17
Jun

Tuesday Morning – Deep Thoughts On Drillers

Print Friendly

In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Crack Spread Update - Ho hum.
  4. Stocks We Care About Today - drillers
  5. Odds & Ends

Holdings Watch: The Wiki and Stocks Tabs are updated.

  • (HK) - Exited the WILDZ trade HK June $35 calls for $2.15, up 4%. This was more risk than I like to carry for any length of time especially 4 days before expiration and as the position had closed down 60% in the prior day's trading I felt lucky to get out whole. I continues to hold the common and the September $20 calls.
  • (NBR) - Exited the (NBR) July $42.50 calls for $3.90, up 111%. I will likely roll longer here soon.
  • (PQ) - Exited the (PQ) July $22.50 calls for $3.10, up 210%. I continue to hold the July $25s (probably not for long as I'm selling down short duration calls at present) and the common.

  • (CHK) - Added more (CHK) common stock at $60.94.

Some may ask why is an option guy buying shares?

  1. I was a stock guy long before I knew what an option was.
  2. I’m going out of town for a week and would rather own shares than options when I can’t see a screen.
  3. I’ve had some good gains lately and buying common is a way of disciplining myself from stepping into larger trades than I normal want because I have hoards of cash sitting about. I’d rather keep cash and stock and not just cash on hand to keep from being tempted to swing for the fences.

Commodity Watch

Crude Oil closed down a quarter at $134.61 after scoring an all time high of $139.89 yesterday morning. This morning oil is trading off a little over $2 on what looks like profit taking.

  • Nigeria Watch: MEND rejects request to attend July peace summit. MEND said that "unlike other groups that go back and forth to be appeased with brinbes, MEND has people with integrity." Folks, I just can't make stuff like that up. 

Natural Gas traded up $0.31 to close yesterday at $12.93 on the July contract. Gas is trading around $13 this morning.

  • Imports came in 3.8 Bcfgpd below the comparable week one year ago.
    • LNG send out volumes registered at 0.8 Bcfgpd, up 0.1 Bcfgpd from the prior week proving that the needle isn't broken. Big deal. Volumes are still down 2.1 Bcfgpd from year ago levels and will almost certainly remain at low levels until U.S. natural gas prices breach $15 ish.
    • Canadina volumes at 7 Bcfgpd, up 0.2 Bcfgpd from last week but down 1.7 Bcfgpd from last year. This is the longest stretch of below average deliveries from Canada in years.
  • Generation Watch: Last Week's Heat Wave Spawned Big Jump In Generation. According to the Edison Electric Institue (EEI), generation was up 6.8% from the prior week and 3.9% from year ago levels due to much warmer than normal weather last week. Gas makes up about 21% of U.S. generation so look for a sub 80 Bcf injection this Thursday which will go up against a 90 Bcf injection last week, last year and an 91 Bcf injection for the 5 year average ... very supportive of these lofty gas prices. 
  • Tropics Watch: Nada.

Crack Spread Update: Nothing to get excited about here as all regions head south. I'd like to see another week's worth of data from the EIA, especially in the area of gasoline demand, before getting long some of these names. One bright spot: (TSO) says this morning it has be able to pay down debt faster than anticipated due to the higher West Coast cracks (see orange triangle below). They'll also take a hedging hit on 2Q earnings as they reverse out of their crude hedges and they see temporarily higher costs due to natural gas purchases but at this juncture the Street is looking for positives in this down and out group.  

crack-spread-061308.jpg

Stocks We Care About Today

GMXR Adds Acreage, Plans First Haynesville Test. The company added 7,231 net acres bring their total position to 27,500. They expect to begin horizontal HS drilling in the next 6 months.

