This highlights the problems we are facing in older fields and puts a further call on OPEC to make up the delta.  
  • IEA Warns Against Subsidies And Tax Cuts. The IEA said the worst thing countries' can do is boost subsidies or in the case of the OECD countries, reduce taxes, both of which increase demand. See next bullet.
  • Obama Promises Windfall Profits Tax For "Big Oil". "We'll use the money to help families pay for their skyrocketing energy costs and other bills." Zcomment: Countries with NOC's (National Oil Companies) often subsidize fuel costs as "Manna-- for the Masses". This in turn encourages rampant growth in consumption. Does this seem a wise course and would this not be in effect what "help families pay their bills" means? Hmmmm....This is not a political comment as I find those arguments fairly pointless in looking at stocks and commodities and I don't want to encourage partisan politics within the site but how Senator Obama does in the polls will likely be another factor contributing to oil price movements in the following function: Obama up = oil up.
  • Paulson Suggests Currency Intervention A Possibility To Rescue The Dollar. Why start now? He's been saying for months that a strong dollar is in the best interests of the country while doing nothing to promote said strong dollar. This morning the dollar appears to be attempting another break out of its current low valuation base and Bernanke was heard echoing Paulson's sentiments (which at this point are just that) last night.
  • Nigeria Watch. Labor union threatens strike which could impact as much as 450,000 bopd of production.
  • Natural gas closed down $0.09 at $12.60 barely marking the move move lower in oil. Heat in the Northeast and Midwest is expected to moderate by Wednesday and this may very slightly soften prices but only solidly higher imports will have a moderating effect at this point and we're getting the opposite of that now as Canada starts to roll lower. This morning gas is trading flat.

  • Tropics Watch: A few waves drifting across the Atlantic but nothing to really comment about. 

  • Gas Imports Fall To New 2008 Low: Down 3.5 Bcfgpd YoY. Taken together with the rally in exports to Mexico, this drop fairly well offsets the 5 Bcfgpd rise we've seen in domestic production. 
    • LNG Still Stuck In Neutral At 0.7 Bcfgpd. You just can't get gas to come to the U.S. with prices as much as $6 to $8 per MMBTU higher than Henry Hub in Europe and Asia. This is 2.4 Bcfgpd below year ago levels when gas was peaking at new records and everyone predicted LNG volumes would continue their upward much into infinity.
    • Canadian Volumes Hit New 2008 Lows. Volumes from Canada fell to 6.9 Bcfgpd, down 1.1 Bcfgpd from year ago levels. I and others have been expecting this for a couple years now and the fact that it looks like it is occurring quite suddenly is odd and troubling as it could develop into another serious catalyst for higher U.S. gas prices. I only say troubling from the standpoint of the consumer in the sense that if you think gasoline prices are smarting people's wallets, wait until we hear about the increased cost of cooling their homes this Summer and the whopper of a bill people will be looking at to heat their homes this coming Winter.

ng-imports-060908.jpg

Stocks We Care About Today

APC Hits More Oil Off Ghana. The Mahogany 2 well comes in an infrastructure constrained 5,200 BOEpd and is believed to be in communication with the discovery well (Mahogany 1) some 4 miles to the southwest and with the Hyedua1 deepwater well 7 miles to the southwest (ie, big structure). Reserve estimates range from 500 million to 1.8 billion barrels. APC has ~ 30% working interest here.   Could give the stock a little shot in the arm.

Quest Resource (QRCP) Buys Petroedge. $140 million for 99.6 Bcfe in W. Virginian, PA, and NY representing $1.41 /Mcfe acquisition price which is pretty shockingly cheap. Good news for (QRCP) but unwelcome valuation for local small cap players. 86% of Petroedge's (private firm) 78,000 net acres are in the fairway of the Marcellus Shale. The reserves will be purchased by related (QELP) and (QRCP) will retain the drilling rights. Worth keeping an eye on.   

HK - Received the old Cramer Cha-Cha last night. He said it was a $48 stock masquerading as a $35 stock. Whatever that means I say welcome to the party pal and good timing given our quick trade outlined above.  

(XTO) Buying Hunt Petroleum. See comment #4 below. 

WIOWIO (Why I'm In What I'm In)

E&P Names

CHK - Common Stock, July calls.

