06
Aug

Earnings Deluge Wednesday

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Lots of earnings last night and this morning. The recurring them among E&Ps this quarter is higher production but also rising operating and drilling costs.

In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Earnings Watch: (XCO), (PXP), (KOG), (HK), (PQ)
  4. Odds & Ends

Holdings Watch: No changes

Commodity Watch:

Crude Oil fell another $2.24 to close at $119.17 due to a strong dollar, continued fear over demand, and in spite of a defiant Iran.  This morning crude is trading pretty flat but nothing matters on price until inventory numbers are released.

  • IEA Reports Demand From Emerging Economies Remains Strong. Will cause global demand for crude to rise in 2008 by 890,000 bopd, which would equate to about 1% growth.
  • Turkey Watch: Explosion on a pipeline in eastern Turkey halts flows of 1.2 mm bopd.

EIA Oil Inventory Report Preview (estimates from the Bloomberg survey and my own for distillates)

 

ZComment: Gasoline and diesel demand are key to how the market interprets this week's report.

  • The Street is expecting a sizable drawdown in gasoline in response to lower gas prices and they may have set the bar a little too high after last week's big draw which was attributable to a three way combination of lower production, lower  imports, and higher demand.  Note that a draw here will not alleviate the somewhat bloated inventories in either gasoline or distillate but they will fire another warning shot across the bow of oil bears now convinced oil is destined for double digits due to demand destruction. If we see that demand picks up, even temporarily in the face of lower prices as both consumers and filling stations stock up on "cheap" gas  it will give us a relatively current data point with which to say, given current economic conditions, here is the point at which demand truly gets crimped.
  • Ditto above comments for distillates. We didn't see a big pick up in distillate demand last week and while it is a smaller market one would suspect that the diesel, which has been running some 75 cents ahead of gasoline at the pump would experience a similar small bump in demand as prices retreat.

Natural Gas tried to rally during the day but failed back as oil tumbled late in the session, close unchanged yesterday at $8.73. This morning gas is trading off a dime.

  • Weather Watch: While the rest of the country swelters, relief has come to the northeast.
  • Tropics Watch: A few tropical waves but nothing worth writing about at present.

Earnings Watch: Huge number of names we care about reporting, these are the high points.

PQ Comes Up Slightly Short; Offers Little Detail or Guidance. Looks like their B-Team wrote the PR.

The 2Q Numbers:

  • Revenue of $90.6 vs $93 expected
  • EPS of $0.41 vs $0.45 expected
  • CFPS of $1.17 vs $1.31 expected range of ($1.09 to $1.52)
  • LOE increased to $1.18/Mcfe do to a combination of repair and maintenance work but also inflationary pressures. Not great.
  • Production: 92.5 MMcfepd which was in line with their 1Q exit rate.

Operations Update - Not a lot of detail so I'll just hit the highest points.

  • Woodford Shale - 4 more wells either completing or about to. No new rate or economics data.
  • East Texas Buda Oil project - 2nd well completed and producing "as high as" 275 bopd
  • Two more Gulf Coast wells drilling.

In A Nutshell: boring press release, good performance on production but a miss to estimates. They see reserves growth of 40% YoY which is decent but there is no mention of production targets.

Conference Call: 9:30 EST

HK Misses On Bottom Line Which I Think Will Get Overlooked After The Fall; Guides 2009 To 30 to 40% Growth

2Q Numbers:

  • Revenue of $305 vs $268 million expected
  • EPS of $0.23 vs $0.27 expected
  • CFPS of $0.80 vs $0.86 expected (range of $0.70 to $0.97)
  • Production of 283,000 Mcfepd (91% gas) vs guidance of 280 to 290,000 Mcfepd. This represents
  • Lease operating expense of $0.50 / Mcfe vs $0.52 last quarter. Very low.

Guidance:

  • 3Q Expected production of 310 to 320,000 Mcfepd
  • 2008 range stays the same at 295 to 315,000 Mcfepd. Implies annual growth of 27% and implies a 4Q average of 360,000 Mcfepd.
  • 2009: Anticipates 30 to 40% organic growth

Mid Year Reserves up 25%: Reserves rise to 1.33 Tcfe (internal estimate) from 1.1 Tcfe booked at YE07. This includes no reserves from the Haynesville which should be a significant add by year end putting gross reserves of between 5 and 7 Bcfe per well on the books.

Operations Update: Getting Busier

Haynesville Shale:

  • > 300,000 net acres in LA and TX, up from 275,000 at last count...plan was to go to 400k
  • half acreage is longer than 3 year lease term, avg cost is $5,000 per acre.
  • First well results to date:
    • 30 day average production of the first well was 13.7 MMcfepd
    • Core analysis indicates possibility of 170 Bcf gas in place per section (they have been thinking the whole play in the core would be seeing 45 to 55 Bcf per section).
  • Second horizontal well: the Hutchinson 9-5 (91% working interest)
    • completed at 16.7 MMcfepd; recall the first well IP'd at 16.8 MMcfepd.
    • see 151 feet of Haynesville
  • Third well still drilling, expect to complete early September, see 160 feet of pay here.
  • A fourth non-operated well is completing now and shows 158 feet of pay
  • 3 rigs running, doubles in September...plan to drill 29 wells here (including the four above) this year so its about to get very busy. Sees spud to connection timeline of 75 days falling to 60 days in 2009.
  • 2009 plan calls for 140 wells

Fayetteville Shale:

  • Production: > 90 MMcfepd gross which should put their net production > 50 MMcfepd
  • 9 rigs drilling horizontals and one spudder rig, up from 6 rigs last quarter. Moving to 10 rigs and 2 spudders this quarter.
  • Continuing to see improved initial results here. Also seeing improved results from cemented liner systems and from added gas lift (300 Mcfepd for $40,000 add) which they plan to add field wide. 

 

Elm Grove

  • 10 rig program now (up from 8 last quarter); 2 horizontal and 8 vertical
  • The horizontal Taylor Sand program continues to wow. 3 IPs this quarter:7.8, 9.8, and 11 MMcfepd.

Terryville

  • 3D expansion to the west being shot dor 4Q delivery...it'll be interesting to see if they mention the Gray sand with regard to that.
  • Added some nice CV and Bossier Sand wells during the quarter with average IP's of 5.6 MMcfepd.

WEHLU- West Edmond Hunton Lime- Horizontal oil recovery play out in the middle Oklahoma

  •  increasing rigs here to 3
  • nothing else new

 

Conference Call: Wednesday, 10 EST.

 

 

PXP Announce Bigs 2Q08 Beat; Reaffirms Guidance

2Q Numbers:

  • Production: 87,500 BOEpd, current production is between 92 and 96,000 boepd which is the guidance for year end as well.
  • Revenue of $733 mm vs $667 mm expected
  • EPS of $1.84 vs $1.61 expected
  • CFPS of $4.08 vs $3.93 expected
  • Costs: Up
    • Straight LOE was $10.70/BOE ($1.78 / Mcfe) , up about 4% YoY which isn't bad in this environment however it is up 25% from the 1Q08 levels. This is a function of asset additions and "charges for stock appreciation rights" which I don't like to see not broken out from operating numbers during the quarter. That last may cause a little head scratching.
    • I call it straight LOE as they break out steam flood operations in California in a separate category. Those are rising as well, up 38% sequentially and again, in need of a little explanation.

Other Notable Items:

  • Flatrock Update: No new information here from MMR's mid July update
  • Another couple of Gomex wells are either being evaluated or are still drilling.
  • Guidance: Reaffirming prior operating and financial guidance. The word "reaffirm" has not set well with investors over the course of 2Q earnings to date as despite the fall in stock prices, "what have you done for me lately" has set in in the extreme.  Prior guidance here was 92 to 96,000 BOEpd for 2008.

In A Nutshell: Strong quarter from an operation standpoint. This is not a story or management I know well but lots of people asked about it after the CHK JV in the Haynesville and I've been wanting to get closer to the story since then. The stock trades at 31xs 2009 CF which is low to its peers and they continue to impress both in the decline rate treadmill of the Gulf of Mexico Shelf and in their onshore domestic efforts. Will listen to a replay of the call when time permits and think about this one a bit more.

Conference Call: 9 Est.

XCO Blows Out Numbers; Frankly Discusses Rising Operating and Cash Costs; Increasingly Targeting the Shales

2Q Numbers:

  • Revenue of $458 mm (ex item) vs $324 mm expected. This may or may not be comparable to analyst estimates as you can't tell if they backed out the hedge loss)
  • EPS of $0.34 vs $0.24 expected (this should be comparable)
  • CFPS of $2.21 vs $1.47expected (range was $1.01 to $1.70), (this too should be comparable with analyst estimates)
  • Operating Costs on the rise: LOE up from $0.95 per Mcfe in 1Q to $1.13 in 2Q. This is a warning flag. If you don't grow fast enough, increased fuel and other operating costs will eat you alive. In a stagnant or declining commodity price environment this is going to start hurting.
  • Production: 394 MMcfepd, in line with guidance, up 2% seq, current production > 400 MMcfepd.
  • Capital budget increased to target their shale positions.