Driller Multiple Update- Still Cheap

drillers-061608aaa.jpg

Key Takeaways:

Land drillers continue to wake up:

  1. I continue to like the cheapest two, NBR for high horsepower rigs that are going to be needed to meet burgeoning demand in the various shale plays, and (PDS), the cheap Canadian that should be seeing stepped activity in both Canada and in the U.S. in 2H08 and especially 2009.
  2. PDS will likely up its big for (GW)
  3. UDRL is naturally seen as an acquisition target after BRNC and GW offers. Their focus is unconvential, horizontal (2/3rds of their fleet is Hz capable), under-balanced drilling (reduced chance of formation damage). This is a Texas based driller with 71 rigs largely in unconvetional (shale) plays:
  • 32 in Appalachia (adding rigs to the Marcellus where they have 6 of the 13 rigs in the play suited for Marcellus drillling),
  • 21 Arkoma (Caney (Woodford) and Fayetteville Shales) and
  • 18 in the Fort Worth Basin (primarily Barnett Shale). 
  • Two drawbacks: No options and it just popped 9%. They also recently filed a Shelf and while they say they had no plans at the time of filing (May 19) that could change with the higher stock price. 
  • I may take a little stock here anyway as I believe this name is likely to trend up with the horizontal and oil and gas rig counts and I certainly expect those to climb. 

In The Offshore Arena Deep Capable Names Drift Higher With Oil, Rig Announcements

  1. Estimates slow but surely rising along with slowly rising deepwater day rates as companies like PBR contract every deepwater rig in sight out through 2015.
  2. PBR has been announcing rig contracts and new sub salt Santos Basin discoveries on an almost weekly basis of late providing further long term visibility on demand for the deepwater crowd.
  3. PEMEX asked the Mexican oil ministry for permission to conduct seismic surveys in the deepwater Gulf of Mexico yesterday, signaling the country's need to do something to try and stave off sharp declines in production. This too adds to the long term demand tightness of rigs scenario.
  4. West Africa is about to see a deepwater delineation drilling spree after 17 deepwater discoveries were made in 2007 alone.
  5. One area of concern: Jack-up rates appear stable but lots of supply on the way (84 rigs under construction due to hit the market between now and 2011).  One bright point is (DO)'s recent signing of two JU contract extensions at higher rates. Higher spec rigs still garnering stout day rates.
  6. ATW remains intersting but a bit hard to trade from an options perspective.
  7. NE and RIG now the cheap names in deepwater.
  • NE based on statements about new build fleet made by the company, the Street looks light on 2010 EPS. NE is roughly balanced 50/50 Deep vs JU. NE's drillships are 100% contracted through 2014 but their semi-subs are less than 25% contracted at present beyond 2009 so look for day rate upgrades here.
  • RIG has the highest exposure to the international JU market which appears to be compressing their multiple. While nearly all of their deep fleet is contracted through 2010, only 25% of their JU's have contracts 2 years from now. 

Odds & Ends

Analyst Watch: Wachovia starts(WLL) at strong buy.

Zcontest: Pick the company that acquires (HK), must be announced calendar 2008, and get a free quarter sub to the site. Here' s the current list, to notify us of your pick put a comment in at any time. Please no emails.

zcontest-061708.jpg

 

111 Responses to “Tuesday Morning – Deep Thoughts On Drillers”

  1. 1
    zman Says:

    New NFX guidance hitting the wire. Will advise shortly but it is up.

  2. 2
    zman Says:

    NFX Raising 2008 Production Guidance to a Range of 22 to 26% vs 2007.

    Malaysia project startup on schedule.

    2008 Production Guidance goes to 232 to 239 Bcfe from prior 224 to 234 Bcfe (always good to eclipse the top of the old range if you can or take the the new low above the old mid point which they did)

    2Q production guidance shifts up by 2bcf above the prior mid point of guidance. Production will be about 57 Bcfe for the quarter.

    Numbers will be coming up for the quarter and the year (again, as this is the second time they’ve upped guidance this year)

    Woodford and Monument Butte rates growing faster than projected. We knew this but it’s good to hear them reiterate.

    Shares are set to jump, I may add some more $70 July call exposure.

  3. 3
    kyleandy Says:

    z does UDRL have more rigs avail or is 71 the total # they have?

  4. 4
    zman Says:

    Kyle – they continue to add new rigs, 1 or 2 at a time and through small acquisitions.

  5. 5
    reefguy Says:

    z- truing to buy NFX july 65

  6. 6
    john11 Says:

    BMO target raise on HK from $40 to $70.

  7. 7
    reefguy Says:

    change that to 70’s

  8. 8
    el_vogel Says:

    BRY, WFT bouncing nicely

  9. 9
    zman Says:

    Thanks, saw the BMO yesterday morning around 10 est. Stock opening strong (again).