The Big picture stuff:

  • Management - top notch and highly aligned with shareholders
  • High unit volume growth guidance: 22% for 2008, 21% for 2009 and 16% for 2010.
  • gassy - 92% of production is U.S. natural gas,
  • long reserve life (15 years)
  • Massive drilling inventory (>10 years worth at current drilling rates and they are the most active driller in the U.S. bar none).
  • Leading position acreage positions in Haynesville and Marcellus shales, #2 in Barnett and Fayetteville Shales
  • For as long as I can remember, the stock has been the cheapest of the big cap E&P. I have argued that their prospect inventory, production growth rate, and all of the stuff in prior bullet points augured for a more equivalent forward multiple of cash flow relative to its peers. That has now occurred but the name is still cheap and when was the last time Wall Street, upon taking notice of thing didn't swing the pendulum too far in the other direction? Given that production is likely to be revised higher over the course of time I think the stock will continue to soldier higher, perhaps adding 50% to 100% in the next 12 months.

ep-pcf-060908.jpg

Near term stuff (reasons I own it right now, especially the calls):

  • Haynesville hype has catalyzed the names. CHK has drilled 6 horizontal wells that management says it believes are the best wells ever drilled at the inception of a new shale play. Management also indicated these wells are not unlike the well recently announced by (PVA) flowing at a pipeline constrained 8 MMcfgpd.
  • They have 500,000 acres and are still building their position.
  • They will announce well results in early August on their 2Q call and I would expect the stock to run up in the weeks and days prior to that conference call.    

 

NFX - July and September Calls

  • Management- successfully transitioned the company to a leading mid-cap resource player, extending reserve life and valuation multiples in the process. Good financial discipline here as well.
  • Falling F&D costs - likely to approach low $2s per Mcfe, down from $2.90 last year
  • Valuation: they have started to garner more respect since I started pounding the table over them never getting any. Still, the stock remains a bargain.

Near term stuff

    • Dominant Woodford Shale player - July should see first spud of a NFX dual lateral well here, economics could approach $1 / Mcfe on these new, extended lateral wells within 6 to 12 months meaning 2009 F&D will likely fall more.
    • Mancos Shale - Mancos underlies HBP (held by production) acreage in their Monument Buttes field. We could get test results from the first two to three wells here at any time.
    • Bakken Stealth Play - I think they have as many as three successful wells drilled so far and (NFX) has a habit of sprinkling important news items between quarterly releases so news could be soon.

HK - Common Stock, June (added 6/9) and September Calls

  • The "For Sale" sign has been out since day one and management is focused on building the company for the purpose of maximizing value and selling it.
  • Low cost producer - cheapest one I follow on a $/Mcfe basis. ($0.52 per Mcfe in 1Q08!)
  • Rarely misses a quarterly number and often guides higher and yes, they did not up guidance last quarter so it's probably time,
  • Conventional production from the Lower Cotton Valley, Positioned in the Fayetteville and Woodford shales.
  • Building a massive position in the Haynesville Shale (over 150,000 acres now) and going to 400,000 acres.
  • they should have results on at least one horizontal Haynesville test by the 2Q call. 
  • other potential upside in the quarterly call should include further Taylor sand tests at Elm Grove which can offer high rates, a Gray sand test at Terryville, and potentially the first results from their JV with (EOG) in the East Texas James Lime play. 

PQ - Common Stock, July Calls

  • One of the least inexpensive small cap E&P names around - see initial piece here.
  • Haynesville position, small in terms of acreage but it makes them one of the most leveraged to the play given their smaller reserve bookings. 
  • Not the best option trader but patience has paid off here time and again
  • Did I mention it is very cheap: 4.4x 2009 consensus estimated CFPS
  • I expect them to bump production guidance on the 2Q call. 

 

Odds & Ends

Analyst Watch: JPM cutting (MUR) to underweight, Deutsche Banks cuts (CLR) from Buy to Hold (basically saying it's run too far, too fast and other names within the Bakken Play provide better opportunities; but they also said they will view a pullback here opportunistically ... as will I), Jefferies raising its price target for (GDP) from $52 to $66, Merrill upped (SM) to Buy. 

Housekeeping Watch: I will be in Honduras during the last week of June. There will be no posts during this period as I will have no access to markets, communications, air conditioning etc. All things need to have their batteries recharged including me. 

 

 

106 Responses to “Tuesday Morning – E&P WIOWIO Update”

  1. 1
    Sambone Says:

    8:00 am EST

    Crude Up Over $1, IEA Report Supports

    By Nick Heath
    Of DOW JONES NEWSWIRES

    LONDON — Crude oil futures reversed earlier falls to climb more than $1 in European trade Tuesday, with prices steered by opposing forces of a stronger U.S. dollar and a bullish prognosis from the International Energy Agency.