Other Notable Items

  • Capital Costs are Rising:
    • Casing and tubular costs are up 40 to 80% since the start of the year. Wow.
    • Rig dayrates are up from $18,000 at beginning of year to $21,500 with some of the 1,500 hp rigs moving up from $23,500 to $27,000.
    • they said many of their rigs are on longer term contracts so not as much of an impact yet.
  • Guidance: They are now planning to drill fewer wells, refocusing from Shallow Cotton valley and Appalachian wells to more shale wells.
  • Haynesville Shale now increasing focus.
    • 119,800 acres mostly held by production
    • 17 vert and 3 horizontals planned for this year
    • seeing shale thickness of 200' in Harrison, Tx and Caddo and DeSoto, La. vs 350' seen by (GMXR) in their Tx shale
    • But also getting IPs of 800 to 2,800 Mcfgpd from the first 4 verts which is not too shabby.
    • Signed long term deals for 5 1,500 hp rigs
  • Appalachia - refocusing on Marcellus and Huron shales now, drilling 229 instead of 330 planned conventional wells in the division.
    • 1.1 mm acres with 395 K in the Marcellus, largely HBP
    • First horizontal Marcellus will complete during 3Q; found 194 feet of high porosity, high organic content section.
  • In a Nutushell: Great quarter by the numbers. No cost guidance but several ominous cost statements. Not happy with the operational cost side of the income statement and while I think the stock is overly beaten up, numbers are likely to come in given the less zealous gas price environment analysts are now looking for which could yield some near term weakness, especially when analysts bring down their conventional growth assumptions from Appalachia, a region which garners higher differentials to NYMEX than elsewhere in the U.S.
  • Conference Call: Wednesday, 2:30 pm EST.

KOG Announces 2Q Numbers .... And Forecasts Coming Equity And/Or Debt Deal

  • 2Q Number really don't matter here. But for sport here goes:
    • Revenue of $2.0 mm vs $3mm expected
    • EPS of $0.02 vs ($0.01)
    • With little names like this one well can make a big difference during a quarter either positive or negative. In their case they had 3 Bakken wells offline for part of the quarter for workovers.  Again, I don't put too much importance, barely any, on quarterly results here. The beat was due to higher than expected oil and gas price realizations.
  • What Does Matter For Them In The Bakken:
    • The company has been in workover and recompletion mode.
    • They are about to spud (September) their first horizontal Bakken well on their FBIR (Fort Berthold Indian Reservation) acreage (38,000 net acres) once the rig arrives.
    • They have secured drill pipe for 6 horizontal wells here.
    • 2 additional wells have been permitted.
  • And Last But Not Least:

As a result of these changes in strategy, our cash balances and working capital are not adequate to meet our anticipated capital expenditures. As a result, we will need to obtain significant additional working capital through debt or equity financings or by entering into additional joint venture agreements. Once we resolve our immediate capital needs, we expect to begin our planned drilling program in the Bakken shale play.

  • Conference Call: I'll look at this again after the deal but will listen to the call at 11 EST.

DVN and RIG to be added... 

DVN Conference Call at  11 EST

RIG  - Big Beat

2Q Numbers:

  • Revenues: $3.102 B vs $3.054 B expected
  • Earnings: $3.45 vs $3.23 expected ($2.70 to $3.79)
  • Avg dayrate: $238,600 up 4% sequentially

Conference Call at 10 EST

FTO - Earnings pushed back a day to Aug 7

Odds & Ends

Analyst Watch: (RDC) upped to buy at Jefferies.

 

196 Responses to “Earnings Deluge Wednesday”

  1. 1
    Sambone Says:

    8:04 am EST

    Crude A Tad Higher On BTC Pipeline Closure

    By Reza Amanat
    Of DOW JONES NEWSWIRES

    LONDON — Crude prices traded marginally higher in London Wednesday, spurred by news of the closure of a key oil pipeline in Turkey following a fire. But ongoing demand concerns limited crude’s advance, while many market participants opted to wait for the latest update on U.S. crude and oil product demand from stockpile data due out later in the day.

    Nymex light, sweet crude prices climbed back to $120 a barrel following the news of the fire on the Baku-Ceyhan-Tbilisi pipeline, but retreated as bearish sentiment maintained its grip on price activity.

    “The fact that (the) price is back down, shows the (pipeline attack) is not as serious as initially thought,” said Lawrence Poole, analyst at Global Insight in London. Instead, concerns about weak demand were outweighing any bullish news, he said.

    At 1147 GMT, the front-month September Brent contract on London’s ICE futures exchange was 49 cents higher at $118.19 a barrel.

    The front-month September contract on the New York Mercantile Exchange was trading 8 cents up at $119.25 a barrel.

    The ICE’s gasoil contract for August delivery was higher $4.00 at $1,070.50 a metric ton, while Nymex gasoline for September delivery was up 1.28 points at 296.92 cents a gallon.

    BP PLC Wednesday said that it shut down its 1 million barrels a day Baku-Tbilisi-Ceyhan oil pipeline after a fire in eastern Turkey, although it wasn’t immediately clear if the incident was an accident or an act of sabotage. The BTC pipeline exports Azerbaijani crude from the Caspian sea, crossing Georgia into the Turkish port of Ceyhan

    “The BTC pipeline closure for fire will take some oil out of the market but as long as it is confirmed that it is not due to terrorist action it will be considered as a normal operational risk…at this stage we will not characterize it as a long lasting structural risk,” Olivier Jakob, managing director of Swiss-based consultancy Petromatrix said.

    Azeri crude, carried by the BTC pipeline, is a light crude grade similar to North Sea Brent, servicing the same markets, said Harry Tchilinguirian, Senior Oil Market Analyst at BNP Paribas in London. “So in that sense, it is a supportive factor (for crude prices).”

    Meanwhile, market participants were waiting for publication of weekly U.S. inventory figures — due for release at 1435 GMT Wednesday — for market direction and any further signs that demand erosion in the U.S. has deepened, analysts said.

    According to the average of 14 analysts’ forecasts surveryed by Dow Jones, U.S. crude stocks are expected to have risen by 100,000 barrels in the week to Aug. 1. Gasoline stocks are seen to have declined by 1.1 million barrels, while distillates are expected to have risen by 1.9 million barrels. Refinery use is forecast to have decreased by 1 percentage point to 87.1%.

    “A set of higher-than-expected builds could cause the “next shoe to drop’, and perhaps hasten a selloff to the $110-$115 level, something that the charts are already implying,” Edward Meir, analyst at MF Global in New York said. “On the other hand, bullish numbers could spark a short-covering rally, but given the prevailing negative mindset, we suspect any strength will be sold into.”

    Despite the negative market sentiment, brought about by falling demand in the U.S. and other Organization for Economic Co-operation and Development Nation states, some participants expect crude prices to remain strong into the third quarter, thanks to strong non-OECD demand growth and tight supply.

    “Supply constraints have not been lifted and the main centers of oil demand growth (China, Middle East, India, Latin America) do not yet show any material signs of weakening,” Paribas’ Tchilinguirian said.

    —By Reza Amanat, Dow Jones Newswires

  2. 2
    Sambone Says:

    Off subject – This is a VERY good read for tonight. I recommend it for everyone.

    http://oaktreecapital.com/memo.aspx

  3. 3
    zman Says:

    Sam – rig put up nice numbers.

    HK and PQ posted misses.

    HK looked very good on the production and cost side but analysts got ahead of themselves there. Production growth of 30 to 40% for 2009 is nice to see and they saw another good test in the Haynesville (16.7 MMcfepd) and are stepping up drilling there.

    PQ had little to say in their PR.

  4. 4
    Sambone Says:

    #3, saw that.

  5. 5
    zman Says:

    Morgan Stanley freezing home equity lines of credit.

  6. 6
    zman Says:

    RBC takes PXD target from 85 to 110

  7. 7
    zman Says:

    IOC on the tape saying pre stimulation rate of 63 MMcfgpd+ in their Elk 4 well. A month ago that would have sent the stock up $10+ in the pre market.

  8. 8
    Sambone Says:

    Oil Backs Off, But Little Gas In The Tank

    By GEOFFREY ROGOW andROB CURRAN
    Of DOW JONES NEWSWIRES

    NEW YORK — Having shrunk back to levels with which the stock market was comfortable in the spring, oil may no longer be king. The trouble is, there is not much out there to command stocks higher once this latest relief rally peters out.

    Stocks have shown new life since oil prices plunged back below $120 a barrel in New York. The Federal Reserve’s decision to keep interest rates steady and its accompanying statement Tuesday let the party continue, with the Dow Jones Industrial Average up 331 points Tuesday.

    Investors charged back into all of the companies that had been beaten down during oil’s run. Federal Express (FDX) and General Motors (GM) each added more than 5% Tuesday. American Airlines parent AMR (AMR) rose 13%, and Goodyear Tire & Rubber (GT) rose 12%.

    Banks and lenders continued their recent tear. American International Group (AIG) rose 12%, making it the strongest gainer on the Dow. The Financial Select Sector SPDR fund, a basket of financial stocks, rose 4.8% to $22.48. The Consumer Discretionary Select Sector SPDR added 4.5% to $29.73.

    But questions remain about whether any of those sectors have the capacity for earnings growth with a housing market in collapse and labor markets weakening. The old standby trade of “Short Financials, Long Commodities” may become “Short Both.”

    “I still think we’re in for another leg down in this country,” said Virginie Maisonneuve, head of global and international equities for Schroders. “We are not at the crux of problems.”

    Lorenzo Di Mattia, manager of hedge fund Sibilla Global Fund, echoed those doubts. In fact, the retreat in commodities has been spurred by concerns about demand, another signal that the economy is continuing to get weaker.

    “I think this is still the effect of the bear market rally in financials from an extreme oversold position in July,” Di Mattia said. “Meanwhile, the economic weakness is spreading and significantly weakening demand for commodities despite tight supply.”

    Oil has led stocks around for much of the summer. When it moved higher, stocks often backed off; and when it pulled back, stocks found room to run. Higher prices pressured consumers and corporate profits alike.

    During oil’s climb north of $145 a barrel in June and July, equities traders found little to like in the market. The S&P 500 reached its bottom on July 15, a few days after oil’s intraday peak on July 11.

    With oil off about 20% in the past three weeks or so, financials and consumer discretionary names have been the biggest beneficiaries.