    EL V – WFT? I show it flat.

    New highs on HK and CHK.

  10. 10
    zman Says:

    ZTRADE: Added July $70 NFX calls for $2.35 on today’s news.

  11. 11
    reefguy Says:

    had to pay $2.45

  12. 12
    reefguy Says:

    z- When is mancos test due?

  13. 13
    el_vogel Says:

    wft – well, it did spike just a little ๐Ÿ™‚ not a lot of volume either on either.

    NFX – is this the start of a leg up ?

  14. 14
    arodeen Says:

    Thanks for that. I bought the NFX 60/70 vertical call on 6/12 and just bought back the 70’s.

  15. 15
    zman Says:

    Reef – I tried add 5 cent increments from $2.10. The good news is the PR came out a bit late and so the Street is still reacting to it on post morning call squawk boxes.

    Mancos and 3 Bakken could be anyday, but I’d bet July as these guys like to space PR’s between the Q’s

    re leg up, I think so through 2Q call.

  16. 16
    reefguy Says:

    hy sisters rising to new highs

  17. 17
    zman Says:

    The truely wild trade is the HK $40 Junes for $0.50.

    I’m bidding some September $40s now.

  18. 18
    reefguy Says:

    crk up 7%

  19. 19
    zman Says:

    BEXP looking like its ready to move higher now. Haven’t had a lot of news out of the Bakken players, undoubtedly more soon, which was the reason for the WLL upgrade at Wachovia this am.

  20. 20
    zman Says:

    ZTRADE: HK $40 September calls (HKIH) added for $4.30.

  21. 21
    tater Says:

    NFX is currently fighting the down trendline of May 21 to June 6. That was the area of this mornings retreat. Third time at it should result in a breakout if volume is sufficient (3 minute chart, currently oversold stochastically)

  22. 22
    zman Says:

    Thanks Tater – starting to move better but the group is looking oil price dependent after the initial morning surge today. NFX should have further near term catalysts in the form of Mancos Shale and Bakken Shale results. I would think they PR something in the next month but may wait on their conf call which has already been set for July 24.

  23. 23
    zman Says:

    #17 – now bid $0.50 offered $0.60. Took a little at $0.50 but that’s a truly “hate your money wild z”

  24. 24
    zman Says:

    PQ moving.

    Lehman reiterating overweight rating on HK

    CHK at all time high > $62

  25. 25
    crysball Says:

    Z, Regarding upcoming Saudi meeting.
    Jim Kingsdale has an extremely interesting assessment of what the Saudi’s are going to propose on Seeking Alpha. here is the link. http://seekingalpha.com/article/81531-saudi-oil-meeting-scenarios?source=d_email

  26. 26
    reefguy Says:

    bry trying to join the Hy sisters in a run

  27. 27
    ellwodo Says:

    Z – couldn’t resist your wildtrade on HK June 40s. Got in at .60, so far so good.

  28. 28
    zman Says:

    Ellwo – I took 50 at 50 and you can have them for a buck right now if you like, lol.

    Not supposed to be that easy.

    Crysball – thanks for that piece, very well thought out, although I think he makes a bit too much of Saudi’s importance in price direction at this juncture or at least of the meeting’s long term important in point 8. After that I stopped reading as I’m a little trady today but will revisit after the close. I am in general a fan of his.

    Reef – a rising tide…

  29. 29
    ellwodo Says:

    Wild trade – in for 200 at .60, out at .9. Certainly paid for a few years subscriptions. The next wild trade…?

  30. 30
    zman Says:

    Cool Elwo – you may get to do it again today, lol.

  31. 31
    Brian08 Says:

    Hey Z, just curious what you think the biggest risk to owning CHK was…I mean other than their drilling sites coming up bone dry (or having MUCH lower productions than what they originally expected) and gas falling to $2/mcfe (and I doubt that would happen in the near future and even so they’re hedged a decent amount 52% of ’09 at $9.37 and 20% of ’10 at $9.56 (which I’m sure they are going to be hedging more of if gas keeps going up))…I was just curious because I have started to buy some JAN ’10 LEAPS at the $60 strike that I think could yield a very nice return if they just keep on keepin’ on…

  32. 32
    zman Says:

    Brian –

    Haynesville turns out to be non-ubiquitous in nature so that the wells drilled to date have been in sweet spots. This would leave them with a boatload of acreage in less than ideal hunting territory. A lot of people would have to be wrong for this to happen.