    The volatility that has been the signature of crude trading over the last week showed no signs of abating, with prices bouncing from the U.S. dollar-inspired drops of more than $1 earlier.

    At 1049 GMT, the front-month July Brent contract on London’s ICE futures exchange was up 41 cents at $134.32 a barrel, down from an earlier peak of $134.96 a barrel.

    The front-month July light, sweet, crude contract on the New York Mercantile Exchange was trading 41 cents higher at $134.76 a barrel, retreating from the intraday high of $135.50 a barrel.

    The ICE’s gasoil contract for June delivery was 50 cents at $1259.25 a metric ton, while Nymex gasoline for July delivery was up 220 points at 341.60 cents a gallon.

    —By Nick Heath; Dow Jones Newswires

  2. 2
    Sambone Says:

    Seeking Scorching Oil Rally’s Silver Bullet

    By GRAINNE MCCARTHY
    A DOW JONES NEWSWIRES COLUMN

    NEW YORK — Oil prices may have slipped Monday from their record-breaking highs last week, but energy-hungry nations looking for a quick fix to alleviate their pain may be left wanting.

    On its face, the fact that the world’s largest oil producer, Saudi Arabia, put out a statement Monday expressing concern about the current level of oil prices was significant. The kingdom, the de facto leader of the Organization of Petroleum Exporting Countries, rarely discusses oil price levels. This time it sought to go on the offensive, not only articulating its concern but calling a meeting of oil consumers and producers to discuss “substantive ways” of dealing with high prices.

    Reading the tea leaves of the Saudi statement, however, underscores the fact that the kingdom isn’t proposing concrete action to bring down prices.

    The reality is that despite the best efforts of regulators and legislators alike, there’s no silver bullet explanation to account for runaway oil prices, nor is there a clear path toward lower prices. After crude’s stunning gains, however, debating these points is likely to remain front and center for global policy makers as they seek to legislate and regulate themselves out of an energy straitjacket.

    In terms of OPEC, there’s actually not much the group can do. After years of under-investment, OPEC’s oil-pumping capacity is too limited to have a big downward impact on prices, with the group’s effective spare production capacity at a historically low level of just over 2 million barrels a day.

    Most of that capacity is held by Saudi Arabia. The kingdom rejected requests for more oil from President George W. Bush in May, though Saudi Oil Minister Ali Naimi said the country would sell 300,000 barrels a day more in June for a total of 9.45 million barrels a day because of added customer demand.

    Do Something, Anything
    An OPEC meeting might have some impact on prices. If the group were to convene an extraordinary gathering ahead of the next scheduled meeting on Sept. 9, oil traders would likely view it as evidence that a production increase is in the cards, potentially pushing prices lower. But producer-consumer meetings typically don’t result in any OPEC decisions even though the group often uses the occasion to meet informally.

    The last such gathering was in April in Rome; it ended with a statement expressing concern about oil prices, which were then trading around $118 a barrel.

    Fast forward six weeks and current oil price levels make $118 look cheap. Benchmark crude futures in New York climbed nearly as high as $140 a barrel on Friday, in a scorching run that saw prices leap $10.75, or 8.4%, to settle at a record $138.54 a barrel on the New York Mercantile Exchange before slipping back near $135 on Monday. It was crude’s largest one-day dollar gain since futures began trading in March 1983 and came in the absence of any fresh event to drive prices higher.

    Not surprisingly, the surge fueled existing anxiety about a bubble in the oil market and prompted a slew of officials to call on OPEC to do something — anything — about high prices.

    “OPEC needs to open the production lines to a greater extent, increase global oil supply,” said Australian Prime Minister Kevin Rudd. In inflammatory language, Rudd said the Group of Eight leading industrial nations should “apply the blowtorch to the OPEC organization.”

    Move Hard To Rationalize
    Legislators in Washington are clamoring for ways to close any loopholes in federal oversight that they perceive are being used by speculators to artificially inflate oil prices. The move by oil prices above $100 a barrel and the speed of its ascent to nearly $140 has only further convinced those in the bubble camp.

    Others say crude has strong supply-and-demand support. The rally certainly had its roots in fundamental factors that continue to play a role — look no further than China to find evidence of the world’s voracious demand for energy. There are also significant supply concerns, not least the fact that the most productive oil fields globally are aging.