    But the debilitating drop in home prices and the tightening of credit markets haven’t eased. Moreover, even if banks are getting closer to the end of their massive capital markets write-downs — a point that is still debated — they clearly are going to have trouble generating earnings now that key business lines have been flattened.

    “You have to have earnings, and the earnings visibility is poor for banks, while the potential to earn money is much more muted than people realize with the economy where it is,” said David Klaskin, chief investment officer for Oak Ridge Investments in Chicago.

    In addition, the pullback in oil prices hurts the energy sector — one of the few areas of strength for the market this year. The Energy Select Sector SPDR Fund (XLE) is off 4% this week. Exxon Mobil Corp. (XOM) is also lower.

    Still, some investors could see the pullback as a chance to buy into a sector they think will be strong for years to come.

    “There are good companies selling off here in energy and going to a reasonable area where valuation guys like me can buy,” Klaskin said.

    —By Rob Curran, Dow Jones Newswires;

    —By Geoffrey Rogow; Dow Jones Newswires

  9. 9
    zman Says:

    RGI – great rates in their 8K on long term ultra deep: $600 k per day.

  10. 10
    zman Says:

    Sam – been the saying that for a while re the general market…how is it going to rise without energy, the only part that is showing growth and is the cheapest of S&P sectors

  11. 11
    zman Says:

    PQ call about to start…not even tempted to add here… need to get a handle on what happened to production during the second quarter to come in so flat to 1Q exit.

  12. 12
    ddaley Says:

    For a “hope springs eternal’ entry, from a briefing trader:
    “I’m not a glutton for punishment, but I’d like to draw your attention to Nat Gas (UNG). This chart formed a reversal bar last week along with other commodities and Monday price gapped down and wasted no time taking out last week’s lows. Trading was very heavy as a new leg down started. Yesterday volume continued very heavy. BUT PRICE MADE NO FURTHER PROGRESS. That’s a sign that deep pockets are buying amidst the panic. With sentiment so bearish it might not take much to spark a rally. And a pattern such as this has the potential to take out the previous week’s high before it runs out of steam.”

    For my part, I could not agree more with the last post of yesterday from Texana. That “all of the energy stocks are pretty much moving in tandem with the xle, irregardless of their fundamentals. And the suggestion that the XLE will be held to the 70 strike for expiration. War would change that of course, but, as T said, cash is a great position.

  13. 13
    zman Says:

    Service trading up nicely,

    HK looking to rally off pre call lows on guidance vs the miss.

    I trust nothing before EIA inventories.

  14. 14
    zman Says:

    PQ CC #1

    Adding 4th rig in Woodford

    3rd buda well drilling…2 weeks

    Pelican Point: 24 mm/d after 3 months, annual gross cash flow of $100 mm gross from this well.

    LOE $1.18 – in range. See slight increase in labor and materials costs.

    Reconfirm $1.10 to $1.20 LOE guidance

    G&A – higher than expected

    96 to 102 MMmcfedp for 3Q
    Reconfirming prior guidance for 2008

  15. 15
    zman Says:

    PQ CC#2

    Reserve growth anticipated goes from 30 to 40% for 2008. By year end >75% of reserves will be from long-lived reserves.

    PQ Q&A starting:

    Woodford. Should complete 1st well on the eastern side which promises to be sizable, second well drilled as well. Results in between calls.

    HK definitely overlooking the miss in favor of guidance now.

  16. 16
    zman Says:

    PQ commenting on BP in the Woodford. Says BP looked at the play for awhile, says they are looking to double their OK production. Says this will help with the transportation out of the basin. Good news for PQ and NFX.

    HK – wow, seems like old times. Call starts in 10 minutes there.

  17. 17
    cadillac Says:

    Sam,

    Re #2 post. Very good read. I would say a very balanced look at the economy and markets.

    Also interesting RIG trading down early with what looks to be ANOTHER very good quarter

  18. 18
    zman Says:

    RIG had a bit of unexpected dock yard time in the numbers.

  19. 19
    zman Says:

    ZTRADE: WildZ at its finest. HK $35 September calls for $2.10 (HKIG) and HK $30 August calls for $2.40. The Augusts are pretty high risk as we have the call starting in a few minutes and a strong reversal on the stock. We also have oil numbers in about 45 minutes which can change that reversal pretty sharply. Guidance was very strong in the Q so see the post for further thoughts.

  20. 20
    zman Says:

    PQ – saying they have rights all the way through the Haynesville / Bossier. Will go back and read the transcript….hopping on the HK call.

  21. 21
    reefguy Says:

    eac bags sale for now…stock down almost 10%

  22. 22
    Nicky Says:

    Morning all. I am still looking for energy and metals to stage a counter trend rally which will last a few days. In nat gas it appears to be underway although I can’t rule out a slightly lower low. Gold looks to be in the same place as nat gas either a temporary low is in place or we need a slightly lower low.
    Neither the BOE or the EU are expected to do anything with rates tomorrow although there is slight talk that the BOE could cut by 0.25. Any hawkish inflation talk out of Trichet could provide us with the catalyst for the rally.

  23. 23
    zman Says:

    PQ going to 7,200 foot laterals in the Woodford.

    A little more enthusiastic this morning as we are:

    1) not currently in baby and bathwater action.
    2) seeing stories and forward guidance given some nod of approval. Witness HK up and RIG which beat but with some downtime expected down.

    This could change completely with the oil numbers and if you missed it late last night, Texana’s point on trying to call a bottom in this environment being a bad idea was definitely not lost on me. I never called a top and kept buying in small increments all the way down. Now I think they are very cheap but the names could get cheaper.

  24. 24
    zman Says:

    Reef – unreal ho hum reaction on IOC, what’s up with that?

  25. 25
    kyleandy Says:

    z can u get on webcast of HK i cannot

  26. 26
    zman Says:

    HK CC #1

    LOE very low
    G&A – $0.55 / Mcfe down from 1Q
    Gathering – a little high, see it falling in line with guidance

    Wow SLB … add from the other day starting to work now.

  27. 27
    zman Says:

    Kyle – I’m on, they are running down the financials now.

  28. 28
    kyleandy Says:

    finally on

  29. 29
    jsaun14 Says:

    Z-

    Would some far out IOC calls be a good idea to capture the value of this news when the sector wakes up?

  30. 30
    reefguy Says:

    IOC- is boone selling into news?

  31. 31
    zman Says:

    HK – CC #2

    Net debt to cap of 30%
    borrowing line remains undrawn

    Fayetteville Shale
    44% increase in wells drilled count 1 Q to 2Q
    27% seq growth in production, non op well count incr 36 to 59 in 2Q
    operating wells : state tests show 2.3 MMcfepd, vs 1.7 mmcfepd in 1Q in same region.

    North region – this is cheaper area – saw 3.2 mmcfepd with cemented line with 6 stage frac (first cemented liner in the northern part of play (shallower makes cheaper).

    Elm Grove update
    those Taylor wells – avg 9.5 mm/d for those 3 wells.
    Hosston recompletions: 11 mmcfepd gross/7.5 mm/d net aggregate. Nice low $ adds.

    Sawyer Field – Sutton County – excellent results so far. They finalize their JV with EOG.

    Haynesville update on the way…

  32. 32
    antrimshale74 Says:

    Coal stocks moving nicely this AM as well, save for MEE which announced an offering last night.

  33. 33
    zman Says:

    HK CC#3

    Haynesville:
    10 rigs by 2008 YE and 20 for 2009. Rigs have been secured.

    140 operated in 2009 and more in later years.

    Drill at least 1 well per section in the 3 year lease area which is about 150,000 acres.

    The H.S. works in a wide variety of gas price environments.

    See the coming wells here as better as dictated by learning curve and experience.

    CHK moving on these comments. Almost funny.

  34. 34
    BirdsofpreyRcool Says:

    HK organic growth rates will exceed even XTO’s aggressive target next year. nice.

    Gotta love the Hawk!

  35. 35
    reefguy Says:

    140 wells times 10MMCFPD and stabilized at 4MMCFPD is 640 MMCFPD EoY 09?

  36. 36
    zman Says:

    HK CC#4

    $700 mm spending in 2H08. Another deal to pay for that????

    Reserve growth to be high, reserves up 25% at mid year w/o the Haynesville wells.

    PXP moving well on their numbers from last night as well.

  37. 37
    zman Says:

    HK Q&A #1

    Haynesville Questions:

    regional estimate for takeaway capacity: current takeaway is – didn’t say.

    several new projects underway will add 2 to 3 Bcfgpd in between 2009 to 2011. That should settle the gas market a bit as that is not glut style growth.

    Reef – Nice exit rate calc eh? Lol. They look to be doubling the company by the end of 2010 on my back of the brain calc.

    BOP – yep. As long as they don’t become a serial filer.

  38. 38
    zman Says:

    HK Q&A #2

    Rigs secured for 2009. Are they newbuild? 7 or 8 are newbuilds coming in late 2008/early 2009.

    E Texas – Haynesville …when do you move west and test? Scheduled wells in Harrison down to Shelby in 2008, will have results by year end. Wow, that’s PVA / QMXR country.

  39. 39
    zman Says:

    Oil inventories in 5 minutes, oil up $0.75 now.

  40. 40
    BirdsofpreyRcool Says:

    HK… serial filer… like CHK, perhaps?

  41. 41
    zman Says:

    HK Q&A #3

    Cost of the last well, $8.5 mm. Lots of science in it, will come down over time.

    BOP – or XTO on the debt side.

  42. 42
    BirdsofpreyRcool Says:

    EAC… company thought they could get $85/share in a buy out. Didn’t like the bids… stock at $47.66 now. ouch.