    A more likely scenario is the possibility that service costs will being to rapidly escalate causing shortages of men and mats leaving acreage to expire undrilled. Probably not as much of a concern for CHK as they will “get the rigs” but it may make it tough on smaller players. Hence the steel and rig plays.

    Gas prices easing will take the stock price in no matter the hedges. They are their own worst enemy in the supply demand equation.

  33. 33
    zman Says:

    added to the HK hateyourmoney trade at 0.75.

  34. 34
    Brian08 Says:

    What exactly do you mean by acreage expiring? I’m guessing this has to do with the concept of “leaseholds”…So they don’t actually own the land, they just “rent” it for a cost and some royalties to the people who actually own the land?

    If you’ve already covered it let me know and I’ll go searching for it…

  35. 35
    zman Says:

    Brian – they are paying 10,000 to 20,000 per acre and paying a royalty for the right to drill on the land for five years. If you don’t convert that to HBP (held by production) status in that time frame, it can be leased to someone else for drilling.

  36. 36
    Brian08 Says:

    Now it’s all starting to come together in reading their presentation…Thanks Z…

  37. 37
    zman Says:

    DNE piece – starting to look back into it, never bought, Jefco report ineffectual. Seems oddly unloved even for a little $ stock in this market as many have moved. EBITDA generation should be stronger than expected since the Street is asleep on the name. I have not bought it and won’t just yet but am looking. May have a short thought this week or something longer early mid July…there seems to be no rush.

  38. 38
    zman Says:

    Raymond James taking HK price target from $54 to $64 with the stock at $39 after BMO sent their target from 40 to 70 yesterday.

    They are saying a 75% risked basis (which is a bit more risking than I’ve seen other brokers use in the play) HK’s leasehold gives them net potential of 10 Tcfe. That’s more than the company has been saying and a big pile, to employ technical term, when you put it up against HK’s company wide booked proved reserves of 1.1 Tcfe at YE07.

  39. 39
    zman Says:

    PDS upping bid for GW. They must have read the post, LOL.

  40. 40
    ram Says:

    Where is SWN’s land positions in the U.S.?

  41. 41
    zman Says:

    Ram – SWN is overwhelmingly in Arkansas in the Fayetteville Shale where they are the lead player.

  42. 42
    ram Says:

    Thank you. Is the Fay Shale a good place to be? Is it overshadowed by the HS?

  43. 43
    zman Says:

    Fayetteville is absolutely a good place to be, CHK is #2 there.

  44. 44
    ram Says:

    Thank you.

  45. 45
    el_vogel Says:

    re #37 – what DNE piece are you referring to? Stock looks a bit of a dog…

  46. 46
    el_vogel Says:

    BRY suddenly rocketing up

  47. 47
    zman Says:

    Ram – It’s shallower but different amount of gas in place per section so the wells are smaller. Still good economics but you don’t see the blockbuster initial production you see at Haynes. Woodford is part of the same Arkoma Basin as Fayetteville and both are smaller in aerial extent than what they currently think the boundaries of the HS are.

  48. 48
    zman Says:

    El – V – not a dog, at least in my book, just not in the obviously sexy plays. I knew the part of management (Jim Watt) when he ran Remington from $3 ish to $30+ before selling out. I don’t believe he signed on to a dog but the story will take time to unfold (it’s not a shale but gulf coast exploration targets). I never finished a piece on it but I will sometime in July and I think some of the guys here bought in when I mentioned it long ago. Just coming full circle with them and trying to decide if now is the time to get long myself.

  49. 49
    zman Says:

    Those HK’s are bid $1.05.

  50. 50
    zman Says:

    HK briefly through $40, gotta like the establishment of higher highs here.

  51. 51
    zman Says:

    for those keeping tracking out the HK $40 junes, 150 contracts for $1.25 in at avg 0.65 earlier. zoiks too volatile.