    The weak dollar and concerns about inflation have provided further ammunition for oil bulls to get into this market. Given that oil is dollar-denominated, returns for oil producers diminish with every leg down in the dollar, giving them less incentive to pump more and alleviate price pressures. At the same time, the weak dollar makes crude a more attractive investment for buyers in other currencies.

    That’s not to say this scorching run makes sense — it’s very hard to rationalize a move of over $10 on a slow news day. The more crude soars, the louder the bubble chatter will get.

    The American driver may ultimately have the key to lower prices. The spike in the U.S. unemployment rate in May in many ways should give investors reason to sell oil. If more people are out of work, they’ll probably be less inclined to pay $4 at the pump for a gallon of gasoline, eating into gasoline demand.

    (Grainne McCarthy is managing editor for energy news at Dow Jones Newswires.)

    –By Grainne McCarthy, Dow Jones Newswires

  3. 3
    zman Says:

    XTO Buying Hunt Petroleum for $4.186 billion. Hunt active in the Bakken and elsewhere, details to follow.

  4. 4
    zman Says:

    XTO Deal:

    Price 4.186 billion

    Reserve id’d at 1.052 Tcfe ($3.98/Mcfe which on the surface would seem to be pretty pricey), these are legacy fields and XTO is saying they already see the potential to double reserves

    Assets are:
    70% in E. Texas, Central and Northern Lousiana (Haynesville Bossier potential???)
    28% Gulf Coast,
    North Sea,
    does come with 15,000 acres in the Bakken

    197 MMcfepd, and they hedged half of it at $11.08 / Mcfe.

    The nice legacy assets and new deeper pockets is that the application of capital by a proven E&P player can often quickly unlocked new potential. This is well known by 80 year old Hunt Petro and is why they made XTO pay up for the deal. I will watch and may take some XTO here.

  5. 5
    zman Says:

    WLT – that little coal company I never managed to get shares in is doing a secondary. I’ll watch and wait.

  6. 6
    tater Says:

    NFX
    Real quick update on my “be careful” with NFX. The top of Friday’s candle is the resistance point (still in play) the combo with mid-may high is a possible temp double top and yesterday’s move came on less than great volume. Selling days on 7 of last 13, triangle formation to watch on OBV, and RSI not giving a good picture over the last month or so.
    Not a “sell” just a “be careful” as the bigger trend is obviously up. Your time frame is always important in terms of your perspective on a price direction, and this “be careful” is a counter-trend call, which by definition is not for every trader.
    Best part though is that it will be very easy to see where I am wrong, a break above May high. Good luck today

  7. 7
    tomdavis12 Says:

    Z CHK upgraded by CSFB analyst today. Much like the JPMorgan guy woefully behind the curve on everything.

  8. 8
    zman Says:

    Tater – thanks very much

    Tom – well, at least he got the direction right, lol.

    You know you are in a “hot” market when the acquiring company goes UP before the market even opens or there has been much communication between the company and analysts. XTO called 69.40 bid, closed at 67.72.

  9. 9
    el_vogel Says:

    i’m really @ a crossroads trying to figure out a good re-entry point to HK. I don’t necessarily regret taking profits when I did, but I really did miss the boat getting back in @ 27-28 before the big rally…any suggestions anyone? 🙂

  10. 10
    zman Says:

    El-V re HK. That is a problem I overcome by keeping exposure in favorite names and rolling up and out often. Right now the stock is inflated and is going to get a pop today on Cramer last night. Long term I think it goes higher. Short term it could retrench 10% for no other reason than profit taking. They could have news before the conference call but I would not count on it so your near term catalyst will be other players announcing Haynesville progress and then CHK in early August. I can’t stress enough that the fundamentals here are very strong in their non-Haynesville stuff BUT A LOT of buyers and new money have no concept of anything but the HS angle on the story and couldn’t find that on a map. When I do get completely out of these kinds of names its always a pain deciding where/when to get back in which is why I often keep at least a placeholder position in my favorites. Nothing like money to make you pay attention to a story.

  11. 11
    zman Says:

    Tater – will you take a look at XTO for me? That looks like a triple top breakout if it beats $70 today. Fundamentals here very strong.

  12. 12
    zman Says:

    Saudi oil minister comments on oil this morning pulling it down slightly.

  13. 13
    bill Says:

    ty for the qrcp news

    up 2,500 on a quick purchase at the open

  14. 14
    zman Says:

    Nice one Bill, and here I was reloading the coffee machine.