  43. 43
    zman Says:

    HK Q&A #4

    170 Bcf per section. They are not saying that gas in place factor covers all their area. They have joined the sharing of core data groups to get the well costs down. Recall others have been saying 45 to 55 and 30% recovery factor. He thinks they do better, at least in this area that its early to say, trying to stay conservative. Undertaking a very extensive reservoir modeling study.

  44. 44
    zman Says:

    HK Q&A #5

    seeing a little bit of oil coming out of the Haynesville. Hmmm.

  45. 45
    BirdsofpreyRcool Says:

    gee… people still drive cars…

  46. 46
    Brian08 Says:

    Oil up 1.6MM
    Gas down 4.3MM

  47. 47
    zman Says:

    Inventory numbers

    crude up 1.7 mm barrels
    gasoline fell 4.4 mmm barrels – wowow
    distillate up 2.8 – not great

    oil off by half on the numbers.

  48. 48
    Brian08 Says:

    So this should be bullish for refiners, correct?

  49. 49
    VTZ Says:

    DEMAND IS BEING DESTROYED! hahaha

  50. 50
    zman Says:

    gasoline demand looked flat to last week.

    gasoline imports off again but in line.

    They don’t like something here, must be the demand on gasoline or the big build in crude but that was higher imports. Could also be a head fake before oil recovers. Now flat.

  51. 51
    Brian08 Says:

    Obviously V…I love it how the moronic journalists have to find some explanation for the day-to-day movements in prices…I swear they have an excuse roledex…”Demand Destruction”, “Iran”, “Tropical Storms Abate”, “Dollar Rising/Falling”

  52. 52
    antrimshale74 Says:

    I’m thinking it’s shoot first off the headline oil build number then ask questions later.

  53. 53
    VTZ Says:

    Yeah and Brian you always have to refer to “expectations” when its convenient and it fits with your headline.

  54. 54
    zman Says:

    Gasoline production was pretty flat so its not that. Did see a slight pick up in gasoline demand and in jet fuel demand.

    Agree Antrim. ok, back to the HK call

  55. 55
    Brian08 Says:

    Agreed V…Best class I took in business school was “Behvaioral Finance”…That’s what all this stuff is…Reality doesn’t mean squadoosh, it’s all about preceptions…Preceptions are reality…Only thing that can explain what the heck is going on with names like CHK/NFX/SLB/etc. these past few weeks…

  56. 56
    zman Says:

    HK Q&A #5

    HK saying they are still trying more techniques in the Fayetteville shale and they will spend $ to try cemented liners and more stages to optimize. They are watching what SWN is doing. In the quarter they were in a greater number of non-operated wells than operated so they are learning from the “larger players” in the play.

  57. 57
    VTZ Says:

    You guys are all missing the point by looking at your fancy “fundamentals” and statistics… it’s demand destruction and that’s all you need to know. I saw some demand explode outside my house yesterday and it’s being destroying across America… Bloomberg and DJ told me so.

  58. 58
    zman Says:

    DVN is going to be talking about the Haynesville acreage in a positive light on their call which starts in 15 minutes.

    Re Oil – so far so good post inventories…means little I know but at least we aren’t running down five bucks on the crude headline.

  59. 59
    Nicky Says:

    Agreed Z – who was talking about rounded bottoms on here last week? looks a bit like that!

  60. 60
    bill Says:

    rigs that were 20 k per day now 25 to 30

  61. 61
    zman Says:

    VTZ – thanks for the laugh.

    HK Q&A #6

    Considering some asset divestitures to recycle their capital. Like to hear that.

    Rig cost pressures: seeing some, especially in the rig types they need, definitely “up”. They are get NBR and HP rigs, very high quality.

    Nicky – I am much more a fan of the round bottom in oil than in equities. The equities can V bottom all they want if we get some stability in crude and NG.

  62. 62
    BirdsofpreyRcool Says:

    how long is it taking from spud to TD on the ND Bakken wells these days?

  63. 63
    zman Says:

    Bill – re 60. Something congress should consider when thinking of implementing windfall profits tax. Operations costs are up as well with labor and materials, espcially tubing. Way to make US firms uncompetitive, what a great idea.

  64. 64
    zman Says:

    BOP – I’ve heard spud to test in the Bakken in the 709 to 90 day range.

  65. 65
    hermanmar1e Says:

    #56

    Zman, what seems to be the problem with cemented laterals? I think this is the way to go in the shale plays. SWN has tried more expensive techniques, only to find lower production!

  66. 66
    zman Says:

    another nice recovery day in the refiners….because people still drive.

  67. 67
    sane Says:

    API

    Crude DOWN 2.6M
    Gasoline DOWN 1.8M
    Distillates UP 3.1M

  68. 68
    Garyinhou Says:

    My very own personal demand destruction… I just bought a used 27ft travel trailer and a used Chevy P/U.. I’ll get 8 mpg while towing. I’m towing it to deer lease in Bandera.. where I will have similar demand destruction re: Miller lite consumption. And I’m giving approx 1200 lbs of corn feed to deer to boot.

  69. 69
    zman Says:

    Herman – don’t know, HK indicating they are not leaving their open hole packer system for it but they are saying it is helping and they will drill more with than without in the second half.

    Seeing some great shows in the Bossier, different set of rocks from the H.S., taking sidewall cores. Note that the 170 Bcf per section was just Haynesville from a 200 foot section of HS, does not include Bossier sand reserves.

  70. 70
    zman Says:

    Gary – ever see wild boar about those parts? Lots of fun and you don’t have to lure them with food. Also, when times are tight, a switch to the people’s beer, PBR, is in order.

  71. 71
    antrimshale74 Says:

    Very nice move in KWK today. It had been beaten to a pulp lately.

  72. 72
    Nicky Says:

    Broader market – volume is still confirming that higher highs are out there. Time is running out on this cycle though….resistance on spx is at 1294 – 1302 region which I think has a shot at being seen.

  73. 73
    zman Says:

    DVN, by the way, has more acres in the Haynesville than CHK now.

  74. 74
    zman Says:

    Thanks Sane…funky numbers.

    DVN call starting

  75. 75
    zman Says:

    DVN now 483,000 Haynesville acres. Looking for color in the call or Q&A on what they like, and their plan here.

  76. 76
    Garyinhou Says:

    I guess a 30% reduction in the old portfolio means times are tight.. so PBR it is. No hogs on the property.. so I guess “we should seek our pork entertainment elsewhere.”

  77. 77
    tomdavis12 Says:

    Z: It was pointed out that the last time CHK was at 4x cash flow it also suffered from the double whammy of unexpected dilutive secondary and declining NG prices. I guess $20/sh HS addition means nothing when you are afraid. I guess there are elephants that still remember the ’98 almost blow-up.

  78. 78
    BirdsofpreyRcool Says:

    z – re#64 thanks

  79. 79
    zman Says:

    Thanks Antrim, haven’t even printed out their quarter yet….would be the #1 performing stock on my screen and post 2Q results.

    PQ just about the only thing red besides Exxon.

  80. 80
    zman Says:

    Oil easing, so far stocks ignoring.

  81. 81
    zman Says:

    NBR continuing lower these days I just don’t get.

    25% growth 2008 vs 2009
    Fwd PE: 8x

    Everything you hear is that people want their rigs and their rigs are garnering higher day rates and demand looks unlikely to falter.

  82. 82
    zman Says:

    Tom – agreed, I remember 98, the year of the Austin Chalk. Ugly. Plays not the same, but investors are.

  83. 83
    zman Says:

    DVN Haynesville Shale Update:

    Drilling, coring, testing. Have chosen to be quiet up until now.

    Much of acreage is HBP
    Low royalty burden, avg < 20% Defining and derisking 73 Tcfe of gas in place on their acreage. Wow! Drilling 1st Hz well in 3Q 14 verticals drilled.

  84. 84
    zman Says:

    DVN Call

    Think their production in the Barnett doubles in next few years.

    Good results with long laterals, new ones in the 5 mm/d with 8 to 10 frac stages,

    They think 1.2 Bcfgpd from 1 currently, grow for foreseeable future…gas probably won’t like those comments. They basically said we can’t speak for others (EOG) but they are not going to peak anytime soon.

  85. 85
    zman Says:

    Oil giving up now, down almost a buck and looking squarely at 118.

  86. 86
    zman Says:

    VTZ – any thoughts on the Jackfish project relative to other plays up there. Are there significant cost differences between the various plays in terms of gas usage or other?

  87. 87
    zman Says:

    US and security council threaten Iran and oil tumbles below $118. The fix is in on this trade…we remain in sell the bumps mode.

  88. 88
    VTZ Says:

    Jackfish is pretty standard insitu using SAGD. High energy costs.

  89. 89
    regale Says:

    Z, re #70 — Did you go to the Boskin/Greenspan school of computing CPI? Can’t afford to eat cat food anymore? Wild boar is free! Bud Lite too expensive? Drink PBR.

    On another note, Gary, here in sunny San Diego, I’ve got a 130K-mile lovingly used Chevy 4X4 would love to sell, but now it’s worth so little I will just drive into ground. My husband is always adding low mileage and new diesels to his business fleet. He got a call from a local dealer on Saturday: brand-new Ford F250 diesel 4X4 extended cab for $28K — dealers in area wouldn’t budge below $42K last fall.

  90. 90
    zman Says:

    DVN’s reserve calc works out to just under 100 Bcf per section, still double what people had been saying about the play.

  91. 91
    zman Says:

    Regale – we buy dog food around here and that has gone from $17 to $23 for a 20lb bag in the last year.

  92. 92
    hermanmar1e Says:

    Sorry to be on the engineering side. SWN makes 400mcfd less/well with the ECP’s as compared to cemented liners, plus they are spending 200-300 thousand more with the ECP’s.

    If ECP’s were the way to go I would think everyone and their mother would be running them in the Barnett/Fayetville.

  93. 93
    zman Says:

    Herman – that is why I started the site. I don’t pretend to be a G&G guy or a completion engineer even on the internet although I handle on how things work in general. I defer to reef, wyoming or anyone who cares to answer that one. As I understood it, HK was saying they are moving to cemented liners and seeing better results as well as adding gas lift for a pretty signicant % boost (something like 200 to 300 Mcf). It sounded like the same kind of size was seen in the recent wells with part of that attributed to the switch from open hole packers but they didn’t get that granular on it or I was nodding off.

    I am please, again deffering to Texana’s comments last night, that the group is simply not trading oil this am.

  94. 94
    Nicky Says:

    Call me mad but I still don’t see the crude chart as particularly bearish right now. Despite the fact that everyone has talked about crude absolutely tanking the sell off has actually been very orderly which means that any bar up we were to see on the chart right now would look pretty bullish. Looking for a move above todays highs for early sign…

  95. 95
    Sambone Says:

    Ordering lunch today. Chef Salad from Sub shop from August 2004 menu, $3.25. Today it’s $4.90. That’s 50% higher in 4 years or a increase in cost of 12.70% annual. Thought you would want to know. Inflation? What inflation? Oh that’s right, CPI doesn’t count food or energy, oh silly me!

  96. 96
    regale Says:

    Z – #91, that looks to take the Z-CPI to about 35% per annum. Appears to be from the good new/bad news school of thought: Congratulations, the government will send you a Social Security check when you retire at age 75; too bad it’ll only buy you a latte.

  97. 97
    ddaley Says:

    More structural market plays, what we have known:
    Scrambling After Crude’s Dive. From Latin America to Saudi Arabia, how traders, banks and producers alike are stepping up their game to lock in the high price of crude before it has a chance to tumble further – and, in the process, making some big waves in the options and insurance markets. Crude oil and natural gas producers are scrambling to “lock in” prices by buying insurance against further drops in prices, as oil on Tuesday hit a fresh three-month low of $118 a barrel. Oil prices have fallen almost 20 per cent from last month’s record $147.27 a barrel, offering the prospect of a respite from global inflationary pressures and boosting US equities. The Dow Jones index was up 331 points, or 2.9 per cent, by the close in New York.

    In the options market over the last week, for every buyer of insurance against a rise in prices in 2009 there were almost 10 buyers of protection against a fall. Traders said strong buying of put options – contracts that give holders the right to sell crude oil at a predetermined price and date – might be exacerbating the fall in oil prices. The options’ originators, such as Wall Street banks, need to sell futures – pushing down prices – to hedge their option positions. The number of financial bets providing insurance against a fall in prices below $100 a barrel before the end of the year has more than doubled in the past six weeks, according to the New York Mercantile Exchange. On Tuesday there were more than 46,000 outstanding contracts for Nymex December 2008 put options at $100 a barrel, up about 135 per cent on late June. Traders said a single market participant, believed to be a Latin American national oil company, had in the past 10 days taken a large position in put options to protect itself against a drop below $70 by December 2009.

  98. 98
    Nicky Says:

    Note nat gas still holding up..

  99. 99
    1520sbroad Says:

    #92,93 – Z,Hermanmar1e, other completion folks – would be interested to hear other comments in this vein. i thought swn had tried a bunch of different techniques and has sort of settled on a couple that seem to work best in different geographies aided by seismic. Would be interested to hear your take on HS completitions to date as i am still trying to learn as much as i can about that type of well.

  100. 100
    ddaley Says:

    Dogfood here (at WMT) is $11-12 for 50 lbs., Sam Walton’s best.

  101. 101
    ddaley Says:

    The briefing guy again at 12:00 :
    UNG Commentary (40.44 -0.05) -Update-

    This AM I profiled UNG as ripe for swing long entry. Taking that entry here with a stop under 40.

  102. 102
    zman Says:

    1520 – agreed re SWN and lots of different completion techniques over the last 2 years. They seemed to have settle on how they want to go forward in last 2 conf calls/quarters. I think the non-op route chosen by HK to supplement their knowledge here is pretty smart, low interest gives you the code for low dollars and less impact to production plans if it doesn’t work. They said, in relation to the cemented liner they were seeing better results from non-opped wells from big players (plural) so that would be SWN and CHK if not one or two others. Back in the day when CBM was new, the players who took the time and spent the cash to optimize the program within a basin always did better than the guys who just ran out and started drilling into coal seams with big programs without doing the work. It appears HK is taking the former lesson to heart in both the Fayetteville and the Haynesville, mentioning they are in the core sharing info group (unlike CHK who has their own tech team and shares nothing but can afford to do that given their scale and track record in unconventional plays)

  103. 103
    zman Says:

    Good luck with that DD! I think gas is due a size bounce very soon.

    Those takeaway comments regarding the Haynesville of 2 to 3 Bcfgpd incremental looped pipeline capacity between now and 2011 says no flood of gas there. Marcellus will do a lot less than that over same time frame. And there is not another I-Hub coming on next year.

  104. 104
    1520sbroad Says:

    #102 – i like the group sharing idea for HK at this point to get to a “best approach”. I have not listened to the call but did read your notes above – thanks for all the coverage. Any further thoughts that you remember re: #43 above – “extensive reservoir modeling?”

  105. 105
    zman Says:

    1520 – re reservoir modeling. Just that they compared it to the work that they did before on the Fayetteville. That work let them break the play down into 3 zones north to south which allowed them to improve their results quite handily last couple of quarters. They aren’t giving a lot of detail here as they are still acquiring acreage. I think the DVN comment on reserves is pretty telling and helps to confirm what Aubrey and Floyd (HK) have been yelling about.

    Group still green, oil still red. Interesting.

  106. 106
    tater Says:

    Up late last night playing with WTIC chart and lost it all when I went to save it. That made for a good mood and a long morning!
    Anyway, I don’t really look at other people’s work as it gives me an opinion before I look at the chart, and I like to keep a clear perspective. (So if you’ve all seen this analysis before, I apologize).

    Nicky, if you combine your Fib #’s (did not add them as charts are very cluttered) I have to agree with your #94. Very strongly.

    WTIC – First two charts at link:

    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2933882

  107. 107
    zman Says:

    NG flat with oil off $1.10. I think the time is approaching.

  108. 108
    Dman Says:

    Z – any further thoughts on PQ & the market reaction there?

  109. 109
    Fred Says:

    Nicky – re #94 Bloomberg is announcing crude oils off by more then 20% so we’re officially in a bear market. Can you believe that?

    Z – TSO and some of the others finally getting an up day.

    Great commentary keeps the spirits up and the laughs coming.

  110. 110
    ram Says:

    ZMAN – Re naked shorts – Would they also be noted in a stocks short interest info? Also, where do short salers borrow shares that don’t exist?

  111. 111
    Dman Says:

    Just added some Jan OII calls. It’s gotten cheap & the peak hurricane season approaches …

  112. 112
    BossmanG Says:

    Z, which time is approaching? good times or bad times?

  113. 113
    Sambone Says:

    R – They don’t borrow. They just fail to “Deliver”.

  114. 114
    Nicky Says:

    Tater – thanks for the charts – they are excellent! Yes I agree with oil and the 110 area being major support if we fail here. We are at a fairly pivotal point today I feel. Z feels it too in #107! Strength in natural gas I think is leading the whole complex…
    Fred – Bloomberg and CNBC are only adding to my short term bullish thoughts! The sentiment feels way too bearish and I lose track of the times I have seen oil doing exactly the opposite to what is expected….we need to work off some of this negative sentiment before we can really go lower I think.

  115. 115
    1520sbroad Says:

    Gotcha – i’ll listen to the HK and DVN call. Interesting to watch and learn about all these different shale plays.

    Got a call this morning from an old friend of mine that is a citismithbarney broker. He mentioned several E&P co’s that Gil Yang (citi E&P analyst) had just done a conf call on on monday afternoon. Yang covers a lot of the ones folks are interested here – CHK, SWN, FST, KWK, DVN, APA, APC, XTO. No changes in estimates yet that i could see on thomson but the gist of the call was that these producers were not going out of business given the 20+% sell down recently and there were some good opportunities for them drilling wise. I’ll see if i can get some more info. In my experience Gil Yang is pretty conservative in his estimates, price decks, targets, etc. May at least keep some of these on the radar for his brokers.

  116. 116
    Dman Says:

    NBR at 8.25 x ’09 EPS. Took some March calls here.

  117. 117
    Sambone Says:

    12:04 pm EST

    Nymex Crude Slightly Lower After Mixed US Oil Data

    By Carolyn Cui
    Of THE WALL STREET JOURNAL

    NEW YORK — Crude oil futures fell sharply, as a bigger-than-expected build in crude oil confirmed traders’ worries of eroding petroleum demand in the U.S.

    Light, sweet crude for September delivery traded $1.65, or 1.7%, lower at $117.52 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange traded $1.67 lower at $116.03.

    Gasoline stockpiles posted bigger-than-expected declines, which is the only bright spot for traders in the weekly inventories data released by the U.S. Department of Energy. Stocks of the motor fuel drew by 4.3 million barrels in the week ended Aug. 1 compared with expectations for a 1.1-million-barrel decrease, a big drop for the second week in a row.

    “The gasoline number is very friendly, showing that gasoline demand is starting to pick up,” said Jeff Schondorf, an oil trader for MBF Clearing. EIA data showed that U.S. gasoline demand inched up 0.2% to 9.484 million barrels a day, the highest level since last August.

    However, the rest of the report has mitigated the surprise brought by a gasoline draw. Crude inventories rose by 1.6 million barrels, larger than analysts’ average forecast of a rise of 100,000 barrels. Stocks of distillates, which include diesel and heating oil, got a 2.8-million-barrel boost, compared with expectations of a 1.9-million-barrel increase.

    “The poor demand for other products are overriding, showing that refineries are refining less,” Schondorf said.

    Sluggish refining margins continue to be a drag on gasoline output. Refineries are digging into gasoline stocks instead of producing, which has resulted a rise in crude but a draw in gasoline, said Raymond Carbone, president of Paramount Options Inc.

    As a result, refinery use decreased by 0.2 percentage point, deeper than the forecasted 0.1-percentage-point decline, to 87.0% of operable capacity.

    Bleak sentiment has clouded the oil market. Crude oil has been down seven of the last 12 sessions, losing 18% from its record close of $145.29 hit July 3. Traders say they are trying to probe the bottom, as those with bullish bets hope for a quick turnaround, but oil futures continue to trend lower under the pressure of an economic slowdown in the U.S. and eroding demand.

    Front-month September reformulated gasoline blendstock, or RBOB, recently traded down 3.49 cents, or 1.2%, at $2.9215 a gallon. September heating oil was down 6.32 cents, or 1.93%, at $3.2188 a gallon.

    —By Carolyn Cui

  118. 118
    zman Says:

    Sorry – Blackberry having a bad day so I was busy reading while the last 7 comments hit.

    Re PQ – I will take a look at adding in coming days. They had a boring call and a more boring press release after a miss but nothing fundamentally wrong with it. Think it will take longer to recover and with little color to boost it will not play today.

    Fred – woohoo VLO too.

    Dman – not a bad bet

    Bossman – um, cautiously better times.

    Ram – you need to call stock loan and borrow the shares before shorting. They skip that step and especially on exchange like Frankfurt so there are a lot more shares sold short than actually exist. Its a big sham.

    Nicky – re CNBC. I seriously wish they would parade a bunch of analysts and traders calling for $50 oil. We’d be back to $130+ in a matter of two weeks.

    Wow NG!

  119. 119
    zman Says:

    Dman – I think it is a good bet.

    However, I can’t stress enough that I’m cautiously optimistic right now. Fund managers get sacked for moves like this. Or moves a little worse than this. If it is a choice between your job and holding on a little longer, they will choose job. They now they can scream “but it was so cheap” from the bread line and no one will care.

  120. 120
    Dman Says:

    Nicky, when did they last have Matt Simmons on TV? He has said all along that demand destruction will be minimal unless leadership emerges to undertake drastic steps. But that hasn’t suited the narrative lately.

  121. 121
    ram Says:

    Thanks Samb and ZMAN. So if buyers are on vaca, shorts can overly punish stocks and make lots of money.

  122. 122
    zman Says:

    Yep, low volume works both ways too. If congress were to take a lot of liquidity out of the energy markets, say by killing of the crude speculators, and then Iran were to sink a ship in the SOH, the rally would be greater as oil gapped up in a vacuum. Someone should put that in their presidential pipe and smoke it.

  123. 123
    Sambone Says:

    Uncle Phil

    http://www.321energy.com/reports/flynn/current.html

  124. 124
    antrimshale74 Says:

    That UNG call is looking pretty nice right now.

  125. 125
    Sambone Says:

    Fund managers

    DOW JONES NEWSWIRES

    Massachusetts’ nearly $51 billion pension fund Wednesday fired Legg Mason
    Capital Management, a Legg Mason Inc. (LM) unit run by renowned fund manager
    Bill Miller, and four other fund firms – Ariel Investments, Gardner Lewis,
    Mazama Capital Management and NWQ – from overseeing a U.S. equity portfolio due
    to poor performance, Reuters reported. The pension fund’s board approved the
    transfer of about $1.4 billion of the $1.8 billion portfolio to State Street
    Corp. (STT) unit State Street Global Advisors.
    Full story at http://www.reuters.com/article/bondsNews/idUSN0645707620080806

    -Dow Jones Newswires;
    Dow Jones Newswires
    08-06-08 1240ET

  126. 126
    Nicky Says:

    Dman – I saw him on about a week ago. He was making a few off the wall comments which had others raising their eyebrows – I am trying to remember what the heck they were!
    This could be one of those days when they say well it couldn’t go down so it had to go up!

  127. 127
    Nicky Says:

    Volume now lower on spx as we make new highs which points to weakness ahead…

  128. 128
    Dman Says:

    Nicky, I remember some aggressive comments from Simmons, something about how the economists should just zip it because they were always wrong, which did raise eyebrows, but that was when oil was much higher, maybe 3 weeks ago.

    Just took a few Jan FTI calls. Stock all beaten up, business terrific.

  129. 129
    zman Says:

    Easy on the Matt Simmons bashing. When I was much younger I had the opportunity to lunch with him and from that flows my naturally optimistic and somewhat bullish bent, lol. I guarantee that he has done more research into national oil company reserves than anyone whose eyebrows were bent.

    On the demand destruction topic, you should know where I stand. Gasoline demand off 2 to 4% vs year ago levels which were a record is not a suitable use of the phrase.

  130. 130
    zman Says:

    Dman – bashing economists is proof of Matt’s smarts, LOL. Big Ben is an economist, look how well he’s done.

    Seems to me oil traders are still looking for reasons to sell with several seemingly bullish or at least not bearish items on the table. Media seems to play along not really making much hay out of Iran or hurricane season despite the fact that the season is very young and more intense than expected.

  131. 131
    Nicky Says:

    No not bashing him at all. I would say like Dman that whenever I see him interviewed that he does not suffer fools gladly and who can blame him with his knowledge. Its like ‘how many times do I have to tell you guys the same thing and no I am not going to change my mind!’

  132. 132
    zman Says:

    Nicky – I was just kidding ya and I agree completely with 131. Notice how all the old oil guys get crotchety? Its because they get hauled before Congress and treated like villains from summer to summer. I’ll get off my horse now.

    Nigeria saying some production from pipeline damage last week back on line.

    Apparently that Turkish blast still shuttering 1.2 mm bopd. Its is on fire but contained and will take 24 hours to put out. Can’t say when reopen. This is 1% of the worlds daily consumption of oil stopped.

  133. 133
    ddaley Says:

    Tater,
    GREAT work on the charts. There is certainly a cautionary tale there. XES went way beyond its upper trendline. Reversion to the mean and all.
    XOP will have to get through its downward trendline around 54, to be significant.
    XES has more room, to 44 before the down line.

  134. 134
    zman Says:

    BP declaring force majeure on the Turkish pipeline.

    The oil fields that feed the pipeline (Azeri-Chirag-Gunashli or ACG in the Caspian Sea) are being slightly curtailed at present.

    Cause of explosion unknown. Last time we had one of these the PKK (Kurds) claimed responsibility.

  135. 135
    Sambone Says:

    Adding more SKF.

  136. 136
    Sambone Says:

    (Adds details, background)
    ABUJA, Aug 6 (Reuters) – Oil companies have repaired two
    major Nigerian pipelines damaged in militant attacks last week,
    allowing some production to resume in the restive Niger Delta,
    the country’s oil minister told Reuters on Wednesday.
    The Movement for the Emancipation of the Niger Delta (MEND),
    which has led a campaign of violence against the oil sector
    since early 2006, claimed responsibility for the attacks that
    halted 150,000 barrels per day of output in the world’s eighth
    largest oil exporter.
    “All of the pipelines have been repaired. It has beefed-up
    production slightly,” Odein Ajumogobia said in an interview.
    The two pipelines are located at Kula — through which the
    Nembe Creek trunkline passes — and at the Trans-Niger pipeline
    at Rumuekpe, located around 50 km (30 miles) west of the main
    oil city of Port Harcourt.
    The pipelines, both operated by Royal Dutch Shell RDSA.L,
    are connected to the Bonny export terminal. Oil from the
    facility is popular in the United States and Europe because it
    is easily refined into gasoline, diesel and other products.
    (Reporting by Felix Onuah; Writing by Randy Fabi; Editing by
    Tume Ahemba and Anthony Barker)

    Wed Aug 6 17:59:08 2008 -GMT- pnac (nL6530499) = 1 17:59

  137. 137
    Dman Says:

    Z – # 129 I can guarantee that the bent-eyebrow crowd had done no research into *anything*, being that they are TV bobbleheads. Simmons’ idea, that people who are permanently wrong might consider zipping it, induced a kind of nervous laughter from the TV heads because, if they applied it to themselves, the airwaves would be eerily quiet 🙂

  138. 138
    zman Says:

    BOP – anything interesting on the KOG call?

    XCO call in 30 minutes.

    NG – people looking for 61 Bcf injection tomorrow.

  139. 139
    ram Says:

    Samb – Are you sensing a shift out of financials?

  140. 140
    zman Says:

    Oil getting dropped into the close.

  141. 141
    Sambone Says:

    R – You can round trip this baby. What I’m betting is that the “Fat lady hasn’t sung yet” in regards to their bottomline. MER just sold off it’s 2005 CDO’s at 22 cents on the dollar. We’ll see.

  142. 142
    BirdsofpreyRcool Says:

    z – KOG. odd manoeuvre that i hope they don’t repeat in the future: issued earnings press release after close, announce 2ndary offering the next day, hold the quarterly conf call the day after. totally backassward. their conf call is tomorrow.

  143. 143
    BirdsofpreyRcool Says:

    KOG… meanwhile, going thru the red (and making scads of assumptions) gets me to about $2.72/share liquidation value (based on acreage), post 8.05mm share 2ndary. So, trading like a call-option with zero cost for time value.

  144. 144
    zman Says:

    BOP – well, they said they had to do a deal in the pr last night, call tomorrow eh? very rookie. Probably a good call option at that, I’m not up to speed on where their little reservation acreage is, what are you using for OOIP?

    Little Cubic down in the Haynesville I played for a similar time value less call option. They seem to get valued at a unreal premium to acreage value …like a developed acre vs a purchased pasture one. Have not bothered to even track down their new ticker yet.

    XCO call about to start.

  145. 145
    BirdsofpreyRcool Says:

    using XTO’s Headington purchase at $5,500/acrea. KOG’s acreage is in Dunn County and they beleive that is it better located than Headington (of course).

  146. 146
    BirdsofpreyRcool Says:

    KOG = liquidation valuation. assuming an acreage sale with no value given to production or upside from reserves (other than just the raw acreage leasing value). 5 yr leases with 18% royalty. not too bad.

  147. 147
    zman Says:

    XCO going with extreme sarcasm as an opener. Wow.

  148. 148
    VTZ Says:

    Awesome… I love it.

  149. 149
    kyleandy Says:

    Z – re 91 if i gotta drink PBR or natural light due to recent setbacks, the dogs can eat store brand at 7-8 per 20 lb bag. i have yet to notice them not eating it every nite in about 30 seconds.

  150. 150
    ram Says:

    Samb – I understand the round trip. I bought SKF today as well. I wish I could sell off my mtgs at 22 cents on the dollar. I know I would feel better financialy.

  151. 151
    tater Says:

    Does anybody have any info on the trading (S&P 500) of the couple days after Bernanke / fed announcements. I understand that the first day is usually supposed to be 100% wrong. Is that right, or am I misled?

  152. 152
    reefguy Says:

    ky- its gotten so rough, now i am flying commercial and just used my Southwest free flight ticket

  153. 153
    Dman Says:

    I am wondering if down 8% today was in fact the time to buy PQ. Now down 5%

  154. 154
    Nicky Says:

    SPX now at the lower end of the resistance level that I am expecting to stall this rally… anywhere between 1291 and 1302….

  155. 155
    BirdsofpreyRcool Says:

    KOG = forgot the $15mm in cash that DVN has to pay if they walk away from their 3-well drilling obligation ($30mm in total value). So, brings liquidation value of company to $2.88/sh, post 2ndary.

    issuing stock at net book value… penalty paid for waiting until the last minute, i guess.

  156. 156
    Sambone Says:

    By Maria Abi-Habib
    By ZAWYA DOW JONES

    DUBAI (Zawya Dow Jones)–Saudi Arabia’s fund managers are nervous about their
    bonuses this year as few mutual funds listed on the kingdom’s bourse have made
    gains, pulled down by market volatility and an uncertain global economy.
    The biggest losers are mutual funds invested on international markets. Out of
    45 of these funds listed on Tadawul, only one has made gains this year,
    according to data on the exchange’s Web site.
    Of the 18 listed “Arab Funds” on Tadawul, only seven have made gains.
    “Usually we tell our clients that diversification is good as not all markets
    move together,” said Adel Al Ateeq, the director of asset management for Riyad
    Capital. “But this year it’s strange. All markets are down; local, regional and
    international.”
    Al Ateeq believes that the U.S. credit crunch has pulled down global markets
    for the short term and that they will rebound later.
    To be sure, funds have not fallen as much as the Saudi Tadawul Stock Exchange,
    which has declined 24% year to date. Most investors defend the fundamentals of
    Saudi stocks but blame retail investors looking to make quick cash for the
    market’s decline.
    The Tadawul’s poor run is against the growth trend for the Saudi economy, the
    Middle East’s largest. The kingdom, the world’s largest oil exporter pumping
    more than 9.5 million barrels a day of crude, is enjoying the fruits of a long
    run of prices above $100 a barrel.
    But it’s the same high oil prices that are squeezing international markets
    putting pressure on consumers and economic growth in the U.S. and Europe. These
    decline spell losses for Saudi investors.
    The Dow Jones Industrial Average has fallen 12% so far this year, while even
    with its current blip crude traded in New York is up 24% over the same period,
    according to Zawya.com.
    “The Saudi market is attractive at these valuations. There is a lack of
    interest and competence in the market but this creates opportunity,” Al Ateeq
    added.
    Other regional bourses have performed well so far this year, with Kuwait up
    18% and the Doha exchange up 20%.
    International brokerage houses are still flocking to the kingdom, with BNP
    Paribas S.A.(13110.FR) the latest to apply for a license from Saudi’s
    regulator, the Capital Market Authority.
    Goldman Sachs Group Inc. (GS), Merrill Lynch & Co Inc. (MER) and Deutsche Bank
    A.G. (DB) all have operations in the kingdom.
    But brokerage licenses for international banks are rarely issued by Saudi’s
    conservative regulators and companies may be seeking a presence in the kingdom
    in expectation of a wider opening of the market to foreign investors and a
    surge in stock market interest.
    “The Gulf is considered attractive considering the slowing economies of the
    U.S. and Europe, where it’s not as easy to make money,” said a fund manager
    from Samba Financial Group (1090.SA), the second largest Saudi bank by market
    capital. “But the mood and moral of traders has been low and we’ve seen our
    funds loose heavily in the past three weeks.”

    -By Maria Abi-Habib, Dow Jones Newswires;

    Dow Jones Newswires
    08-06-08 0939ET- –

  157. 157
    BirdsofpreyRcool Says:

    Pimco’s Gross says that Treasury is like to rescue Fannie and Freddie. Big “duh,” Bill. Also, would make that agency paper you bought worth a lot more, right?

  158. 158
    BirdsofpreyRcool Says:

    “likely” that is

  159. 159
    Fred Says:

    Excellent flow rates from HK in Elm Grove.
    Jay

    Haynesville Shale Leasing and Operational Update

    Petrohawk currently owns or has commitments to acquire over 300,000 net acres in what the Company believes are highly prospective areas of the Haynesville Shale and Bossier Shale plays in Northwest Louisiana and East Texas. Approximately 50% of the 300,000 net acre position is committed to the Company for longer than a three year lease term, extending the overall timeframe for development of this substantial acreage position. Including acreage held by production, Petrohawk’s cost in the play currently averages approximately $5,000 per acre.

    Petrohawk’s first well in the Haynesville Shale, the Elm Grove Plantation (EGP) #63 (100% working interest), located in Section 9 / Township 16 North / Range 11 West, Bossier Parish, Louisiana, had an initial production rate of 16.8 Mmcfe/d and has averaged 13.7 Mmcfe/d over the first 30 full days of production with an average flowing casing pressure of approximately 5,100 pounds per square inch, primarily on a 20/64″ choke. A recent analysis of multiple core samples from this well by an independent laboratory confirmed rock properties consistent with the productive qualities of the well. More significantly, the analysis indicated a measured gas in place volume for the well of approximately 1.255 million cubic feet per acre foot, which, if the data is uniform across the section, could equate to an estimated 170 Bcf of gas in place within the section where the well was drilled.

    Petrohawk’s second well in the Haynesville Shale, the Hutchinson 9-5 (91% working interest), is located in Section 9 / Township 15 North / Range 12 West, Caddo Parish, Louisiana. The well was completed on July 29 and tested at a rate of 16.7 Mmcfe/d on a 22/64″ choke with 7,325 pounds per square inch of flowing casing pressure. Pilot hole data revealed approximately 151 feet of net Haynesville Shale at a true vertical depth of 11,222 feet. The well was completed with a nine stage fracture stimulation, including approximately 2.5 million pounds of sand.

    The Hunt Plywood 36-11 (100% working interest), located in Section 36 / Township 15 North / Range 13 West, DeSoto Parish, Louisiana, is currently drilling in the lateral portion of the well. Petrohawk expects to reach total depth in mid-August and estimates completing the well in early September. Data from the pilot hole analysis indicated approximately 160 feet of net Haynesville Shale at a true vertical depth of 11,476 feet.

    Petrohawk’s first non-operated Haynesville Shale well, the Whitaker 23 #1 (17% working interest), is located in Section 23 / Township 15 North / Range 13 West, DeSoto Parish, Louisiana. The well is currently undergoing completion operations. Data from the pilot hole analysis indicated approximately 158 feet of net Haynesvile Shale at a true vertical depth of 11,147 feet.

  160. 160
    Sambone Says:

    DOW JONES NEWSWIRES

    The U.S. Treasury will be buying preferred stock to refinance Fannie Mae (FNM)
    and Freddie Mac (FRE) by the end of the third quarter, Bill Gross, Pimco’s
    co-chief investment officer, predicted in an interview on Bloomberg Television
    Wednesday.
    Gross said he was pleased with his company’s investment in agency debt and
    that he was suprised by the widening of spreads following the publication of
    Freddie’s unexpectedly poor results Wednesday, saying that the losses were just
    a step towards the Treasury’s eventual purchase of preferred stock in the
    companies.
    “A bondholder wants the Treasury to come in and inject capital at the
    preferred level so the investments are secure,” he added.
    Dow Jones Newswires
    08-06-08 1500ET

  161. 161
    zman Says:

    XCO – one project delayed due to eagles nesting in the area of the rig. Somebody send that to the eco crowd. An oil company foregoing dollars and actually spending 10s of thousands waiting on a bird to hatch. I can really see the Chinese doing that in the areas we forgo competing with them in. Please.

  162. 162
    BirdsofpreyRcool Says:

    thanks, Sam. i don’t get DJ newswires on my BB (too cheap).

  163. 163
    zman Says:

    XCO – said they bid $40 mm for some acreage in the Holly / Caspiana area and they got laughed at. It went for $80 the next week to someone else. He said Aubrey has not overhyped the play and that Aubrey’s numbers may be too low.

  164. 164
    Dman Says:

    XCO: “1500 HP rigs don’t just fall from the sky with 50 people”

  165. 165
    zman Says:

    Dman – I was laughing too hard to type that. Again, hellllloooo NBR

  166. 166
    Pete Says:

    Z,
    The E&P’s and services have had a good run today what is your thinking on the Aug options on them.

  167. 167
    tomdavis12 Says:

    Z: Do you expect HK finance their expenses shortly? If so, what form and would you consider buying into the issue?

  168. 168
    zman Says:

    Pete – I think the strikes that are beyond 15% above current levels are toast. More near the money I expect to work assuming taht this is not a one day wonder.

    Tom – I didn’t hear “deal now” on the call or see it in the press release and neither did others or the stock would be down $2 and not up $2.

  169. 169
    Sambone Says:

    You want answers?
    I think I’m entitled.
    You want answers?
    I want the truth!
    You can’t handle the truth!

    http://www.crmpolicygroup.org/docs/CRMPG-III.pdf

  170. 170
    Fiveanddimer Says:

    Speaking of Matt Simmons (one of my heros), here’s the most recent clip of him of CNBC. It’s only about a week old. The first 3 or 4 minutes of this piece is a report on the Haynesville Shale, then come Simmons and the other analysts.

  171. 171
    Fiveanddimer Says:

    Whoops, another senior moment. Here’s the link:

  172. 172
    zman Says:

    Thanks Five! Will watch.

  173. 173
    antrimshale74 Says:

    NBR picking up nicely here at the end of the day. Man has it fallen.

  174. 174
    Sambone Says:

    By Carolyn Cui
    Of THE WALL STREET JOURNAL

    NEW YORK (Dow Jones)–Crude oil futures ended lower Wednesday for the third
    consecutive session, as the latest U.S. petroleum inventory data showed that
    demand in the world’s largest consumer continues to erode.
    Light, sweet crude for September delivery settled 59 cents, or 0.6%, lower at
    $118.58 a barrel on the New York Mercantile Exchange.
    During intraday trade, crude hit a fresh three-month low of $117.11 a barrel.
    Brent crude on the ICE futures exchange recently traded 75 cents, or 0.64%,
    lower at $116.95. Settlement prices weren’t available.
    “We are coming back to the basic supply-and-demand fundamentals,” said Peter
    Van Cleve, president of T.W. Energy Consulting, adding that he believed oil’s
    record run to a high above $147 a barrel was “largely based on air.”
    Van Cleve’s comments underscore the mystery surrounding oil: Reasons for its
    precipitous decline over the past month are just as hard to come by as reasons
    for its widely chronicled ascent. Saudi Arabia, the world’s largest oil
    producer, has increased the amount of oil delivered to market, and the U.S.
    consumes less crude. But demand growth, especially in emerging economies such
    as China and India, is still expected to outpace new oil supplies.
    What has changed, however, is sentiment, as more traders indicate that
    investors are reluctant to make bets that oil will rise, even in the face of
    supportive factors.
    On Wednesday, for example, U.S. inventory data for the week ended Aug. 1
    showed that gasoline stockpiles fell more than expected amid a 0.2%
    week-on-week increase in demand for the motor fuel. Nevertheless, Nymex
    benchmark gasoline futures settled 71 points, or 0.2%, lower at $2.9493 a
    gallon. This uptick in demand came as retail gasoline prices across the U.S.
    have fallen below $4 a gallon.
    “The gasoline number is very friendly,” said Jeff Schondorf, an oil trader for
    MBF Clearing Corp.
    The rest of the weekly report, released by the Energy Information
    Administration, mitigated the surprise brought by the gasoline draw. Crude
    inventories rose by 1.6 million barrels, larger than analysts’ average forecast
    for a rise of 100,000 barrels. Stocks of distillates, which include diesel and
    heating oil, got a 2.8 million-barrel boost, compared with expectations of a
    1.9 million-barrel increase.
    “The poor demand for other products are overriding, showing that refineries
    are refining less,” Schondorf said.
    Sluggish refining margins continue to be a drag on gasoline output. Refineries
    are digging into gasoline stocks instead of producing, which has resulted a
    rise in crude but a draw in gasoline, said Raymond Carbone, president of
    Paramount Options Inc.
    Refinery use decreased by 0.2 percentage point, deeper than the forecast 0.1
    percentage-point decline, to 87% of operable capacity. This is considered to be
    a relatively low operating rate for this time of year.
    Traders expect to see more moves downward, as prices are pressured by large
    numbers of put options laid out at various strike prices below $120.
    Market-makers would have to enter the futures market to offset their options by
    shorting crude oil at these low prices, which remains an overhang for the
    market.
    “By the end of the week, the market will become undressed,” Van Cleve said.
    September heating oil settled 4.41 cents, or 1.3%, lower at $3.2379 a gallon.

    -By Carolyn Cui, The Wall Street Journal
    Dow Jones Newswires
    08-06-08 1536ET

  175. 175
    Sambone Says:

    Love this line!

    “By the end of the week, the market will become undressed,”

  176. 176
    zman Says:

    Thanks Five, good interview there.

    This is one of the few days in the last money where 1) a rally in the group has not coincided with a big rally in oil and 2)said rally has not sold off substantially by the end of the day (not yet at least) and 3) good news has made a difference in the returns of individual names.

    The first bit of red following this day will prove a crticial test of conviction in the group’s need for a recovery rally.

    Dman – you’re probably right about PQ but I’m liking exposure to few names at the moment. Still have 22.50s there I hope to punt for more than pennies though.

  177. 177
    antrimshale74 Says:

    Closing at the highs of the day. Very nice.

  178. 178
    VTZ Says:

    slb and hall look like they are rallying into close

  179. 179
    zman Says:

    Before I start celebrating like its prom night I want to see green AND more volume tomorrow.

  180. 180
    antrimshale74 Says:

    Yes. After last Wednesday’s rally, we gave it all up times 2.

  181. 181
    Garyinhou Says:

    Halle-Berry-Luya!

  182. 182
    ddaley Says:

    HK up 15% to 35 is not too bad. That would be the strike for the largest open put interest for AUG. 95 is the equivalent for WLL.

  183. 183
    ellwodo Says:

    Did everyone log off at 3:01 or is the site down?

  184. 184
    md Says:

    Z
    FYI
    http://www.eia.doe.gov/cneaf/electricity/epm/epm_sum.html.

    I beleive that March electrical consumption needs to be adjusted upwards by 25 BCF or .80 BCFpd. Smaller repeat of January 2.7bcfpd adjustment.

  185. 185
    zman Says:

    long night, just doing a little reading. what’s up elwo?

  186. 186
    ellwodo Says:

    Nothing, just enjoying a green screen, but didn’t want to miss anything in case my connection was down so did a test.

  187. 187
    BirdsofpreyRcool Says:

    KOG: answer = company using 9mmBbl OOIP/section. expect to drill on 320 acre spacing with 10% expected recovery.

    The company’s first well, Tall Bear #16, on the Indian land will truly be a wildcat. Closest well is 6 miles south (private company) which will be completed in Sept.

    KOG plans to spud in Sept (as soon as they get the new Unit rig on site).

  188. 188
    hermanmar1e Says:

    1520:

    Reservoir modeling is the process of breaking down a reservoir into pieces (grids) and analyzing how a field has performed and coming up with reservoir properties to match past history performance. Advantages to reservoir modeling are increased drilling oppurtunity (downspacing), among others.

    HS completions are quite a bit different than what is being pumped in the Ft. Worth Barnett, Mercellus, and Fayetville. West Texas Barnett/Woodford completions are closer to what they are doing in N. Louisiana.

  189. 189
    1520sbroad Says:

    #188 – thanks.

    Are folks in the HS running into pumping equipment shortages like they did at the beginning of the FS or are there more crews and equipment on the ground there just because there was more activity there to start with?

  190. 190
    hermanmar1e Says:

    1520:

    Not a shortage in horsepower available, but rather the type of horsepower will be the problem. These HS fracs require High Pressure pumping equipment and ALOT of it! There are only a few HP areas in the lower 48 and they seem to have a lock down on the equipment. Look for the smaller pumping companies to do something in the near future much like they did in the Barnett, where there are more mom and pops pumping as compared to the Big 3. Heck, EOG is even trying to get in the frac business by fraccing their own wells!

  191. 191
    1520sbroad Says:

    Interesting – best of luck to EOG with that. I guess from here on out there will be a shortage of just about everything needed to drill and complete wells all over. rigs, people, pipe, frac equipment, pipelines, you name it.

  192. 192
    hermanmar1e Says:

    1520

    you got it, that’s why it’s good to be in the business!

  193. 193
    1520sbroad Says:

    absolutely – i come at this from a wall street base. I have learned a ton about the oil and gas business in the last 5 years since i got out of the wall street scene. Now when i talk to friends of mine that are brokers, money managers etc. they can’t understand that the oil and gas business is more than just sticking a drillbit in the ground and oil shooting out and that there are energy companies other than XOM that are wildly successful. Their loss.

  194. 194
    md Says:

    Oil Companies May `Panic’ on Tanker-Rate Outlook: Chart of Day

    http://www.bloomberg.com/apps/news?pid=20601109&sid=a7YjyGuwrZQg&refer=home

  195. 195
    zman Says:

    md – Interesting story although it could also prop up oil prices. If you look back to the end of last year and look at a weekly chart of the XLE, it looks like the stocks paniced their way to increased share prices.

  196. 196
    Jay Reynolds Says:

    Eagles/Rigs

    That will be a problem in parts of NW LA also along Caddo Lake & Black Bayou.

    My friend in the wireline business “vacations” at Padre Island, he makes a spare $2,000/day riding his four-wheeler on the beach watching for turtles in advance of any vehicle larger than a pickup moving to/from a location.

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