  52. 52
    el_vogel Says:

    thanks for clarifying, Z!

  53. 53
    scoop006 Says:

    ZMAN THE MAGICIAN MINTS MONEY

  54. 54
    zman Says:

    Scoop! Long time no see. Got lucky on that one and would have been obviously a lot better off if I’d kept the 150 $35 calls sold yesterday but can’t complain.

  55. 55
    Bleemus Says:

    Reuters.com reports world crude oil production has topped out at 85 mln barrels per day even as demand keeps climbing, helping to drive a stunning surge in prices, billionaire oil investor T. Boone Pickens said. “I do believe you have peaked out at 85 million barrels a day globally,” Pickens, who heads BP Capital hedge fund with more than $4 bln under management, said during testimony to the Senate Energy and Natural Resources Committee. The United States alone has been using “21 million barrels of the 85 million and producing about 7 of the 21, so if I could take just a minute on this point, the demand is about 86.4 million barrels a day, and when the demand is greater than the supply, the price has to go up until it kills demand,” Pickens told lawmakers.

  56. 56
    kyleandy Says:

    thks for the DNE update

  57. 57
    Dman Says:

    I just read the Jim Kingsdale article linked in #25

    An interesting example of informed speculation. His overall thesis seems plausible: that this Saudi initiative is actually a cunning plan hatched by Bush and Cheney in conjunction with other western powers.

    The idea is that (if I may simplify a little):

    1. The Saudis invite the world over to their secretive kingdom and unveil a gigantic gleaming tap with “oil” written on it in elaborate golden script with diamond encrusted swirly bits.

    2. At the precise moment that the world is agog with wonder at this Middle Eastern marvel, giant switches are thrown in London and New York, unleashing a terrifying onslaught of oil futures selling, the likes of which have never been seen by evil oil speculators.

    3. Said evil oil speculators suddenly switch over from the dark side and begin shorting oil themselves with whatever pittance them may have remaining after step 2.

    As you can see, it is a very cunning plan and Jim then tries to assess how likely it is to work.

    The only thing I would like to add to his careful assessment is the question “How well does a typical Bush/Cheney grand plan for the Middle East actually work out?”. If they are the only geniuses involved, the plan is looking a little forlorn already. Oh wait, maybe Samual Bodman is onboard …OK then it’s gotta be a sure thing.

    Jim’s article reminded me of something. A while ago I listed key events in the fairly bizarre history of US-Iran relations going back to 1953. It’s a seriously weird tale and enough to convince me that anything is possible. But I forgot what might be the weirdest thing of all, which Jim reminded me of by making some wildly inaccurate claims about Iran’s ties with Iraq.

    These claims also happen to be those increasingly emitted by the Bush team as they try to gin up a war with Iran: it is claimed that Iran is supporting those (like the currently in vogue bad-guy, Moktada al-Sadr) who are undermining the current Iraqi “regime” (as Jim calls it).

    OK, so here’s the weird part: the Iraqi “regime”, i.e. PM Al-Maliki and friends, is itself deeply tied to Iran, as are all the major Shiite blocs in Iraq. Many (if not all) of the senior figures sheltered in Iran during Saddam’s reign. The current “regime” in Iraq was all but installed by Iran. Indeed, sunni Iraqis sometimes use the term “Iranian” as a derogatory reference to all Shiites in Iraq.

    So: Mr Bush, day in and day out makes threats and accusations against the mullahs in Iran, yet is practically in bed with them in all his dealings with the Iraqi “government”.

    I’d call that weird, but … well it is the Middle East after all.

    Also, I suppose the question arises: have any of his advisors actually *told* Mr Bush who he is dealing with? Would it just be too confusing? Do the advisors know? I guess we have to wait for more tell-all books from Bush spokespeople …

  58. 58
    zman Says:

    Bleemus – hard to argue with his logic although the peak oil thing is not really investable and the nomenclature should be
    “peak oil at a price” not “peak oil” as there is more oil to be recovered economically at higher prices. A lot of the big fields see primary recovery factors of 10%. That’s 10% of OOIP (orignial oil in place). Technology and sweat = money can increase that to 15 or 20% now and more at higher prices. So as he is saying at the close, price discovery will yield greater production. The demand side of the equation needs to be tackled as well and this is why he is a big proponent of wind and other alt power.