  15. 15
    zman Says:

    So far Cramer has no legs on HK, given up more than a dollar from the open high and I probably should have taken his gift on the open and closed those Junes. Group weakening under profit taking pressure. Service, E&P, Refiners (again), even coal all turning red.

    DUG up 2%.

  16. 16
    zman Says:

    Volume extremely light so I’m not very concerned. Look at NFX down $2 on a whopping 38,000 shares. Utterly ridiculous that a company of that size can fall 3% in 15 minutes on no volumes. Tells me there is way too much hot/stupid money in the group.

  17. 17
    Dman Says:

    NFX down 3%, legging into some Sept calls.

  18. 18
    zman Says:

    When the group recovers and it very well may as the broad market thinks about going positive I think names like HK and CHK could press their opening highs.

  19. 19
    Jason Says:

    What strike on the NFX, DMan?

  20. 20
    Garyinhou Says:

    Half the volume I would have guessed in CLR… buyers just watching for now?

    Z.. profit taking/ correction.. could last a few hours or few days?? My guess is it may be short lived.. my guesses often wrong

  21. 21
    Dman Says:

    Z – I think NFX was up as an attempted coat-tails play along with HK, but that never really seems to work, so they bailed out & pushed it down. If it keeps falling I’ll need a new theory 🙂

  22. 22
    zman Says:

    Re profit taking hours vs days, I try not to spend a lot of time on that kind of thinking as its just about impossible to tell. I’m better at guessing that CNBC will bring out a bunch of bears to talk about the group now that the tickers have been red for almost 30 minutes.

  23. 23
    Dman Says:

    Jason, I went for the $65s. Will buy more if it falls further.

  24. 24
    john11 Says:

    Interesting Investors Biz Daily feature on NXY today, canadian oil and gas driller, anyone familiar with it?

  25. 25
    zman Says:

    Cramerica abandoning HK.

    NXY – High quality Canadian but not a name I follow closely.

  26. 26
    john11 Says:

    Thx Z

  27. 27
    zman Says:

    WILDZTRADE – Part II. Added more HK June $35 Calls for $2.10.

  28. 28
    texana Says:

    buying clr on dip

  29. 29
    tater Says:

    Running errands today, court again tomorrow, so I will be in and out for a bit here.
    XTO
    Don’t really see anything that you don’t, 70 is the line in the sand. Today’s early action signals an overall indecision, who or what is going to push it out of it’s 5 minute chart triangle?
    Daily chart shows the horizontal trading range between 60 and 70. Only thing that I don’t like right now is that the RSI might be signaling a negative divergence, but that would seem to be tenuous and nitpicky. Gun to my head? Buy the breakout above 70 like you suggest, or wait for a return move back to 70 after the breakout (return moves happen more often than people think as the big boys short the breakout).

  30. 30
    tater Says:

    XTO
    5 min chart triangle just broke to upside as I wrote that

  31. 31
    Popeye Says:

    IOC making a move.

  32. 32
    Popeye Says:

    IOC announces gas flow results @ Elk-4.

  33. 33
    zman Says:

    Thanks for the headsup Popeye, that stabilized flow rate of 160 MMcfgpd is monster as is the height of the hydrocarbon column. I’ll see if I can find Reef.

  34. 34
    reefguy Says:

    160 is an AOF. In carbonates that is not as meaningful

  35. 35
    Fred Says:

    I found Uncle Phil Davis amusing and thought folks might enjoy:

    http://seekingalpha.com/article/80560-options-trader-monday-outlook?source=d_email

  36. 36
    zman Says:

    Credit Suise reiterating neutral on CHK today.

    Stocks trading today like its options expiration. Very slow.

    Oil up a $0.70 and falling off. Yesterday down oil was good for the group and today up oil has been bad. Market starting yet another minor rally and the linkage to crude is very obvious.

  37. 37
    VTZ Says:

    Nexen is a great company, they are a large canadian-based international E&P. I would liken them to Talisman.

  38. 38
    zman Says:

    Oil negative, market thinking about a rally but not really into it. Energy sectors growing a little redder.

    V – agreed re TLM comp, good company.

  39. 39
    VTZ Says:

    Nexen also has a JV upgrader with OPTI Canada. they are building a gasifier which converts heavy oil to natural gas so they are not exposed to the rising costs of nat gas, but also they use the worst (heaviest) part of the barrel to do so. It’s a tradeoff between oil volumes vs oil netback (the oil would be worth less per volume if ther heavy part they are gasifying would be included)vs gas costs.

