10
Feb

ReTARPed Tuesday

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Today's the big day in D.C. both for TARP II and the $800 billion stimulus package to be voted on in the Senate. If I were an elected official I would say this is nearly the end of the world as we know it. Of course, that kind of statement is meant to imbue certain other elected officials with a sense of urgency, and is in fact, far from the case. Fortunately I am not an elected official but unfortunately, this type of traders watching the politicians wrangle on TV market is just about as boring as it gets and at the end of the day, leads to a hungover market with "so now what?" printed on its dazed forehead. 

In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Earnings Watch - CRK
  4. Stuff We Care About Today - Oil Service
  5. Crack Spread Update
  6. Odds & Ends

Holdings Watch: The wiki tab is updated and new and improved

 

  • NFX - $10KP Sold the FEB $22.50 Calls (NFXBX) for $2, up 125%. Continuing to hold the March Calls.

 

  • SPWRA - $10KP - Bought (3) SPWRA $40 Calls (QSUCH) for 2.65. Just diversifying my small solar position into a silicon sourced maker. I put these guys second to FSLR (the dominant thin film solar maker) and think that both benefit from the passage of the stimulus with its $100 billion in alternative energy funding and its tax incentives which keep the 30% of cost deduction and formalize the removal of the cap cost (no long limits on how much of the cost of the product can be deducted).

 

  • HK Added FEB HK $22.50 Calls (HKBX) to the regular account for $0.55 with the stock trading down 4% at $21.20 against a broadly green energy back drop. Feels like profit taking and perhaps a brokerage downgrade I have not seen or money flowing into big brother CHK which was upgraded by Goldman this morning.

Commodity Watch:

Crude oil fell $0.61 to close at $39.56 yesterday despite dollar weakness and news that OPEC has now delayed 35 long term projects due to ongoing weak demand and prices. Crude continues to appear to be trying to put in a bottom and the latest trading action, while somewhat hesitant, has been able to shrug off much of the recent poor economic data results. This morning crude is trading up a buck.

 

  • OPEC Watch: Cartel president El-Badri says compliance on the recent 4.2 mm bopd of announced curtailments at 80% which is much better than the normal 50%. Current shut in OPEC capacity is ~ 8 mm bopd, one reason we are highly unlike to see a V-shaped bottom in crude prices.


  • Hugo Is A Nutbag ... And Maybe Not Long For The Presidency Watch: Venezuela has a referendum for re-election of Chavez scheduled for Sunday. If it does not pass he will have to step down due to term limits in 2013. Given rising unemployment in the oil industry this may be a tough test for Hugo.
  • Tanker Fire Watch: A container ship struck an oil tanker off Dubai in a shipping lane setting fire to the tanker. Fire still burning, reason for collision unknown. 
  • Early Read on Wednesday's Crude Inventory Report:
    • Crude: up 2.5 mm barrels
    • Gasoline: up 625,000 barrels

Natural Gas traded up 3 cents to close at $4.81 yesterday, a slight bit of follow through on Friday's tumbling rig data despite a balmy forecast. Although this week is forecast to be quite warm the 6 to 14 day forecast calls for a return to more winter like temps. This morning gas is trading flat.

  • Imports Watch: Flat from last week, down 1.1 Bcfgpd from year ago levels. 
    • LNG - 0.7 Bcfgpd, down 0.2 Bcfgpd from last week and down 0.1 Bcfgpd from last year.
    • Canada - 8.3 Bcfgd, up 0.2 Bcfgpd from last week, and off 1.0 Bcfgpd from last year.
  • Mexico Exports:

Earnings Watch:

CRK Reports Ho-Hum 4Q08 Results; Chops Budget;  Increases Focus On Haynesville.

  • The 4Q Numbers:
    • Production: 164 MMcfepd (previously disclosed)
    • Revenues of $100.1 mm vs $107mm expected
    • EPS of $0.22 vs $0.31 expected
    • CFPS of $1.77 vs $1.55 expected
  • Reserves: (previously reported)
  • Budget: Falling. On January 5th, CRK announced a budget of $450 mm with the vast majority ($399 mm) focused on  East Texas and North West Louisiana (including 43 planned horizontal Haynesville Shale wells). Last night's budget has fallen to $366mm with 30 wells planned for the H.S. out of a total of 41 planned company wide. This is down from 2008 drilling levels of 136 wells.
  • Operational Update:
    • Haynesville: 2 wells to date, IP of 9 and 14 MMcfepd, decent, not world class
    • 8 more wells in progress (could have results from several of these in the next month).
    • 70,000 net acres in the H.S.
  • Nutshell: 4Q results were light on the top line due to lower than expected prices. Company going forward looks quite a bit different with a smaller budget, highly focused on the Haynesville, bears watching.
  • Conference Call: 10:30 EST

 

Stuff We Care About Today

Oil Service - Stocks No Longer Feeling The Pain / Fundamentals Are A Different Story. After a shocking bad year last year the oil service group, has seen much calmer waters in 2009. While earnings estimates for this year and next continue to sink investors began flocking back to the group in late December and the Oil Service index, (OIH), is up 10% year to date. During this same time:

  • the North American rig count has gone from gentle swan dive to belly flop dropping shedding 322 rigs this year alone, and 622 since the September peak.
  • capital spending by E&Ps is down anywhere from 25 to 75% with many of the largert E&Ps (the guys who employed the most rigs just last Fall, off 50%
  • every E&P conference call tells of 15 to 25% service cost price reductions with more on the way
  • rig day rates on shore have plummeted close to and in some cases below break even levels, off more than half from late 2008 levels.
  • on the International front, OPEC is shelving projects, some deepwater exploration is being deferred, and a number of oil sands expansion and green field projects have been put on perma-hold.

In many of the past down cycles for prices, rig counts have fallen sharply but recovered fairly quickly. The "deepness" of the financial crisis, a deflationary scenario, and an overwhelming unwillingness to take on more risk on the part of producers along with all that extra shut in OPEC capacity makes for a "this time it's different" scenario. Merrill Lynch is looking for an L-shaped bottom and says earnings have not fallen far enough yet. I agree. Not only is pricing and actiivty likely to fall further but it will take longer to recover meaning the 2010 numbers are in further jeopardy as well.

A Look At The OIH - Cheap For A Reason

One Month Change ... Ugly For The Fundamentals, Not So For The Stocks. This is just for the month and I and others feel the estimates have much more downside. Only the deepwater names have real insulation against this (and in fact are not seeing much in the way of reduced activities).

So What Am I Going To Do? I've only taken the occasional put in oil service names in recent times and I don't care for OIH puts as the mix of stocks in the index is broad and mutes the down side. I'm looking at puts in (BHI) (rigs, completions), (BJS) (pressure pumping), (HP) (rigs), (NBR) (rigs), (HAL) (global oil services), and (SLB) (global oil services)

 

 

Crack Spread Update - Cracks remain buoyant in advance of the Spring season. I'll wait for further weekly data before thinking about dipping another toe in the refining group. 

 

Odds & Ends

Analyst Watch: RBC upped (XTO) to Outperform, SunTrust cuts (NFX) to Neutral, Credit Suisse chops (DO) target from $93 to $79.

 

178 Responses to “ReTARPed Tuesday”

  1. 1
    elduque Says:

    BDI +159 1974

    TED -5.297 90.43

    Continuing improvement

  2. 2
    BirdsofpreyRcool Says:

    Lots of stuff from the Credit Markets this morning. Let’s start with the good news first (lifted from the strategy desk of a firm I work with):

    Investment Grade Credit – as represented by the CDX IG11 Index – closed at its tightest level in 2009. The CDX IG11 Index’s underlying members was unable to match the impressive tightening by the CDX IG11 Index over the past week – thus pushing the Index’s skew to nearly 40bps Given the market’s high expectation levels, we do not expect Geithner’s plan to fuel additional spread tightening and will most likely be met with CDS index spread widening Although the equity markets were in a “wait–and-see” mode on Monday, technical market factors, the prospect of an economic aid package passing congress, and expectations of a politically supported TARP program sent the CDX IG11 Index to its tightest close of the year. These factors enabled the CDX IG11 Index to close at 187bps on relatively light trading volume. From a relative value perspective, Monday’s close represents one of only a handful of closes under 190bps since LEH declared bankruptcy last fall. Despite the index’s strong performance over the past week, we would caution investors not to become too enthusiastic about Mondays’ closing level. We do not expect the credit indices to consolidate their gains and form a new trading range, nor do we expect the recent spread tightening trend to continue. The majority of the CDX IG 11 Index’s move tighter was not supported by individual spread tightening and recent gains could prove to be fleeting unless the market becomes convinced that the government’s actions will counteract the worst-case economic scenarios.

    The HY CDX11 Index, even with auto default concerns gaining momentum, erased the majority of its February sell-off to close at $74.47. Unlike its investment grade equivalent, the HY Index remains at relatively distressed levels.

    Conclusion It appears as if the credit markets are already pricing in the passage of the stimulus plan as well as the near perfect implementation of a re-directed TARP program. We do not believe that these oversized expectations can or will be met. Therefore, although we expect the government programs to succeed over time, we would recommend having a short bias going into Geithner’s 11am press conference.

  3. 3
    BirdsofpreyRcool Says:

    Now, the bad news: Washington should have put the Stimulus Package “on hold” instead of the “bank bailout package.” It’s simple, without the banks, there is nothing to “stimulate.”

    Geithner’s Bank Rescue May Determine Effectiveness of Stimulus 2009-02-10 05:01:00.23 GMT

    By Scott Lanman and Craig Torres
    Feb. 10 (Bloomberg) — The unprecedented stimulus package that President Barack Obama is trying to wrestle through Congress may end up being wasted unless the administration can find a way to restart stalled credit markets.
    Investors are demanding a 5.20 percentage-point premium over U.S. Treasuries to buy bonds sold by companies with investment- grade ratings, more than five times the level of two years ago.
    The rate on jumbo mortgages is 6.91 percent, almost 1 percentage point higher at than the start of 2007.
    The financial-rescue plan that Treasury Secretary Timothy Geithner will unveil today may determine how effective the stimulus will be. Without the ability to borrow to invest in new business projects, or credit for purchases of new cars, homes and appliances, companies and households won’t be able to follow through on Obama’s tax cuts and spending programs, analysts said.
    “We really haven’t seen any breakthrough yet in the credit logjam,” said former Federal Reserve Governor Lyle Gramley, who is now a senior economic adviser at Stanford Group Co. in Washington. “We’re going to get limited benefit from the stimulus program unless people can finance their normal operations.”
    After weeks of debate, the Treasury today will announce a fresh round of injections of taxpayer funds into banks, an expanded Fed-led effort to spur consumer and small-business loans and an initiative to address the toxic assets clogging banks’
    balance sheets. Geithner speaks at 11 a.m. in Washington.

    Private Capital

    It’s unclear how successful Geithner’s plan will be in restarting markets. One of the ideas is to bring private investors into a so-called aggregator bank that would buy devalued securities, according to people familiar with the matter.
    The illiquid securities, mainly tied to mortgages, have spooked investors away from putting new money into banks and made lenders loath to extend new credit. Rather than borrow at the Fed’s target rate for overnight funds — now as low as zero percent — to lend, banks have instead parked a surplus of $793 billion of cash at the central bank itself.
    “We have got to fix the financial system — if we do not deal with this, we will not get anything else done,” Christopher Whalen, managing director of Institutional Risk Analytics, a financial-services research company in Torrance, California, said in a Bloomberg Television interview. “If banks cannot move mortgages off their books, then we have a problem. We will see credit availability much lower” than in past generations.

    Restart Market

    Whalen said the challenge is for the government to craft its solution so that it becomes a “market maker,” enabling the banks to offload the illiquid securities and put them in the hands of other investors.
    The aggregator bank may end up working like an auction house, with the government orchestrating sales, said Stuart Eizenstat, a partner at the law firm Covington & Burling and a former deputy Treasury secretary in the Clinton administration.
    Banks would bring distressed assets for investors to bid on, with federal protection for buyers against future losses.
    “The government will in effect put a floor under those assets,” Eizenstat said. “If the value goes up, the investor gets the benefit. If the value goes down, the government picks up that, but it’s much less of an immediate expenditure than you would have if you purchased them.” Guarantees may also play a role for investments banks intend to hold to maturity, he said.

    Investor Signals

    Investors offered mixed signals about their appetite for participating in the effort.
    “It will be a bad decision for a hedge fund to invest in these illiquid assets,” said Kenneth Windheim, chief investment officer of Strategic Fixed Income LLC in Arlington, Virginia, which manages $1.7 billion in assets and invests with hedge funds. “You’ll end up running into the same problems as the banks. The hedge fund industry is suffering as it is already.”
    John Snow, a former Treasury secretary who is now chairman of Cerberus Capital Management LP, said that guarantees “might energize the private sector to begin putting in capital.”
    Obama warned yesterday in a news conference that the economy faces a “full-blown crisis,” urging lawmakers to approve the stimulus package of more than $800 billion being considered in Congress. The credit crisis “is not over,” he said.
    The financial rescue needs to create an “improving” credit market to ensure that the stimulus works, said Bruce Kasman, chief economist at JPMorgan Chase & Co. in New York and a former Fed researcher.

    Bond Sales

    There are signs of a thaw in some markets. Companies sold
    $146 billion of bonds in the U.S. last month, the most since May, and even high-yield, high-risk junk debt had the best start to a year since 2001.
    Procter & Gamble Co., the world’s largest consumer-products company, sold six-year notes last week at a rate more than a percentage point lower than it issued in December.
    Still, a measure of the appetite for banks to lend to each other remains elevated. The gap between the three-month London interbank offered rate and the overnight indexed swap rate is
    0.95 percentage point, down from a high of 3.64 percentage points in October, while remaining distant from the 0.25 percentage point level some analysts regard as indicating a stable market.
    Another option that officials and regulators considered was to set up a government-funded “bad bank” that would buy up the toxic debt. New York Senator Charles Schumer said that was “very expensive,” costing as much as $4 trillion, and risked setting values for the securities “so low that every other bank would go bankrupt.”

    TALF Expansion

    To help spark new credit, the Treasury plans to work with the Fed to expand the Term Asset-Backed Securities Lending Facility. The program, which has yet to start in its original form, offers loans to investors in top-rated debt backed by “newly and recently originated” loans.
    The TALF has initially aimed at providing up to $200 billion of credit, with $20 billion from the Treasury’s $700 billion Troubled Asset Relief Program. It covers education, car and credit-card loans, and borrowing guaranteed by the Small Business Administration. The program may be expanded to include real- estate debt such as commercial mortgage-backed loans.
    “They’re going to have to put a lot more TARP money into that,” Gramley said.

  4. 4
    BirdsofpreyRcool Says:

    Lastly, the ugly news… although, this is baked into the High Yield Spread numbers at this point, I do believe —

    Global Default Rate Will Peak at 16.4% by November (Update1) 2009-02-10 12:36:55.232 GMT

    By John Glover
    Feb. 10 (Bloomberg) — The rate of defaults on speculative- grade debt by companies worldwide will peak at 16.4 percent in November as the economy worsens, according to Moody’s Investors Service.
    “Rapidly deteriorating global economic conditions and the ongoing banking crisis signal a flood of corporate defaulters in 2009,” Kenneth Emery, Moody’s director of corporate default research, said in a report today. Emery predicts about 300 rated corporate issuers will default this year, compared with 104 in
    2008 and 18 in 2007.
    Moody’s raised its global default rate to 15.5 percent in the next 12 months from last month’s estimate of 15.1 percent.
    In the U.S., the rate at which companies fail to meet their obligations will rise to a maximum 16.4 percent in the fourth quarter, Moody’s said. The rate will peak at 19.6 percent in Europe.
    About $1 trillion of credit losses and writedowns at financial institutions worldwide have combined with the deepest economic slowdown since World War II to weaken company finances and slash the cash flow they can use to pay their debts.
    The global speculative-grade default rate ended January at
    4.8 percent, up from 1.1 percent a year ago, Moody’s said. In the U.S., the rate rose to 5.2 percent last month from 1.4 percent a year ago, while in Europe the default rate tripled to
    2.4 percent from 0.7 percent a year earlier, Moody’s said.
    Speculative-grade debt is graded below Baa3 by Moody’s and
    BBB- by Standard & Poor’s.

  5. 5
    BirdsofpreyRcool Says:

    Credit Market Indices Update —

    IG 191 +2bps wider from yesterday

    HY 74 5/8 unch’d from yesterday

  6. 6
    BirdsofpreyRcool Says:

    Lastly, TRA reported. Bottom line: Fertilizer is a beautiful thing.

  7. 7
    crysball Says:

    Vaalco energy [EGY] has a new presentation from the January 2009 Pritchard Energy Conference with some new data on their drilling activity [for those interested]:

    http://www.vaalco.com/presentations/Energize_2009_Presentation.pdf

  8. 8
    BirdsofpreyRcool Says:

    CRK — focus on the Haynesville + some of the lowest levels of debt amongst the player there should get them some attention… conf call at 10:30 EST.

  9. 9
    zman Says:

    BOP – I’m going to miss the call (meetinat 9 EST) but will read to the transcript. Probably time for a full work up there.

  10. 10
    BirdsofpreyRcool Says:

    z — they aren’t sexy. they aren’t high profile. they aren’t hypsters. But Steady Eddie + ample access to capital + these guys really DO what they say (stay w/in cash flow) + great YoY growth rates projected for 2009 = worth spending a little time on unloved CRK.

  11. 11
    zman Says:

    Roger that, important to do what you say.

    Nice open for energy, E&Ps, coal, and solars catching a nice bid.

    Gotta bop to that meeting, back at 11 EST

  12. 12
    BirdsofpreyRcool Says:

    a little bit of good eco-news…. Wholesale Inventories for December came in lower than expected… down 1.4% vs down 0.75 expd

  13. 13
    Nicky Says:

    Good morning all.

    Broader market. My preference is that we are in wave e for a triangle wave iv. In wave e we are likely in b down. Could end anywhere between here and 7900 area and then we rally for wave c of e.

    Fundamentally its looking like they can’t wait to take this market down on the stimulus and bank bailout. How many times have we seen that happen.

  14. 14
    BirdsofpreyRcool Says:

    CRK cc started… worth jumping on. Record number of people on the call… interest will pick up here.

  15. 15
    choices Says:

    dry bulk stks-most down over 9%, some just down over 4%-not real sure how to play these guys-they are VOLITILE.

  16. 16
    choices Says:

    CRK moving, up over 5%, spread is about 0.07 between bid & ask

  17. 17
    BirdsofpreyRcool Says:

    For anyone looking to buy individual bonds… CRK has $175mm of 6 7/8 due 2012 that are offered at around $82… That is a 14.4% yield. If you are looking for current income and can find these bonds, let me know. I’d be a buyer.

  18. 18
    zman Says:

    Anything new on the call BOP, just got back in?

    Did Geitner spook the broad market?

  19. 19
    BirdsofpreyRcool Says:

    still on CC… CRK fielded a proppant question.

    “very interested in RCS, think it will result in significant cost savings” in the HVS — CRK

  20. 20
    BirdsofpreyRcool Says:

    z – not quite sure exactly what is spooking the mrkt. The “stimulus” package spooks me… and there is no “silver bullet” for banking. But, is any of this really “new” news??

  21. 21
    BirdsofpreyRcool Says:

    Trading Desk says sell-off is just “sell the news.”

  22. 22
    BirdsofpreyRcool Says:

    If that’s the case… might be some buys out there… ?? what do you think, z?

  23. 23
    Nicky Says:

    Well lets be honest the biggest economy in the world is now in the hands of someone who can’t even get his own tax returns right – is that supposed to instill any confidence?

  24. 24
    zman Says:

    NG off $0.20.

    I’m just back in the door five minutes, no opinion yet. Too many rocks being thrown by politicians, not any answers, makes buying the early dips dangerous.

    That being said, I think we rally later in the week and I may add to some of the names I’m in now, I might add RIG and on a good rally I’ll probably take puts in NBR and SLB.

  25. 25
    zman Says:

    Too funny Nicky.

  26. 26
    zman Says:

    SD, second day of positive action falling a modest target upgrade by Goldman. Not ready to add.

  27. 27
    zman Says:

    If we do rally this another bright day for FSLR, up $4.50 now, a green DJIA probably see it up double digits. SPWRA riding coattails.

  28. 28
    BirdsofpreyRcool Says:

    key metric to watch: SPX at 850.

    Above, the Credit Bears just watch from their cave. Below, the Bears will stick out a paw and start to take swats at the CDS mrkt. Which scares the dickens out of stocks…

  29. 29
    Nicky Says:

    here comes the carrot – the foreclosure solution…

  30. 30
    zman Says:

    BOP – re CRK. Did they give a completed well cost estimate for Haynesville horizontals. The straightline math on their capex would be $10.1 mm which is high so I assume that includes some gathering and other in it. Like to know if they gave what the 2 completed H.S. wells cost and where they see well costs going over 2009.

    Also, did they give EUR’s ?

  31. 31
    Nicky Says:

    to be announced in a few weeks time but will involve bringing down interest rates for homeowners.

  32. 32
    zman Says:

    Nicky – so my mortagage payment is going to fall now but my taxes in 2010 are going to go up?

  33. 33
    BirdsofpreyRcool Says:

    CRK — agreed… the cost/well is mystifying. No answer there yet.

    5 Bfce = EUR/HVS well

  34. 34
    Nicky Says:

    they have to get it back some way Z.

    Actually my own view is this started with housing and will end with housing. Until they can put a floor under foreclosures and therefore price declines there is no end in site to this so its about time they did something for the homeowner. Everyone else has been bailed out but that hasn’t addressed the root of the problem.

    That said it looks the market couldn’t care less.

  35. 35
    zman Says:

    Thanks BOP, maybe the are bagging that well count to guarantee an upside surprise on the production numbers in the second half.

    Had a thought reading their pr last night, they mention a H.S. well drilling in Toledo Bend field…that’s SFY country. Wonder if they have any plans to poke a Haynesville horizontal there.

  36. 36
    BirdsofpreyRcool Says:

    z – re CRK, in all honesty, i may have missed a question on costs/well… have had to run bewteen a few different things today. I’m sure the answer is in there somewhere. It’s a glaring question.

  37. 37
    zman Says:

    Nicky – the funny thing is, nobody wants government in their soup unless it benefits them. I’m not in foreclosure, so am I going to benefit in terms of $ on my mortgage payment or am I to take solace from the fact that my block does not contain a bunch of foreclosed homes?

  38. 38
    zman Says:

    BOP – I will read the transcript when available this afternoon. My sense is the market will give me a second shot at the name as we just cracked 8000 on the G-man’s closing remarks (we take this seriously, the risk isn’t as big as the headline numbers yada, yada, yada).

  39. 39
    BirdsofpreyRcool Says:

    Perhaps the most important element for the market was how Geithner was going to deal with the toxic assets on banks’ balance sheet. On that score, Geithner indicated the Treasury is still exploring a range of different structures for this program and will seek input from market participants and the public as it is designed. Given the market’s run-up into Geithner’s speech, this recognition that the plan still hasn’t been finalized is seen initially as a big disappointment by the market..

    Op ed — frickin stupid, to not lay out a plan in this speech.

  40. 40
    zman Says:

    I’m not sure you can blame all the sell off on BTRSTN. I think traders heard some things they didn’t like, the biggest of which is more uncertainty on the way as he disclosed that they will be working on it for weeks into the future. So they have a plan to have plan.

  41. 41
    Nicky Says:

    Well problem I see Z is if they don’t stem the foreclosures and price declines then your ‘asset’ is going down which is not a pretty option for you either.

    Gold starting to move higher. It was giving us the heads up this was going to happen earlier.

  42. 42
    zman Says:

    BOP – wow, great minds, lol.

  43. 43
    BirdsofpreyRcool Says:

    I feel a deeply profane rant coming on… so, I will back away from the keyboard.

    IG 195

  44. 44
    Nicky Says:

    Stupid, stupid, stupid, they have been billing this speech for days now and it basically told us they still don’t know what they are doing! Do they really think they can bluff their way through this?

    Its not out of the question that we are now in v down.

  45. 45
    zman Says:

    The G-man will be on power lunch so they are going to try to sell this plan to the market.

  46. 46
    choices Says:

    30-yr bond up 2+ pts, $future up barely

  47. 47
    choices Says:

    I think we have to face facts: I do not believe anyone in govt has a clue as to how to fix this-I hate to use a phrase but “we are in uncharted waters.” The prev admin was bumbling/stumbling thru 1st phase of TARP and screwed it up and now we have so many egos in the econ sphere but still cannot come up with a plan. I am surpised that the $ is not zero, S & P at 500, and the Chinese are selling their T-Bonds-the incompetence and ignorance sends very harsh messages to the world.

  48. 48
    Nicky Says:

    Choices before this is over the $ will be worthless and the SPX will be at 500 or lower.

    Maybe they should just let everything collapse and housing prices fall by 90% and thousands of banks go under. Maybe the free market really does need to work.

  49. 49
    Nicky Says:

    I hate Larry Kudlow but he is right when he says they should never have come to the market with this today.

  50. 50
    kyleandy Says:

    z – re CRK they have excellent maps of hs on slides 17 and 21 of their presentation. there is a north toledo bend and a south toledo bend, both of which they are in. pg 17 shows their immediate drilling plans. well in s. texas fandango field named leyendecker cost 14 mm didnt hear mention of hs wells. one thing u might note said they prob will break tradition and give an update in 6 weeks instead of waiting for the qtr as they will have 3 more wells completed by then. i thot it very upbeat call lasted 1 1/2 hrs.

  51. 51
    Fiveanddimer Says:

    Nicky, I’m afraid I have to agree with you. That’s why a percentage of my net worth is dedicated to hoarding physical gold. What other choice does one have, if the rest of one’s net worth is somehow tied to the dollar?

  52. 52
    BirdsofpreyRcool Says:

    The real problem is in thinking that Washington can “solve” anything. They can’t. They can spend, they can bloviate, but they can’t “fix” the markets.

    The markets will be fixed. Time and the attractive scent of “cheap assets to be had” will take care of that.

    No one complained when stocks and bonds were giving 15% returns per year. No one complained when they bought a house for zero % down and refinanced in a year to take out $10k. Not a peep out of Washington or Main Street or Wall Street then. This is the other side of that cycle. Markets cycle… it’s what they do. Risk/reward. No reward with no risk. I just wish people at the top would stop it with all the hysteria. They are scaring us.

    We have seen worse — much worse — in this country. And gotten through it. We will this time too. Once we stop running around in circles and screaming that the sky is falling.

    Housing prices — on a national level — are almost done bottoming. Maybe one or two more quarters. That will put the floor on all of this. And the US will be the first out of this fine mess. In SPITE of the damage the “stimulus” is about to wreek on this country’s Balance Sheet.

    rant over. used less profanity than I thought I would.

  53. 53
    zman Says:

    Thanks Kyle, will have a look at the maps. Leyendecker would be a Wilcox sand, prolific, deeper, quite a bit costlier, more like exploration than a shale. I’ll read the transcript when it becomes available.

    Energy holding up surprisingly well.

    I’d note Geithner is speaking to Bryan Williams, not the lunch time crew on CNBC. How brave of him.

  54. 54
    zman Says:

    Ok, part II of the interview will have Steve Leeseman, should be a little less fluffy.

  55. 55
    BirdsofpreyRcool Says:

    kyleandy – thanks for the assist with CRK. I didn’t hear anything specifically aimed at the HVS well costs either. They are having problems with their 3rd well… so, that is skewing the present costs. But, should be able to get to the bottom of this.

    One thing I’m pretty certain of with CRK… they will not issue stock this year. I don’t think they will have to. Unlike some other HVS players I can think of.

  56. 56
    kyleandy Says:

    bop – will try my brokers for those CRK bonds. sound good to me. did u agree w/ my upbeat assessment of call?

  57. 57
    tater Says:

    Has anybody considered that the inclusion of a $15,000 NEW HOME tax credit amounts to a $15,000 loss on the value of your presently owned home. Think about it. If somebody is considering buying your used home or the brand new one across the street, each priced at $100,000, which one now really only costs $85,000? So what do you have to do to the price of your home in order to sell it at a comparable price to the one across the street?
    Thanks for my net decrease in taxes. Right.

  58. 58
    choices Says:

    Thanks for the summary, BOP. I agree that we have probably seen worse but I think we are less prepared to solve the major problems because of the extreme divisions in the country, stoked by the wingnuts on talk radio. The more I see of the buffoons in Congress in both parties, the less confidence I have. I think they do need personal trainers and handlers who are somewhat sane and competent. The political system is broken.

  59. 59
    zman Says:

    Tater – absolutely. Same as when they offer discounts on new cars, takes the exact same amount off your used car value.

  60. 60
    BirdsofpreyRcool Says:

    kyleandy — yes. It was upbeat. Like jy said yesterday, I think CRK mngmt is doing the Happy Dance about selling off Bois d’Arc and the other “non-core” (offshore) assets this summer. Snagged a pile o’ cash for that stuff. Good time to have a pile o’ cash!

    Pls do tell me what your broker says about the CRK 6 7/8. I see them pretty freely-offered in the institutional mrkt.

  61. 61
    BirdsofpreyRcool Says:

    choices — the less money we give ’em, the less damage they can do to us. George Washington had it right… serve 2 terms, then go home. “Govt” is not SUPPOSED to run the economy!

  62. 62
    tater Says:

    Again I point to the simplest of solutions. STOP the building of any type of home. No building permits for 5 years by presidential decree (some sort of interstate commerce clause BS ought to make it legal). What would happen to the value of every home across the US and the derivatives based on those assets? Immediate solution. Home builders get a buyout and workers put to work building schools and roads.
    How hard was that? Took me a whole 5 minutes.

  63. 63
    BirdsofpreyRcool Says:

    tater — I just love it when you rant… keep going, guy! You make more sense than a sack of Senators.

  64. 64
    tater Says:

    I’m really done. I have a tendency to upset people. And to Ram, I owe you an apology from last week. Not so much for what I said, but how I said it. Uncalled for, and I am sorry.

  65. 65
    zman Says:

    Crude teetering at $39.

    Geithner CNBC interview over: Verdict = lacking. CNBC said a number of emails coming in saying essentially they can’t believe the guy came to the microphone with such a vague “plan”. Ok, that’s enough from me.

    Market direction pretty uncertain for the day, may do a little fishing if things get worse for RIG.

  66. 66
    zman Says:

    Wow, Tater, that’s big of you. And I didn’t even have to go all Rodney King on you, lol. We’re all big kids here anyway.

    Just to let you know I being chintzy bidding some SLB and BHI March puts.

  67. 67
    zman Says:

    EIA on the tape with a new STEO

    Sees industrial gas demand down 5.1% in 2009.,

    Sees total gas demand down 1.3%

    Sees total supply up 1.1% (a lot lower than the previous forecast)

    Sees LNG imports up only slightly in 2009.

  68. 68
    BirdsofpreyRcool Says:

    Well… bottom line (spoken calmly) — The Gov’t can’t “fix” this crisis. That said, time and attractive asset prices will fix this market. But, the more people hope for a Gov’t-forged-and-delivered “silver bullet,” the more people will be frustrated, mad, and stop trying to help themselves.

    A massive hurricane has hit the US. Markets are standing around, wondering when the Gov’t is going to fix their fences and clear the downed trees in their front yards. Well, there is not enough Govt in the world to do the clean-up required here. So, markets need to start picking up the bricks and sawing away the tree limbs themselves.

    And the sooner they (we) realize this and get to work, the sooner the storm damage will be cleared away.

  69. 69
    choices Says:

    Z, what percentage of total gas demand is the industrial component?

    Thanks.

  70. 70
    BirdsofpreyRcool Says:

    CRK — checking around with others on the call… no details re: cost of HVS wells. Odd. Seems like that would be a key question. On the other hand, having only completed 2 wells, maybe it’s too early to pin them to a number.

  71. 71
    zman Says:

    about 30%, a little more in the winter, a little less in the summer.

  72. 72
    zman Says:

    BOP – the wells should be $7.5 to $9 mm a pop based on the outcomes of others, they may not have said since they were probably sciencing the heck out of the first two and the other one has down hole problems. Once 1,500 HP rigs start falling in price it would seem they could get the wells done significantly cheaper, use of resin coated sand will help too, may be able to spend the same and get another 10% more wells punched.

    Did they say anything about firm transportation?

  73. 73
    BirdsofpreyRcool Says:

    z – they were kinda sly about the transportation issue. Said they had a number of “relationships” that will provide CRK with enough capacity. But they would not name names. This was in response to a question re: the CHK pipeline announced. Frankly, they made it sound like transportation will not be an issue.

    That said, they also are not going to be drilling up just one corner or two of their HVS acreage. They intend to pepper their 2009 wells around, with an eye to holding onto their acreage position they amassed. So, not putting any undue volume pressures in any one area in 2009.

  74. 74
    BirdsofpreyRcool Says:

    Denbury out with a registered debt offering: $350mm Senior Subs, 7 yr, non-call 4, 9-handle coupon, priced at a discount to yield 11.25% (current price talk).

  75. 75
    BirdsofpreyRcool Says:

    Denbury bonds expected to be rated B1/BB and will be used to repay bank borrowings. Co-lead by JPMo and BAS.

    Those might be some juicy bonds… not 144a, so will be available to retail when bonds settle, I would think.

  76. 76
    elduque Says:

    EIA monthly diatribe is a good lagging indicator.

  77. 77
    BirdsofpreyRcool Says:

    I haven’t followed Denbury for years and years. So, z, what do you think?

  78. 78
    zman Says:

    re 73, that’s good answer

  79. 79
    Nicky Says:

    Bernanke now – too depressing.

  80. 80
    zman Says:

    BOP – I’m pretty cold on DNR until oil prices find a bit more bottom. Will have a look. CO2 can’t be a good sale price for them either right now.

  81. 81
    BirdsofpreyRcool Says:

    z – thanks. Drives me back to wanting to find those CRK 6 7/8s at 14.3% bonds…

  82. 82
    zman Says:

    My kingdom for a day without government speakers of any kind.

  83. 83
    kyleandy Says:

    bop – no luck w/ either fidel or bofa on CRK. Will try again tomorrow. suprisingly bofa much more knowledgable and helpful than fidel. he said call him back tomorrow. can’t believe i said something good about bofa. only trade there cause they give u 30 free trades a month if u have acct there. was glad u asked z about DNR . my quick look at them didn’t look too hot. makes the CRK bonds look great.

  84. 84
    Garyinhou Says:

    Afternoon comrades!

  85. 85
    BirdsofpreyRcool Says:

    z – much nicer said than i was thinking…

  86. 86
    zman Says:

    So I wonder, did they keep Ben around to be the fall guy?

    Bidding below bid on a little RIG. Good day to be patient with bids, fast with offers.

  87. 87
    kyleandy Says:

    z- getting better – now we get to listen to barney frank. not!!!!

  88. 88
    BirdsofpreyRcool Says:

    kyleandy — since BofA is a pretty active underwriter/bond trader in the energy space, I would think you would have much more luck going there, than to Fido. Fido just has to buy in the street like the rest of us slobs. BofA can go to their bond desk. Doesn’t mean you get a better price, just means BofA gets to make more… and it therefore more motivated to actually find the bonds for you. Please keep us up to date on your CRK Bond Quest. Appreciate it!

  89. 89
    zman Says:

    Tomorrow’s earnings: PCX … Coal but no interest on my part.

    Thursday : CLB (cores, sort of interesting but I’d bet they are a lot less busy now) and PVA and ECA, could be pretty interesting Hayensville news.

  90. 90
    Bob Says:

    PCX announced earning pre-market today with cc at 10. Spiked on opening and then fell back

  91. 91
    zman Says:

    Thanks Bob, looked at wrong day on my calendar, it feels like a Monday.

    Financials down 8%

    Drybulks down 5%, another day like today and I’ll take some out of the money March calls in DSX.

  92. 92
    zman Says:

    No trades for me today until Ben stops getting grilled and the oil market closes, whichever comes last and quite possibly no trades after that. Market wants answers, the guys on the stand don’t have them.

  93. 93
    Garyinhou Says:

    Z – any thoughts on a xom trade for a bounce in dow (at some point)

  94. 94
    BirdsofpreyRcool Says:

    z – just a personal observation… but I have noticed that until Omar Nokta at Dahlman Rose goes positive on the shipping group, it’s just a random walk — at best — for the sector. But, that can be said of so much of the stock mrkt these days. You only own them for a day or two. “Long-term” means a week.

  95. 95
    zman Says:

    Gary – reading my mind are you? Was looking at the Feb $80s in the $0.75 range earlier, turned my head and it was in the mid $0.50s. My still do it but just for a trade, XOM was uncommonly weak for much of yesterday too.

  96. 96
    zman Says:

    BOP – just thinking buy the best positioned in the group for earnings next week, no love affair with them warranted just yet.

  97. 97
    BirdsofpreyRcool Says:

    z – it does seem to work for you. Any way you can make $$ in this mrkt, do it. Just throwing in a free ad for Dahlman Rose, I guess (he’s a great shipping analyst).

  98. 98
    BirdsofpreyRcool Says:

    can we say stuff like that on this site??

  99. 99
    zman Says:

    I don’t see why not. I take a fair number of negative shots at analysts but they can’t all be bad. Dahlman seems to be the axe there, Cantor used to be good, not sure anymore.

    When does Ben get off the hill? Is he speaking again tomorrow?

    Very little damage being done in E&P at present, especially in the shale heavy names like CHK, HK, GMXR, SWN etc.

  100. 100
    Garyinhou Says:

    cool, xom is spanking it’s LOD’s right now, maybe we can get fire sale going the last 1.5 hrs foolishness

  101. 101
    BirdsofpreyRcool Says:

    Geithner talks again at 2:30… in front of a committee. Maybe the mrkt will stop the freefall as I would expect the Dems to try to throw soft-ball questions at Timmy. In an effort to make him look good.

    Hey! I’ll take anything I can get these days.

  102. 102
    BirdsofpreyRcool Says:

    Timmy vs The Senate Banking Committee… coming up now.

  103. 103
    Nicky Says:

    Oil going to lead everything else into the abyss by the looks of things.

    Indices look to have started wave v down and we are currently in v of 1.

    If this is the case I expect oil to take out the continuous contract low in the 32 area.

  104. 104
    zman Says:

    Oil closing down 4.6% vs the S&P down 4.8% and the Dow down 4.5%.

  105. 105
    zman Says:

    ZTRADE: $10KP

    Added (1) RIG February $60 Call (RKJBL) for $2 with the stock down $1.85 on the day or 3% at $59 vs a 5% dip in the OIH and against the backdrop of 4.8% of the S&P500. This is a bottom fish in a volatile, depressed market and I plan to add more if it dips further tomorrow.

  106. 106
    Nicky Says:

    When does the API come out?

  107. 107
    BirdsofpreyRcool Says:

    Bernanke in front of the Senate Financial Services Committee… Timmy in front of the Senate Banking Committee… it just gets better and better.

  108. 108
    BirdsofpreyRcool Says:

    Sorry… make that Ben in front of the HOUSE Financial Services Committee. Want to get my facts straight.

  109. 109
    nifkin Says:

    does anyone know of any reweightings or rebalances going on today? Early mkt on close order imalances are unusually large- GE 600k for sale 8Mill paired off, KO 4 Mill to sell etc. etc.

  110. 110
    zman Says:

    Nicky 4:30 EST

  111. 111
    Nicky Says:

    Thanks Z

  112. 112
    BirdsofpreyRcool Says:

    Young Timmy did not complete his homework. The market does not want to hear that our economy is in the hands of a tax-scofflaw, dog-ate-my-homework kind of guy.

  113. 113
    zman Says:

    CRK up 15 cents now.

  114. 114
    BirdsofpreyRcool Says:

    CRK – sold it around noon. Retreating to the sidelines.

  115. 115
    zman Says:

    Nicky – IEA will be cutting global oil demand numbers again in the morning.

  116. 116
    zman Says:

    BOP – that link is too funny not to share on a day like today.

  117. 117
    BirdsofpreyRcool Says:

    AMAZING resemblance!!

    http://popculturespot.com/ProductImages/2007/timmypost.gif

  118. 118
    zman Says:

    XLF down 11%.

  119. 119
    BirdsofpreyRcool Says:

    Coincidence?? I think not… From the Popular Culture Dictionary

    “Due to the popularity of South Park, Timmy’s exclamation “TIMMEH!” soon entered into pop culture as an outburst used to describe, chide, or respond to moments of extreme un-coordination, lack of concentration or other losses of logic, sense or reason”

  120. 120
    choices Says:

    bop-what do you make of the huge market on close orders which were posted-someone wanting out at any price?

  121. 121
    BirdsofpreyRcool Says:

    choices – I’m not expert there… so, your explanation seems as good as any. Maybe someone who bought on earnings, then sold with the mrkt sell-off.

  122. 122
    choices Says:

    I understand 4.5 mil bac and 4 mil ko-not sure about others

  123. 123
    BirdsofpreyRcool Says:

    oh – you mean about the “rebalancing,” maybe? Seriously, I’m a bond-mrkt person… how stocks trade is not my area of expertise. But, thanks for asking.

  124. 124
    zman Says:

    How lame. Bloody Mary-thirty

  125. 125
    BirdsofpreyRcool Says:

    choices – i do know we went through some serious support levels… according to my traders and mrkt strategists. So, maybe some program sell orders kicked in.

    Can’t blame anyone for selling on today’s Destruction Derby Show.

  126. 126
    BirdsofpreyRcool Says:

    Sorry to rant… but, you just can’t build up the to this with “My Treasury Secretary will lay out his plan”… only to hear that there is no plan. That’s worse than finding out that the inmates are running the asylum. It’s like we handed the keys to them and TOLD them to run it.

  127. 127
    sane Says:

    API

    Drude Down 1.996M
    Gasoline Down 2.9M
    Distillate Up 853K

  128. 128
    Jay Reynolds Says:

    When a debt free oil producer can’t even pay the light bill it’s time to stop the hemmorage and turn things off for a while. My leases give me 90 days or so breathing room after which I must resume production (for a while, unclear as to duration) before taking another breather while still maintaining my leases.

    If anyone is buying HS rights in the area now would be a damn good time to come calling. Z, you asked what our break even was in this field and I’m going to say it’s $56/bbl w/ a 75% NRI.

  129. 129
    zman Says:

    Thanks Sane and JR.

  130. 130
    zman Says:

    Those API numbers are divergent on products with the EIA survey. People were looking for a build in gasoline and a drawdown on distillate.

  131. 131
    mahout Says:

    BOP,

    Loved your comments today, especially “dog ate my homework kind of guy”. Unbelievable, isn’t it? He should have kept his mouth shut until he had a well defined plan that made sense. I’m sorry, but G-man has started out very badly with 2 faux pas in a row. What have we got here in this guy?

    Do have one thing on my chest. Politicians and many others love to rant that we got nothing for the TARP 1.
    350 billion just down the tubes, hang all the scoundrels! Not so! What we got IMO was the saving of a whole financial system about to go into flaming-crashing catastrophe. If anyone thinks it’s bad now, and it is, it is NOTHING compared to a whole financial system (banks, insurance companies, and other financial institutions)lying in smoking ruins! Look at the fall-out from the Lehman BK. That was just one company.
    Again i repeat. End mark to market accounting. It may even be the only thing that will save us.

  132. 132
    Wyoming Says:

    As I understand from one of the people involved, tomorrow will be WFT reduction day, supposed to be deep but none have been yet.

    BHI did theirs last Friday but once again, it was people most likely not to pass a drug test.

    A lot of nervousness starting. I think the next couple weeks will be the end of the service bull.

  133. 133
    zman Says:

    CHK on the tape with another $300 mm senior deal, 9.5%, due 2015.

    Use of proceeds: to repay indebtedness on the revolver.

    These are in addition to the $1 billion of notes CHK floated on Feb 2.

  134. 134
    Wyoming Says:

    Out of curiosity, is the revolver at a higher interest rate than 9.5%?

  135. 135
    ram Says:

    “Bush-era offshore drilling plan halted” – is this old news?

  136. 136
    Wyoming Says:

    Ram,

    Saw that too. IMO, not a problem today, but in a couple years or perhaps sooner, it will be a mad scramble.

  137. 137
    ram Says:

    Thanks Wyoming for the feedback.

  138. 138
    PackMan Says:

    BOP – good posts this morning b4 9:30. Wish I had logged in, I could have traded this day better if more focused on the downside.

    Was not expecting Geithner to offer up, well, nothing.

  139. 139
    PackMan Says:

    Nicky #13 – good call.

  140. 140
    PackMan Says:

    Z Nicky BOP re: geithner.

    Talk about amateur hour !
    The emperor has no clothes.
    They don’t know wtf they are doing.

    They had been building up to the announcement of “the plan” for days/weeks. And Timmy comes out w/ an empty bag.

    How stupid was that ?

    Geithner is completely toast; after his tax issues, his public debut was this ??

    He blew it; so did Prez Hopey Change.

  141. 141
    zman Says:

    Wyo – don’t know if you got my message but was at a coaches meeting. In answer to 134 the answer is no, their revolver would be substantially below that, I think I recall it should be floating around 5%. The Street seems willing to let Aubrey pay it down with high priced debt only to charge it back up at his “discretion”. The language for use of proceeds and the possibility of recharging the revolver back up remains unchanged.

  142. 142
    zman Says:

    A possible solution in the U.S. for those who play fast and lose with the truth and I’m thinking of Madoff and his type:

    http://www.marketwatch.com/news/story/Former-chairman-Chinese-company-sentenced/story.aspx?guid={A59640B5-94D6-428E-9C88-21E2CC31ED11}&dist=hplatest

  143. 143
    PackMan Says:

    BOP 61. Big O unfortunately thinks that “only government can fix the problem”. That’s what he said last night.

    Which is, of course, insane.

  144. 144
    zman Says:

    Pack – Its just sad. I keep writing to my congressman telling him to take a day, week, or month off to no avail.

  145. 145
    PackMan Says:

    BOP 126 …exactly !

  146. 146
    PackMan Says:

    Z – LOL. Those would be job losses that no one would care about !

  147. 147
    PackMan Says:

    131 … I saw a reference tonite that Dodd or Schumer said that putting mark to market on ice was part of the plan (if there is a plan, of course).

  148. 148
    Wyoming Says:

    Thanks Z, really don’t know why one would want to pay more for what they already have but I have learned to accept what is for what is.

    Of course these are the same types who thought CDO’s were a good thing but I digress ….

  149. 149
    BirdsofpreyRcool Says:

    Wyoming — it’s all about subordination and covenants and first liens. Sub debt puts the least claims on a company to perform. For the most part, if you just pay your interest when it’s due, sub debt doesn’t bother you. But, if you’re going into a downturn, your banks can (and will) bother you a lot. Banks have performance covenants that sub debt does not. Banks can pull the plug (or make you pay for waiver relief) if you violate sometimes stupid covenants.

    In short, CHK is paying down their banks as a defensive move. CHK is willing to pay more in interest expense for debt that is more patient.

    Mark Twain — A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain.

  150. 150
    zman Says:

    Re the interior secretary’s action, I wrote this earlier for tomorrow’s post:

    # U.S. Government Showing Less Than Friendly Drilling Hand. Not a big deal so far but the direction seems to conflict with the “get us off foreign oil” mantra unless your answer is handing out bicycles. Since the administration has come to D.C. we’ve had the Minerals Management Service revoke parcels for lease in Wyoming and Utah, the forest service pull the plug on 67,000 acres up this week for leasing in Colorado, and now Interior Secretary Salazar (who runs the MMS) pull the plug on leases potentially opened up for drilling in the outer continental shelf in the last hours of the Bush Administration. The new OCS proposal will involve a four step process:

    * an extended public comment period,
    * a comprehensive assessment of the resources offshore,
    * a series of four public meetings and
    * a development of an offshore plan for renewable resources.

    # ZComment: Welcome to Footdragging 101. The Bush plan would have accelrated a development plan that would affect some 300 million offshore acres on the outer continental shelf (OCS), from the US eastern seaboard to the Pacific Ocean off California, the eastern Gulf of Mexico and Alaska. Two decades ago (latest estimate) these regions of the OCS were thought to contain 18 billion barrels of oil and 70 Tcf of gas. But who would want that?

  151. 151
    Wyoming Says:

    BOP,

    Thanks. BTW, did you like the resin comments on the HS fracs? If you want to read more, SPE 38611, Proppants, We Don’t Need No Proppants.

  152. 152
    choices Says:

    cramer pushing SLB, likes RIG but said it has moved too far.-may see short spike in SLB-someone said today that Cramer is now playing the oil/gas stks-I agree that it would be better for him to stay away.

  153. 153
    zman Says:

    Choices – Since I’m not yet long SLB puts I’m happy to have the C-man pump it up a bit for me. Funny how he doesn’t care to differentiate much between the two despite the fact that RIG has fallen a lot further since its peak but will having rising earnings this year and next while SLB’s earnings are still falling for 2009 and again in 2010 and the floor for those earnings is far from certain. You go C-man! Pump the SLB like a drunken monkey with a gun.

  154. 154
    Wyoming Says:

    Also, SLB has North America exposure, RIG has all of the good stuff with deepwater (little JU with the GSF acquisition). SLB does well in the deep and is a favorite child of the street.

    RIG has hard contracts, malice clauses etc. SLB has some contract stability international but job to job in NAM and some international.

    Also, hard to have a despot like Hugo take over your Deepwater rig and withhold payments while SLB has a lot of equipment and trained locals who can abscond.

    Interchange HAL with SLB for the most part.

  155. 155
    zman Says:

    Re 154 – I hear ya man. I’d throw in BHI and NBR as people who have not suffered enough yet from a stock price standpoint as well. The list will be long for OIH and I think the safest names are still the deepwater guys. For the N. American onshore exposed, the analysts are still taking weekly looks at revising numbers as the rig count falls and more anecdotal evidence comes out of the E&Ps about current and future arm twisting.

  156. 156
    zman Says:

    Reading the CRK transcript now, will have follow up comments for the morrow.

  157. 157
    Wyoming Says:

    BHI and WTF (left the typo in) or WFT along with the other 2.

    I see NBR as more a NAM thing, lets not leave out PTEN and PDS (Greywolf people got lucky unless they stay greedy). Unfortunately, CLB will probably get clubbed, eventually. That will be a great one on the bounce. Anything geophysical; Dawson comes to mind. Lufkin will probably get a ding, who wants to bring on artificial lift (sorry JR, I am feeling your pain). ALY and BJS fit the bill too.

  158. 158
    zman Says:

    Right, WFT kind of mini SLB. NBR last man standing with rig prices not falling? That can’t last if the horizontal count runs south. Maybe UDRL too but they are already $5. Should have added BJS, my bad, I did in the post, just not in 155.

    CLB reports for a Thursday call. Wonder how their backlog in terms of miles and miles of cores looks now. High PE, I’m tempted to put it.

  159. 159
    zman Says:

    Crude back over $38 tonight, presumably response to the API, up = % with gasoline.

  160. 160
    zman Says:

    Wyoming – did you see that comment on CRK’s Collins well about the equipment breakdown during the frac. Question about it ticked off the company man who responded basically with sometimes things break and luckily no one was hurt. Do you know what broke? Got any pictures for my collection?

  161. 161
    zman Says:

    Oh, well head blew off, I seem to recall that now, few weeks back.

  162. 162
    Wyoming Says:

    Was it a tree or a frac head?

  163. 163
    zman Says:

    They just said wellhead. It was during the frac so frac head. Stuff happens. Analyst was a bit of a dunce about the way he asked the question.

  164. 164
    Wyoming Says:

    Did you ever get pictures of the FracTech crew that burnt down in OK?

  165. 165
    zman Says:

    Nope. Please send.

    Wyo – these guys are fairly busy for their size and safe, little debt, no chance and I mean just no chance of equity offering any time soon. Pretty interesting reserve growth they are looking at and they are bagging the Street on well costs (looks like a sizable over estimate at $10mm ish per well and probably on reserve adds). Not a lot of data yet but if they don’t much it up they are going to be trading at ultra low $/Mcfe by year end.

  166. 166
    zman Says:

    Safe = conservative in #165.

  167. 167
    Wyoming Says:

    It happens. We did a frac in Calif, they ran a non API crossover in the casing. At ~ 9,000 psi it broke loose and we had a wing valve open for observation. Flippen Bauxite and Gel all over the crew, I was half way up a hill before I turned around to see WTF. Got to love land jobs vs. offshore.

    With all of the mammals that are running in the crews I am really surprised there are not way more accidents like this, really is a credit to the service guys, many smaller indies.

    These things happen, Force = Pressure x Area. A simple NASA equation …

  168. 168
    Wyoming Says:

    I will try to dig up the photos.

  169. 169
    zman Says:

    Hey, I remember that equation from high school physics. Recall I was mechanical engineering before I realized I could sleep in and get through B-school but not so with analytical geometry and calculus.

  170. 170
    zman Says:

    Don’t go to too much effort, still reading CRK transcript, long well done, well received CC.

  171. 171
    zman Says:

    Wyo – can you define “clustering of the purse” and “proliferation phasing” so I don’t have to get my Hyne books off the high shelf.

  172. 172
    Wyoming Says:

    Sure it was not Clustering of perfs? or Perf Clusters? Perf Clusters, reference to a set of perfs in a stage of a frac. We did 10 stages with 3 sets of perf clusters ….

    Not sure why they use “proliferation” (dazzle em with brilliance, baffle em with Bull shit) with phasing. Phasing is the orientation of the shots with the gun,draw a circle on a piece of paper. 0 degree phasing has all of the shots in the perf gun pointing in the same direction. 0/180 has the shots on opposite sides of a circle. 90 degree is at 3 oclock, 6 oclock, 9 oclock and noon. JSPF is jet shots per foot, 6 is what I usually like.

    Orientation would men that I use a weight that will point 0 degree phase at the top of a horizontal or 0/180 from side to side. In a vertical, I can use a tool the will shoot my holes in the frac plane and some other tricks.

    BTW, guns are like proppants, everyone is an expert. Me I prefer 6 jspf, 60 degree phasing, cheapest is alright to frac. Big hole @ 12 jspf for sand control and high perm reservoirs. Just some generalities.

  173. 173
    zman Says:

    Thanks as always sensei.

    Just got sent a note FST on the tape post close with a 14 MMcfepd IP, 100% owned Haynesville completion. 2 other wells completing and 2 drilling. 2 rig program for 10 to 12 wells this year, 106K net acres.

  174. 174
    Wyoming Says:

    Heard/herd? they were in there. Kind of a sleeper company. Did they not say at NAPE something like they like their Barnett property (0 activity/budget) but they like the HS better?

    One of our guys I work close with used to be a prod. foreman for them. Retired, sharp and I think they have a lot more of his type.

  175. 175
    Wyoming Says:

    Avg results. Really wish they would stop and help rip off the band aid.

  176. 176
    zman Says:

    175 – agree completely. Stress you are drilling to get HBP and not trying to grow production at these prices and back off the gas (so to speak).

    So I take it the gel in 167 was a touch on the warm side? Yet another reason I drive a desk with five monitors.

  177. 177
    Wyoming Says:

    Not warm, straight out of the pump, thru the Wellhead and out the bursted crossover (non-API). You are correct on flowback, warms up pretty good when you are deeper.

    In So Cal, Imperial Valley, we worked on Geothermal. Saw pictures of a “Steam Out”. Rig literally melted and sunk into the ground. They use titanium casing. Just some Cliff Claven for you.

  178. 178
    Wyoming Says:

    I’m out. Thanks.

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