  59. 59
    zman Says:

    Kyle – I hope to get it done mid July.

    Dman – wow, tell us how you really feel!

  60. 60
    scoop006 Says:

    Z I just can’t believe my good stupid luck. On last Monday’s sell off I loaded up on June calls for CHK,CLR,& HK along with Sept. HK. ALL sold today at my FINAL CLEARANCE SALE.

  61. 61
    Dman Says:

    Z – just trying to make sense of a very crazy world. Not sure I’m making much progress.

    But Jim is also valiantly trying to pierce the darkness with the bright light of inquiry. One interesting point he makes in passing is that the planned assault on Iran is much more likely if oil can be forced down by November or thereabouts.

  62. 62
    Dman Says:

    Scoop – “Buy low, sell high” doesn’t sound stupid or lucky to me. Sounds like a plan that might work!

  63. 63
    scoop006 Says:

    D, IN 7 DAYS?

  64. 64
    zman Says:

    Dman – I see the saleability of the lower oil, then strike Iran as a concept but honestly, if they want to do it, they will just do it, either the US or Israel or both and I don’t think we or the Iranians will see it coming.

  65. 65
    zman Says:

    CHK finally moving like it has something to do with the play and is cheap. Still loving the fact that JPM cut their rating here back at $46 AFTER they announced the Haynesville play.

  66. 66
    Dman Says:

    Scoop, I seem to recall Z saying you are quite the trader and I noticed your timing too. Keep posting your buys & eventually I might get smart & just tag along …

  67. 67
    zman Says:

    That PDS bid for GW amounted to $9.30 per share vs the original $9. GW rejected it already.

  68. 68
    italyinvestor Says:

    Zman – HK June 40s in at .75 out at 1.20. First Ztrade and enough to re-up for a year.

  69. 69
    scoop006 Says:

    DMAN, With Zman’s permission,I’d be happy to post my trades if you guys don’t think it would be presumptuous of me to do so.

  70. 70
    Dman Says:

    Z – Aubrey wouldn’t have decided to throw the 1st ever analyst day without having something cooking. He said it’s a double & now the analysts more or less agree. Still amazing to see it move though…

    & where is that JPM guy on it now? If he hated it lower then it must be a “strong sell” by now ๐Ÿ™‚

  71. 71
    zman Says:

    Scoop is a good trader.

    Italy – we got lucky on that one and it was not even an official trade so you won’t see it in the end of the week or perf tables. That was so risky I just feel wrong about sending it out on the Zblast. From time to time I do that and it usually does not work out and I will not make a habit of it.

  72. 72
    Dman Says:

    How about old HAL gettin groovy up 2.7%.

    Z- ever get the impression that PDS doesn’t quite know how the takeover dance goes?

  73. 73
    zman Says:

    Scoop – I don’t have a problem with it as long as you don’t make me look too bad, ๐Ÿ˜‰

    NFX up $4. Tater, any candlestick observations there?

    Dman – I can tell you where I’d put him if I were his director of research or especially his bankers. It’s not that he’s a dumb guy because he’s not but he doesn’t get what moves stocks AND he took the lesson he received from management on the 1Q call personally. “Don’t hate the player, hate the game.”

  74. 74
    Fred Says:

    If Nicky was around she’d most likely be posting this. Speculator’s hold 70% of WTI Oil contracts if anyone wondered:

    http://www.upstreamonline.com/live/article157246.ece

  75. 75
    uop Says:

    zman:

    CHK still cheap ????

  76. 76
    occam Says:

    A vote here for scoop to post trades

  77. 77
    zman Says:

    Uop – less cheap than it was but still cheap to peers given growth rate through at least $75.

  78. 78
    uop Says:

    scoop; good idea to post your trades

  79. 79
    Dman Says:

    NFX certainly blew thru that downtrend line.

    Z – I see what you mean about that candlestick. It’s a cool-looking one but I don’t know my cadlesticks from my chandeliers. (OK, OK, I don’t actually have any chandeliers, but that’s not the point).