    It’s the first gasifier in the oil sands.

  40. 40
    VTZ Says:

    To be clear the oil sands upgrader is in development, but will start up in mid 2008 I think.

  41. 41
    john11 Says:

    VTZ..thx very much for the info.

  42. 42
    ellwodo Says:

    XCO – looks as if it’s on sale compared to the other Haynesville players. Any thoughts on Sept calls (to give time for CHK updates in Aug)?

  43. 43
    el_vogel Says:

    methinks the ‘cramer pump’ has turned into a trader’s dump…if he’s rallying behind a stock, it’s become a flag to others that they can offload their shares to stronger than usual demand…

  44. 44
    el_vogel Says:

    or – maybe everyone’s selling energy shares to buy more financials. LOL!

  45. 45
    zman Says:

    I think of XCO as more of a Marcellus shale play than a Haynesville name although they do have a small acreage position. I sold a little early and am not willing to go back in the just yet.

    RE: HK and Cramer. He’s not wrong about his points…and neither are you. You can tell which stocks will rally in the event of a rally today though, XTO, CHK, HK

  46. 46
    js1 Says:

    when cramer pumps a stock like he did last night it is usually a smart thing to sell in AH and buy back next day or two

  47. 47
    js1 Says:

    somebody do a rain dance and try to keep WFT closing over 45

  48. 48
    Pete Says:

    Z,
    Are you still holding the June DUG ?

  49. 49
    zman Says:

    Pete re DUG

    yes $27 and $30 June calls.

  50. 50
    irished Says:

    adding to WFT on the pull back

  51. 51
    irished Says:

    was a question, sorry

  52. 52
    zman Says:

    RE WFT – no, I generally try to space them out a little more, especially names that I don’t traffic in all that often.

  53. 53
    ellwodo Says:

    XCO – not trying to argue, just to understand: in their June presentation they disclosed 107,000 net Haynesville acres with est 2 to 5 tcfe of potential reserves. Granted, that’s only 1/5 of CHK’s Haynesville acreage, but XCO is only 1/10 of CHK’s market cap. In comparison to HK, XCO has about half the Haynesville acreage but less than half of HK’s market cap. The market is giving XCO less respect now, but as a relative bet on Haynesville doesn’t it seem like it’s on discount?

  54. 54
    zman Says:

    Elwo – arguing is fine and I see your point, I was looking at them from a reserves metric, HS potential relative to their current booked reserves is about 2x based on what are becoming standard spacing EUR and spacing assumptions. The other players we play with having exposures in the 4 to 6x current reserves. There should be a table of them on the E&P tab. But your point is taken and the stock isn’t exactly expensive either.

  55. 55
    zman Says:

    E&P and service groups now look like a source of funds, I guess (seriously) so the hot money types can buy financials.

  56. 56
    tater Says:

    Sold CLR 65 puts at 2.9, see support at 62 so I figure this could be a good time to try to play catch-up to all of you who have been crushing with this company.

  57. 57
    ellwodo Says:

    Z – thanks, other viewpoints is one of the benefits of this site. I was just focusing on one metric.

  58. 58
    scoop006 Says:

    Z I’m bored and itching to buy something.How about making another WILDZTRADE so I can piggy back your trade. If you don’t I will buy CLR June $70c’s

  59. 59
    el_vogel Says:

    does anybody follow/like STO?

  60. 60
    bill Says:

    may i suggest chk, pq , and hk

    im adding here

  61. 61
    tater Says:

    NFX – sitting at support right at its 50 EMA now @ 64ish. Somebody give me a nudge and I’m back in.

  62. 62
    Sambone Says:

    12:28 pm EST

    Nymex Crude Sags As Dollar Rebounds

    By GREGORY MEYER
    Of DOW JONES NEWSWIRES

    NEW YORK — Crude oil futures surrendered earlier gains and traded lower Tuesday as the dollar rose against the euro.

    Light, sweet crude for July delivery was recently down $1.53, or 1.1%, at $132.82 a barrel on the New York Mercantile Exchange, after rising as high as $137.98 in early screen trading. Brent crude on the ICE futures exchange dropped $1.39 to $132.52 a barrel.

    The dollar was stronger for a second day against the euro, which recently traded at $1.5471 from $1.5627 late Monday. Federal Reserve Chairman Ben Bernanke expressed worries about inflation, which the currency market interpreted to mean interest rate hikes might be coming. The greenback’s decline has correlated with strong gains in dollar-denominated crude this year.

    “The dollar is really putting on a good show against the euro today after Bernanke’s comments,” said Addison Armstrong, an analyst at brokerage tradition Energy in Stamford, Conn. Crude also dropped on weakness in gasoil, a distillate fuel traded on the ICE exchange that was recently down 1.3%, he said.

    The dollar’s connection with oil prices is the subject of debate. Treasury Secretary Henry Paulson said Tuesday the weak dollar isn’t to blame for surging oil prices. Answering questions after a speech, he said people are focused on the “wrong thing,” and that supply and demand are behind rising prices.

    Oil had surged more than $3 earlier in the day after the International Energy Agency, which advises 27 member countries, said in its monthly oil market report that supply from producers outside the Organization of Petroleum Exporting Countries is failing to keep up with global consumption. The agency sees world demand growing by 800,000 barrels a day this year, or 0.9%, to 86.77 million barrels a day. The IEA sees non-OPEC supply growing by only 500,000 barrels a day this year, half the level expected months ago.

    Front-month July reformulated gasoline blendstock, or RBOB, fell 3.66 cents, or 1.1% to $3.3574 a gallon. July heating oil fell 3.05 cents, or 0.8%, to $3.8465 a gallon.

    —By Gregory Meyer, Dow Jones Newswires

  63. 63
    scoop006 Says:

    Tater, FWIW I bought NFX July $65 this AM

  64. 64
    Garyinhou Says:

    Z – reverse saying… when in doubt… buy half?

  65. 65
    zman Says:

    I’m not in a rush on days like this to bottom fish. Took more HK and risky like it was that is not working out at the moment. Oil is accelerating to the downside and it could be off $5 in a wink, again, don’t need to put more dollars at risk in front of that.

    DUG up 5%

  66. 66
    el_vogel Says:

    before i go jumping back into anything, is there reason to believe things will stay down for a while?

  67. 67
    zman Says:

    Dollar is very strong, people are talking top again in oil which is what they do on red days, we could be in for a couple of these and I am not getting more aggressive in front of oil numbers tomorrow. I’m still very cash heavy and I still have my DUG calls.

  68. 68
    zman Says:

    ZTRADE: Out DUG $27 Calls for $2, up 18%. Still holding the DUG $30 call position.

  69. 69
    zman Says:

    HK – why I only do the occasional WILDZ. Down 5% on the common and more off the all time high from this morning. No news, just suddenly the market hates energy again. Ug.

  70. 70
    zman Says:

    Oil down 3.35
    NG down 22 cents
    doesn’t help either on this “baby and bathwater” day

  71. 71
    zman Says:

    HK – another attempt at a rally off the lows. I’m unlikely to nibble more there today as it appears all rallies are being met with fairly heavy selling.

  72. 72
    kyleandy Says:

    z what AOF stand for in #34

  73. 73
    reefguy Says:

    Cashing out last week looks good on such a red day. UP names–IOC, SM, cwei. Anybody else????

  74. 74
    reefguy Says:

    AOF is Absolute Open Flow. In a matrix porosity reservoir(no fractures, no frac, this is a meaningful number)In a fractured limestone it is less meaningful

  75. 75
    jy Says:

    AOF = “absolute open flow” calculated flow rate from usually 4 flow tests of a well on different choke (orifice) sizes. Take the 4 measured points at different choke sizes and calculate an AOF as if there were no choke (restriction) on the flow rate at all. Usually only useful in comparing one well to another in a similar reservoir setting.

  76. 76
    elijahwc Says:

    GW just caught a bid

  77. 77
    Dman Says:

    Todd Harrison was arguing a few days ago that the gold:oil price ratio had gotten very low (gold been soft lately while oil was going crazy) and suggested gold as a play or even long gold & short oil as a trade. The recent trend where up oil has crushed stocks (including energy stocks) got me thinking that maybe I do have to look to keeping a position in USO or the like. But then applying Todd’s view, maybe gold/silver would also play that role & without having to “pay up” so much for it just now.

    Gold stocks getting spanked: AUY down 7% & I just nibbled on some Jan DITM calls

  78. 78
    kyleandy Says:

    ELI REEF thks TXCO only down .01 that shud count as up today!!!

  79. 79
    zman Says:

    Thanks Eli, had not seen.

    Groups getting a little lift with oil closed, as was the behavior last week on such days. I would say volume is a bit higher today and sell off has at times looked a bit panic-like which doesn’t make me want to go fishing.

    Refiners – another bad day (4 to 6% discount sale in all names but VLO which is down 2%)

  80. 80
    elijahwc Says:

    Re #76

    Z, a real bid as in for the company

  81. 81
    zman Says:

    Eli, right, glad I had not yet gotten into PDS.

  82. 82
    ram Says:

    GW is up 9% on something.

  83. 83
    ram Says:

    Is GW a good fit with PDS?

  84. 84
    zman Says:

    PDS wants to scale up in the US and south of the border so I guess they think so. I have not looked at what that puts the rigs at on an assets basis but will do.

  85. 85
    reefguy Says:

    sm up 3% on bog red day

  86. 86
    zman Says:

    SM = Merrill upgrade

  87. 87
    reefguy Says:

    z- thanks

  88. 88
    ram Says:

    Thanks.

  89. 89
    Sambone Says:

    (In U.S. dollars unless noted.)
    CALGARY, Alberta, June 10 (Reuters) – Precision Drilling
    Trust PDUN.TO said on Tuesday it has made an unsolicited $9 a
    share bid, worth about $1.6 billion in total, for contract oil
    driller Grey Wolf Inc GW in order to boost its U.S.
    presence.
    Kevin Neveu, chief executive of Canada’s biggest drilling
    firm said Precision was looking to expand in the United States
    and said Grey Wolf, which has a fleet of 121 rigs offered “a
    significant U.S. footprint.”
    ($1=$1.02 Canadian)
    (Reporting by Scott Haggett; editing by Rob Wilson)

    Tue Jun 10 18:53:47 2008 -GMT- pnac (nN10372634) = 1 19:05

  90. 90
    ram Says:

    ZMAN – Are you storm free for a while?

  91. 91
    zman Says:

    Storm free? You mean in the tropics?

  92. 92
    john11 Says:

    BZP having a decent day, announced restart of production last night.

  93. 93
    zman Says:

    Thanks John, saw that. I wrote them up awhile back, interesting little play there, never managed to get myself into it. There is a back ground piece on the reports tab if you are interested.

  94. 94
    zman Says:

    DUG off by half from its highs today.

    CHK off less than a buck. Hmmmm.

    HK considering a rebound. Will hold my June position through the morning.

  95. 95
    ram Says:

    Storm free, meaning AR.

  96. 96
    zman Says:

    yeah, not bad, thanks. Getting a bit of a break from the heat as well.

    Sambone – I don’t see a thing in the tropics yet, have you seen anything on water temps, heard they were up but don’t see a map where I had one bookmarked from last year.

  97. 97
    ram Says:

    Since Cramer was looking at 5 diff “wildcaters”, HK being the first, any bets on who’s next. Of course on a day like today, it didn’t matter much.

  98. 98
    zman Says:

    Ram – well we know he likes EP and CHK but I would not call them wildcatters. Here are my bets:

    Don’t if he has an opinion on NFX but that would fit nicely into the gas concept as the leader in the Woodford. SD in west Tx, SWN for the Fayetteville, XCO for the Marcellus.

    Agreed – did not matter today, maybe he will repump it. Had I had a brain I would have taken his morning gift for the pump it was. It’s not like he revealed anything new about the play, he just got the arm chair crowd involved.

  99. 99
    scoop006 Says:

    Cramer bought 300 shares of SWN today for his trust

  100. 100
    zman Says:

    Ok, so I got 1 out of 4 so far, lol.

  101. 101
    Sambone Says:

    I’ll get it tommorow. Tini time, baby!

  102. 102
    scoop006 Says:

    Last Fri. he bought XTO SWN & EP too. I say he talks about SD tonight

  103. 103
    Nicky Says:

    Afternoon all. Crude has support at 130.35 and then 128.30.
    Right now I don’t see this as any more than a wave ii correction.

  104. 104
    zman Says:

    Afternoon Nicky. Agreed, still think this is pretty anemic sell off of an $17 2 day rally last week.

  105. 105
    Nicky Says:

    Oops forgot to mention that the 20dma comes in around 129.00. Further support at 126.00……

  106. 106
    zman Says:

    Kyle – absolutely will do.

    Bill, if you are around I take it you have noted the market and I think China induced capitulation of the dry bulks. I recall you said you were getting out a few weeks ago and I was thinking that buying into the earnings would be sloppy at best and never did and that turned out well. But they have been hammered in short oder here. Aside from the China Olympics effect and renewed fear of a further decline in the U.S. economy, got any thoughts to explain this whacking?

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