  80. 80
    italyinvestor Says:

    Zman and all – only posted as a thanks and a testament to the quality of information here on the site. I have learned more about short term interactions in the past 1/2 month as a subscriber than in a year of haphazard independent study. While i’ll never post another trade, i hope to contribute to the discussion in the future though my ocupation is far from the oil/gas patch.

  81. 81
    Dman Says:

    Wow. OII going into orbit (NASA pun intended).

  82. 82
    Pete Says:

    Z,
    re: wildz trade
    Wish you would reconsider putting out a zblast on a wildz or a zblast note to see site for them. That way if away on other business I can pick up the e-mail alert and check it out on the site.

  83. 83
    zman Says:

    Dman – As you know I’m not a TA guy but I respect the dark arts of candle sticks, point and figure and elliot wavers as much as the next guy.

  84. 84
    arodeen Says:

    I agree that CHK is still cheap. Any opinions on a good price for the CHK October 65 or 70 calls?

  85. 85
    kyleandy Says:

    italy he has been so good for 6 months its unbelieveable. i rarely trade options like he does, but often trade the underlying stock and option spreads, and while i have made an astounding amount of money the option boys have made that much more. he also has a real reason for the stocks he buys. am one happy subscriber!!! (plus i now know about horizontal drilling, oil shales , and a lot more!)

  86. 86
    doc Says:

    ne at new hi with a 13 pe. They report 7/18

  87. 87
    davidjeso Says:

    Z – kudos on the site from a new subscriber. Any thoughts on Kodiak (KOG) stock in the sense of buy some and tuck it a way for a few years type play…maybe combo it with some BEXP for a little micro cap Bakken exposure?

  88. 88
    Dman Says:

    Doug Kass has been averaging into DUG as part of a pair trade: long financials & short energy. Cites yesterdays intraday reversal in oil as a sign that could indicate the “beginning of the end of the long energy trade”.

  89. 89
    zman Says:

    Italy – that last part about learning makes my day. I learn as much here as I try to teach.

    Kyle – too kind.

    Nice to see the OII, need Sambone here to take a look at the Atlantic.

    Waited a bit long to roll NBR, will wait for July now most likely.

    Pete – I do the wildz via blast but not the wildwildz and not trades I just don’t feel like justifying (BEXP the other day on a dip). I will say that I don’t want to get into the mo-mo fast money thing very much at all and am not not not not not a day trader. I stink at it.

    NE – on my list of guys to get today and just did not do it. Like story very much as per post comment today.

    Welcome David and thanks! Re KOG I don’t know the story well enough to offer much of useful thought there but plan on having a look before the weekend.

    Occam – I have not forgotten that DNR-like name of yours that escapes me right this second either.

  90. 90
    Dman Says:

    Z – #83 hope I wasn’t misunderstood: I would *like* to know what today’s NFX candlestick means. Any practitioners of said dark arts care to take a look?

  91. 91
    scoop006 Says:

    Z Bought “X” July $165 puts @$7.80.

  92. 92
    occam Says:

    scoop- interesting. I have recently heard from a buyer that steel products are now overpriced. Is this part of your rationale for this trade?

  93. 93
    tater Says:

    NFX real quick, making some other trades. No candle analysis until the close, doesn’t work.
    Some TA observations, don’t like the number of open options contracts at 65, may draw it like a magnet (without hurting the general uptrend on the longer term), don’t love today’s volume as it only average, would have a lot more meaning for such a big 2 day move if it were on big volume.
    Pull back to downtrend line, sitting near it now, I expect it to close there to give everybody something to think about.
    Other than that, what’s not to like? RSI has a 2 day up-tick, but of course it does. Longer term RSI still gives me the willies.
    Not a lot of help here, sorry, but the action denotes that you have to see a real break above that line to confirm todays rally as “the” breakout.

  94. 94
    davidjeso Says:

    Z – sounds good re: KOG…look forward to your thoughts. Did you pick up BEXP common per your note earlier?

  95. 95
    Popeye Says:

    I wonder where the HK buyout price is now.

  96. 96
    Bleemus Says:

    I hold KOG in ltp. Interested also in your thoughts.

  97. 97
    zman Says:

    No it was a quick option trade re BEXP, in and out. But I am warming to the story.

    Tater – thanks, would have been better had their news not be lost in a sea of energy love today.

    DJIA dn 105
    Oil off $0.85
    NG at 12.99

    XNG up 2.2%
    OIH up 2%

    who’da thunkit?

    HK looking for a 40+ close. Popeye, good observation. I’d guess a 40% premium to current is in order. Not sure who does it but I’d bet against it being CHK at this point. If you are new around here you can get a free quarter by picking HK’s acquiror. The list will be on the bottom of the post in short order.

  98. 98
    zman Says:

    I think I will start taking more profits in earnest in the morning prior to the EIA inventory release. Feeling a little too across the board green here. If we get a follow through opening pop I will be punting my one last June call and many of my July’s.

  99. 99
    Dman Says:

    “… a sea of energy love”

    I thought I was swimming in something. Guess that must be it.

  100. 100
    tater Says:

    NFX- As you know I’m in and out, currently short the 60 puts, limited return but I felt safer considering the possible trend line resistance.

    RIG – anybody wanting to play this one, call up a 3 month daily chart and display a 20, 50, and 100 EMA. Kind of makes you want to wait to see which line it stays outside of for two days in a row before committing any real money.

    USO – broke the triangle first to the upside, now to the downside, so the triangle formation is a bust, unless we now choose to call it a trading box just to make the voodoo people save face. Sitting at 10 EMA support currently, I’m out as my mangina has taken over in front of tomorrow’s EIA.

  101. 101
    jsaun14 Says:

    Z –

    Will you hold your August MMRHH?

    Thanks –
    Jsaun

  102. 102
    jiveyjr Says:

    PDO drilling shallow Calif. wells showed up on my Investors’ Daily screens…making a big move percentage wise lately…bought a small amt. personally

  103. 103
    Jay Reynolds Says:

    My finance and I thank you all for our new Harley Softtail Custom.

    JR

  104. 104
    VTZ Says:

    Z – I’ll take my shot with Talisman for the HK acquirer for lack of better names available and due to their strategy change which may lead them to trying to be an acquiree instead of trying to get acquired.

  105. 105
    zman Says:

    jsaun, I think so, that one is a pure bet. I may sell it and buy a little lower though.

    Jay – you know I don’t give advice but wear a helmet.

    VTZ – nice one, will add you.

  106. 106
    scoop006 Says:

    Z #105 2nd sentence. You should write sitcoms

  107. 107
    jsaun14 Says:

    Pure bet or sure bet? I followed you in after looking at a JPMC research report this a.m.

  108. 108
    kyleandy Says:

    jsaun does JPMC stand for jp morgan.
    z – would that be our favorite analyst that downgraded CHK at 46??

  109. 109
    jsaun14 Says:

    Yep, I wanted to retract that post as soon as I made it. They couldn’t make a worse call on CHK.

    But, they have an overweight on MMR with their price deck and the NAV is obviously much better when the model is run w/ futures.

  110. 110
    texana Says:

    just some general infor on kog: most of the buzz has to do with their recently permitted test on the ft. berhold indian reservation for bakken production. basically there has not been any drilling in this area since the 80s. their 55k gr/ 40k net ac lies in a direct line between eog’s parshall field & mro’s bailey field. peak oil nd llc just completed offset well that according to rmoj is making 1000 bopd, a couple miles west of their acreage. spud date for kog’s well aug r sep 2008. also dvn is drlg on their ac in sw wyoming that is on a drl to earn 50/50 base. kog presently produces about 500 boepd co wide….the buzz is everything east of the nesson anticline…..bexp has a wi in a lot of wells that r drlg & alot of permitted wells. support is 15 resistance is at 17, a break of 17 to the upside should run at least 20%. defintely a buy on any pullback as it has been under accumulation for the last 2 weeks. thx t

  111. 111
    zman Says:

    MEND has already said it will not be attending the July peace summit and as such I don’t expect it to quell anything.

Leave a Reply

You must be logged in to post a comment.

Zman’s Energy Brain ~ oil, gas, stocks, etc… is is proudly powered by Wordpress
Navigation Theme by GPS Gazette

s2Member®
Get Adobe Flash player
%d bloggers like this: