29
Jun

Monday Morning And All Is Calm

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This is probably the slowest short week of the year (unless you work in the British Embassy in Iran or are Bernie Madoff). Energy discussions this week will center around who wins and who loses from the Energy Bill passed last Friday in the House. I've been through a few attempts at energy legislation before and remember that those you think will be toast (or at least severely burdened) will fail to fall much (in this case coal and refining stocks in energy land and steel and home builders in the non-energy world).  It probably is a bit of good news for the ailing ethanol industry however as outside of a plug in electric vehicle project, the only idea served up in the bill to "get the U.S. off foreign oil" was ethanol. The bill is far from a done deal a more comprehensive version of it will be taken up in the Senate later this summer. and some sticking points over trade sanctions (for those nations not complying with the U.S. idea of clean energy) will have to be hammered out.  Secondly, the bill is only a plan to have a plan. The true costs will shift around and the efforts to impose changes are at least 12 months away. In that time, much can change. Hopefully, some legislator will discover CH4 during that time.


The Week Ahead:

  • Monday 6/29: No U.S. data release
  • Tuesday 6/30: EIA Natural Gas Supply Report for April (probably later in the day), Chicago PMI, consumer confidence
  • Wednesday 7/1:  EIA Oil Inventory Report, ADP employment, ISM, construction spending, pending home sales, car sales
  • Thursday 7/2: EIA Natural Storage Report, jobless claims, non farm payrolls. factory orders
  • Friday 7/3: MARKET CLOSED - HAPPY FOURTH OF JULY

In Today's Post:

  • Holdings Watch
  • Commodity  Watch
  • Stuff We Care About Today - BBEP, XCO, IOC
  • Odds & Ends

Holdings Watch:

  • $10KP:
    • $19,100
    • 56% Cash

Commodity  Watch:

Crude oil eased 1% last week to close at $69.16. The 12 month crude strip is now trading at $72.35. This morning crude is trading up $0.80 on a flat dollar, higher equity futures and continued unrest in Nigeria.

  • Nigeria Watch - Amnesty Update: Well that was short. MEND claims to have attacked another Shell facility. Recall from Friday that four rebel factions, not including the leading rebel group MEND, were seeking a dialogue with the Nigerian government in a step towards taking up a previous offer of amnesty. MEND says they struck the Forcados oil export terminal leaving parts of it on fire and Shell said they shut in an undisclosed amount of oil as a precaution. MEND also denounced the amnesty offer spouting about "those who would sell their birthright for a bowl of porridge, yada, yada yada". Sounds like there will be little peace in Nigeria this summer.
  • Gasoline Demand Watch: Data for the week prior to the fourth of July holiday often move up a peg from the surrounding weeks as gasoline retailers stock up prior to the inevitable price run up. Given that we saw a drop in last week's data but an increase in production, I would not be surprised in the least to see a rally back above the 9.3 mm barrels per day level which should help gasoline stocks this Thursday. I continue to read headlines like "gasoline fever finally breaks" and "gasoline prices have peaked for 2009". Three words: I doubt it. 
  • Iraq Watch: Iraq says it plans to more than double current output to 6 mm bopd by 2017. The IEA says this is likely to be overly optimistic. I concur. IEA goes on to say production could actually fall in 2010 and 2011 from current production of 2.3 to 2.4 mm bopd before making a small recovery in 2014 to 2.7 mm bopd. More than doubling from their in just 3 years is highly unlikely in my book under good conditions, let alone the disorganzation and terrorism that plagues Iraq now, before the U.S. has fully pulled out.

Natural gas closed down 2% last week to close at $4.11, but recovered from a fall below $4 at week's end once a tropical disturbance near the Yucatan became ever so slightly more organized. The 12 month strip is now trading at $5.31 with 1Q10 hovering around the $6 mark  and continuing to give producers a chance to hedge at attractive levels. This morning gas is trading down close to $4 as the tropical disturbance in the Gulf is not likely to amount to anything more than rain.

  • Gas Supply Watch: The next catalyst for gas should come Tuesday afternoon if the EIA's gas monthly is on time, showing gas supply for April. I don't anticipate large declines in aggregate but instead expect to see a further, more pronounced rollover in volumes from the March data.
  • Weather Watch: Heat Finally Arrives In Much of the Eastern Consuming Region.  Cooling Degree Days (CDDs) compared to gas storage injections:

    • Week Ended 6/13: 39 CDDS vs 114 Bcf Injection
    • Week Ended 6/20: 52 CDDS vs 94 Bcf Injection
    • Last Week: 76 CDDs, 29% warmer than normal. This should yield a much small injection, smaller than normal and smaller than last year's 86 Bcf and given the hot forecast and an easy set of comps from last year (89, 102, 87) it is  possible storage will report smaller than year ago injections for the next four reports.
    • This Week's CDD Forecast: 67 CCDs, in line with normal and year ago levels.

 

  • Tropics Watch: Friday's tropical threat is today's Gulf of Mexico shower. No development expected in the next 48 hours.

Stuff We Care About Today

Deal Watch:

EAC Acquires Mid-Con / Texas Panhandle Assets From XCO:

  • Reserves of 24.6 mm Barrel of Oil Equivalant (BOE)

    • 28% oil
    • reserve life of 11.6 years (fairly long lived)
    • 5,795 BOEpd, (pretty fully developed, reserves are listed as 100% proved developed producing)
    • LOE of $6.95 per barrel (low cost to operate)
  • Acquisition price: $375 mm

    • Finding cost of $15.24 per BOE/ BOE ($2.54 per Mcfe)
  • Nutshell: Win-Win
    • For XCO:
      • Given current gas strip pricing, the gassiness and the seemingly limited upside of the asset , that's a pretty good sale price for XCO.
      • The deal will give XCO a little more breathing room as they focus on the Haynesville Shale (last 3 wells in the play IP'd over 20 MMcfepd.
      • New net debt to cap is still 90% due to price related writedowns but EBITDA to interest is a much less strangling 5.5x
      • This is the kind of deal you do when you have one play like the assets being sold that is pretty much an annuity and tapped out for upside and you have another play, with which you can inject new capital (like the Haynseville) and receive double digit returns even in a $4 gas price environment.
    • For EAC:
      • it makes sense as well as the fields are old, have been under capitalized of late (meaning they can spend a little and boost production or at least maintain it with less trouble
      • they hedged roughly 90% of expected volumes from the acquisition from 2010 through 2012 at an oil price in excess of $70 and a gas price of $6.99 (not too shabby)

BBEP Monetized Some Hedges; Borrowing Base Falls To Match:

  • Raised a whopping $25 mm, hedged 2011 and 2012 higher
  • Their borrowing base will $735 mm following the deal (down from $760 mm) with $645 mm outstanding after the hedge monetization.
  • This looks more like a forced move than any kind of strategic decision
  • Says there is no plan to reinstate the distribution at this time. So glad I stayed away from this overly complex, but very well resumed (not sure if it's a word but you know what I mean) MLP.
  • I continue to prefer LINE in the MLP space

IOC Draws Chinese Interest

  • After snapping up Addax Petroleum last week, the resource hungry Chinese are looking at (IOC)'s Papua New Guinea LNG project or (IOC) itself.
  • The reports from the South China Mornig Post just said that both CNOOC and PetroChina are looking at preparing bids on the project.
  • I may take a little piece just to play along, especially since the stock fell from $38 to $24 in the last week after announcing a mechanical issue with one of their drill stem tests.

Odds & Ends

Analyst Watch:

  • (APC) - Barclays trims APC target from $45 to $43, stays Equal Weight
  • (NXY) - Haywood raises to Sector Outperform 
  • (EQT) - Stiefel starts at Buy, target $52.
  • (TK) - Jefferies ups target from $16 to $18, keeps at Hold.

 

73 Responses to “Monday Morning And All Is Calm”

  1. 1
    zman Says:

    Can tell its going to be quiet in here as BOP is on a vacation this week.

    Exxon reporting flaring at LA refiner, driving gasoline up this am along with typical run into the weekend, that just launched crude back above $70.

    Reef – thanks for working on the map, I still cannot confirm that well as E.F.S. I may call REOS today to confirm that it is.

  2. 2
    zman Says:

    NG fighting to hold $4 as Gulf disturbance fizzles. We get supply tomorrow if the government is on time meaning I’ll have the slide show available for the Wednesday post.

  3. 3
    zman Says:

    IEA predicts global oil demand to rally 0.6% per year through 2014. Not much of a news flash but that seems to be providing further fuel to the oil rally this am.

  4. 4
    Dman Says:

    anyone know why CRK dropped 6% with huge volume last Friday?

  5. 5
    zman Says:

    D – saw your question Friday, looked about, came up with nothing. Volume was massive with huge imbalances at the close. Very tempted to add it here for a run into earnings. They’ve been doing everything right of late.

  6. 6
    zman Says:

    D – Ya know it was probably the Russell rebalancing. Saw huge volumes in those names.

  7. 7
    TEXWS6 Says:

    Global Warming = Climate Change

    http://online.wsj.com/article/SB124597505076157449.html

  8. 8
    zman Says:

    Thanks Tex.

  9. 9
    zman Says:

    Another wishy washy summer day for trading. Oil up $1.50, NG down 11 cents now, stocks mixed, those up are barely up, watching jobs later this week.

  10. 10
    zman Says:

    Knock, knock, this thing on?

    Gasoline on fire now, up 3%, sticking with my comments from the post, I don’t think you’ve seen the 2009 highs yet. Right now gasoline is leading crude higher and dragging heating oil up as well. We’re still in the elevated range for crude, don’t really see a break out or much of a break down from here with the SP falling off considerably.

  11. 11
    zman Says:

    Tried to take a little IOC as per the post when it was up $3 but I was too cheap. If the Chinese do make a real bid for the company, I’d put that number somewhere north of $45.

  12. 12
    Dman Says:

    #6 thanks Z, looks like an opportunity there.

  13. 13
    zman Says:

    Dman – probably so. What do you make of the scientists now coming out saying yes to warming, no to man as a cause? Not interesting in a political argument or name tossing or what have you, just interested for my own educational purposes. Thanks.

    Stocks acting like they want to keep this little rally going but with CNBC rotating between looking like CSPAN one day and Entertainment Tonight (the Madoff witch burning is on now) it is hard to imagine this lasting much beyond the mid day tomorrow. Volumes in E&P land are abysmal. I will take this entire week off next year and go to the beach. I will, I will, I will.

  14. 14
    Dman Says:

    #7 – so the gist of the story is: a politician asked another politician for reassurance on a scientific issue. It never occurred to him that locating some actual scientists might have been a better approach.

    Meanwhile, just in case the confusion of various politicians with no scientific background wasn’t enough to convince you, the article announces that “the world’s first woman to receive a Ph.D. in meteorology, expressed relief upon her retirement last year that she was finally free to speak “frankly” of her nonbelief.”

    Wow, that’s a compelling scientific argument if I ever saw one. A scientist who thinks that science is about “belief” then pronounces she is a nonbeliever.

    Terrific, as long as we’re talking about joining the Moonies. Oh, we’re not? We’re talking about science, with all that evidence and reasoning stuff? Oh, then in that case, I suppose we can settle the issue by polling yet more politicians in various countries … after all, that’s how science works isn’t it? Why bother with scientists when you can conduct an opinion poll or just cut to the chase and ask a politician to sort it all out.

    Well, I’m glad that’s settled.

  15. 15
    Dman Says:

    Z – wrote #14 before I saw #13. I’ll get back to ya shortly.

  16. 16
    BossmanG Says:

    Z, not sure if this was discussed before, have you had a chance to publish your trading notes?

  17. 17
    zman Says:

    Boss – No, I looked them over and thought they were more lacking than my last save. Going through a rewrite in my spare time. Apologies for the delay.

  18. 18
    BossmanG Says:

    No worries! Appreciate all the info you post daily for us!

  19. 19
    zman Says:

    Boss – Thanks.

    Crude up $2 at $71.10. Gasoline up nearly 4%. I continue to laugh everytime we see an obvious oil short come on CNBC to inform me that suddenly the fundamentals do matter more than the dollar and the direction of the equity markets and what happens in Nigeria which should not matter. Nigeria is one of the best sources for light crude for the U.S. The world’s crude supply is becoming heavier and dirtier. Nigeria still matters and if you think peace is suddenly going to break out over the amnesty offer I have many bridges to offer you.

    HK running into that low $22 level resistance again. Tater, you around this week?

  20. 20
    bill Says:

    Moonbats say its treason if you dont buy into global warming

    http://newsbusters.org/blogs/mark-finkelstein/2009/06/29/krugman-accuses-republicans-form-treason

    here is an al gore classic

    http://www.entertonement.com/clips/mvrjpyzwdt–Betrayed-this-coutnryAl-Gore-

    Im going to the store for moonbat repellant

  21. 21
    zman Says:

    Thanks Dman – figured you hadn’t seen my request yet, lol.

    Fitch affirms PXD at BB+, outlook stable, probably a minor positive.

  22. 22
    Dman Says:

    Z – re #13. Hard to answer without some specifics, so if you have a link to a particular scientist making that case, I could take a look.

    I notice that a lot of the “skeptics” are geologists, such as Ian Plimer, (mentioned in the article).

    Usually they just make some observations about the variability of climate across geological timescales and then assert that the current situation simply falls within normal variability.

    The problem with this is that

    (a) the climate modelers are well aware of the climate history on all timescales. I don’t know why geologists think that this will be some kind of revelation.

    (b) the geologists never seem to bother to get up to speed on the atmospheric/oceanic physics that underpins climate models. Not surprising, since this stuff is remote from their own background. But it means that basically they know nothing about the actual climate mechanisms that are being studied. Consequently they cannot make informed judgments on it but that doesn’t stop them making ill-informed pronouncements.

    I will try to get a look at Plimer’s book, but I’m not expecting much, to be honest. The article quotes praise for the book from Paul Sheehan, “a noted Australian columnist-and ardent global warming believer”.

    What can I say? Before we had a “nonbeliever”, now an “ardent believer”. So I guess we’ve stumbled into a religious conference or something? First of all, scientists don’t usually consult newspaper columnists for the latest scientific developments, whether or not they are “ardent believers” in a theory. I guess this would come as a shock to the WSJ columnist.

    The WSJ article mentions a bunch of physicists who have had an “open letter” rejected by Nature and Science.

    First some context: Nature and Science are the worlds #1 and #2 scientific journals respectively. There are many thousands of specialized scientific journals. The top journals maintain their position by rigorously reviewing publications. The simple fact is that those journals have extremely high rejection rates for all submitted material. You can’t just write them a letter and sit back expecting it to be published.

    As it happens, when global warming first became a hot scientific topic (i.e. decades ago) the editor of Nature at the time was James Maddox. Maddox was a physicist who was more than just “skeptical” of the link between CO2 emissions and climate change. Skepticism is the normal and proper scientifc attitude to new ideas. Maddox was more hostile than skeptical, but nevertheless the evidence kept rolling in and he had to set his own views aside.

    Which leads me to the question of “dogma” raised in the WSJ article. Obviously, science is not supposed to be about dogma, which is (again) something with more religious connotations.

    But the media and/or public is not really equipped to handle the subtle complexities of difficult science.

    For example, look at the current flu pandemic: at first the media treated it like the bubonic plague. Then when millions failed to immediately drop dead, they decided it was a non-event or even a hoax. Now it is dawning on them that it is a very real event, which will kill a large number of people, but it is occurring a little slower than their 24 hour news cycle can handle.

    If the media can’t handle the flu, good luck teaching them climate science.

  23. 23
    Dman Says:

    #21: correction: it was John Maddox, not James.

  24. 24
    bill Says:

    Is global warming bad

    I prefer warmer weather, thats why i travel to Florida in February

    I prefer global warming to global cooling.. Even the moon bat Al Gore and his Goron’s would have to admit to that

  25. 25
    zman Says:

    Thanks D.

    Do you have a link or study showing sources of CO2? Like to biggest to smallest?

    How does deforestation fit into the picture? I mean, if we stop putting out 83% of the carbon we do put out in the U.S. (I think that is the energy bill’s goal), does CO2 continue to rise anyway since there are many forests that would have consumed it in the past that are not there now? I understand part of the allowance credit dollars will go to planting trees but I would imagine, as in most things the federal government does, they see dollars going a lot further than they actually will.

    I’m not a scientist but I like to gather as much info as possible with an open mind on the subject.

    Right now, the 2/10ths of 1 degree F that some claim is the outcome of the current proposal troubles me. Wonder what the standard deviation is on that.

  26. 26
    zman Says:

    Madoff got max, 150 years. Wahoo!

  27. 27
    ddaley Says:

    Z:
    On the climate debate:
    Betraying the Planet
    By PAUL KRUGMAN

    So the House passed the Waxman-Markey climate-change bill. In political terms, it was a remarkable achievement.

    But 212 representatives voted no. A handful of these no votes came from representatives who considered the bill too weak, but most rejected the bill because they rejected the whole notion that we have to do something about greenhouse gases.

    And as I watched the deniers make their arguments, I couldn’t help thinking that I was watching a form of treason — treason against the planet.

    To fully appreciate the irresponsibility and immorality of climate-change denial, you need to know about the grim turn taken by the latest climate research.

    The fact is that the planet is changing faster than even pessimists expected: ice caps are shrinking, arid zones spreading, at a terrifying rate. And according to a number of recent studies, catastrophe — a rise in temperature so large as to be almost unthinkable — can no longer be considered a mere possibility. It is, instead, the most likely outcome if we continue along our present course.

    Thus researchers at M.I.T., who were previously predicting a temperature rise of a little more than 4 degrees by the end of this century, are now predicting a rise of more than 9 degrees. Why? Global greenhouse gas emissions are rising faster than expected; some mitigating factors, like absorption of carbon dioxide by the oceans, are turning out to be weaker than hoped; and there’s growing evidence that climate change is self-reinforcing — that, for example, rising temperatures will cause some arctic tundra to defrost, releasing even more carbon dioxide into the atmosphere.

    Temperature increases on the scale predicted by the M.I.T. researchers and others would create huge disruptions in our lives and our economy. As a recent authoritative U.S. government report points out, by the end of this century New Hampshire may well have the climate of North Carolina today, Illinois may have the climate of East Texas, and across the country extreme, deadly heat waves — the kind that traditionally occur only once in a generation — may become annual or biannual events.

    In other words, we’re facing a clear and present danger to our way of life, perhaps even to civilization itself. How can anyone justify failing to act?

    Well, sometimes even the most authoritative analyses get things wrong. And if dissenting opinion-makers and politicians based their dissent on hard work and hard thinking — if they had carefully studied the issue, consulted with experts and concluded that the overwhelming scientific consensus was misguided — they could at least claim to be acting responsibly.

    But if you watched the debate on Friday, you didn’t see people who’ve thought hard about a crucial issue, and are trying to do the right thing. What you saw, instead, were people who show no sign of being interested in the truth. They don’t like the political and policy implications of climate change, so they’ve decided not to believe in it — and they’ll grab any argument, no matter how disreputable, that feeds their denial.

    Indeed, if there was a defining moment in Friday’s debate, it was the declaration by Representative Paul Broun of Georgia that climate change is nothing but a “hoax” that has been “perpetrated out of the scientific community.” I’d call this a crazy conspiracy theory, but doing so would actually be unfair to crazy conspiracy theorists. After all, to believe that global warming is a hoax you have to believe in a vast cabal consisting of thousands of scientists — a cabal so powerful that it has managed to create false records on everything from global temperatures to Arctic sea ice.

    Yet Mr. Broun’s declaration was met with applause.

    Given this contempt for hard science, I’m almost reluctant to mention the deniers’ dishonesty on matters economic. But in addition to rejecting climate science, the opponents of the climate bill made a point of misrepresenting the results of studies of the bill’s economic impact, which all suggest that the cost will be relatively low.

    Still, is it fair to call climate denial a form of treason? Isn’t it politics as usual?

    Yes, it is — and that’s why it’s unforgivable.

    Do you remember the days when Bush administration officials claimed that terrorism posed an “existential threat” to America, a threat in whose face normal rules no longer applied? That was hyperbole — but the existential threat from climate change is all too real.

    Yet the deniers are choosing, willfully, to ignore that threat, placing future generations of Americans in grave danger, simply because it’s in their political interest to pretend that there’s nothing to worry about. If that’s not betrayal, I don’t know what is.

  28. 28
    bill Says:

    24

    Do i get a tax credit for planting a tree?

    You got to look at big picture, this is just a shake down on industry for campaign contributions and raise taxes for politicians to pizz away on their favorite cause

    Did you know , the island of Manhantan was created due to global warming?

  29. 29
    Dman Says:

    #23 the Russians tend to agree: they figure a bit of warming could go a long way in Siberia.

    Z – I haven’t been paying close attention to the energy bill because what little I saw about it seemed rather detached from reality. The politician are happy if they are seen to be “doing something” & they really don’t care if “something” will be enough or even relevant at all. The idea is that when it all hits the fan, they can say “well, we tried to do something, didn’t we?”. Even worse, they know perfectly well that it will be *other* politicians in charge, many years later, who will have to deal with the outcomes, so they care even *less* than usual about the realism of today’s efforts. (A bit like the handing of immense debt mountains to future generations, only more so).

    Are they claiming the bill is worth 0.2 F ? Good question about the SD on that.

    Open mindedness: it occurs to me that where people do detect “dogma” is not so much in the underlying science (which few have heard much about) but in the policy prescriptions for action. In that area, undoubtedly there has been a dogma advanced, i.e. that cutting CO2 is the only approach. This has long been my own point of departure: I am not going to bother advocating an approach that is clearly not going to work because it will not be adopted sufficiently. It also annoys me that these prescriptions are treated a moral imperative when instead it is a matter of practical problem-solving.

    Actually there was a letter published recently in Nature arguing that a dogmatic insistence on CO2 reduction goals (that are clearly not going to be achieved) was actually dangerous as opposed to helpful.

  30. 30
    Dave J Says:

    Has anyone seen a good summary of the cost or affects the Waxman-Markey climate-change bill will have on E&P?

  31. 31
    zman Says:

    As I was saying in the post, this is a legislation is a long way from passed. But I am disappointed in the bill itself. I’m disappointed in how it is presented as a jobs bill. Every time energy legislation comes up it is saddled with other issues. The U.S. really does need an energy plan but this is not it. Also as I was saying in my intro its not the EOTWAWKI for coal or steel, both of which are up today.

  32. 32
    zman Says:

    Dave J – I have not seen anything with numbers attached. I went through the entire bill and the focus is not on E&P, I have not gone through the entire amendment but I did not hear of it being in there. The bill mainly targets refining, steel, building (via tightened standards) etc. E&P faces a bigger threat from the proposal to regulate fracing. If that passes costs are set to rise per well although I doubt it would be much, more of a delay in the permit process. If you do see hard numbers on the cost to E&P forward them but be wary, as I’ve stated before, this is the least number intensive energy bill I’ve ever seen. It is more of a guideline for a bunch of groups who will be brought together over the next two years to decide how things are going to be. So I’d bet most $ estimates won’t be close enough for even hand grenades.

  33. 33
    Dman Says:

    Continuing the last part of #28: I’m searching for an analogy:

    OK, so we’re on a ship and we’re heading toward an iceberg. The captain asks the bridge crew for suggestions. Someone suggests “we could convert the ship into a helicopter and fly over the berg”.

    That is how I see the CO2 reduction plan: it would work if it could actually be done, but a realistic path to getting it done just never seems to be spelled out.

  34. 34
    zman Says:

    Dman – re 32. That’s how I see it too except that I see China piling up more ice on the iceburg while your makeshift, bicycle-peddle-powered gyrocopter tries to top it.

  35. 35
    Dman Says:

    Z – #33 yes, the “ship” I have in mind is the whole planet & the fact that the crew/passengers do not see all their interests being aligned is one reason why a real plan doesn’t exist. If you could *really* get international consensus for action, then the CO2 reduction plan could in fact be done and it could be made the foundation of a whole new economy. But if the “crew” are busy ambushing each other & “free riding” (in game-theory terms) then it obviously won’t happen.

  36. 36
    Dman Says:

    Z – when does earnings season kick off for the group ?

  37. 37
    zman Says:

    Volumes remain light. HK trading at about 1/3 of normal for this time of day. Stocks just drifting and not acting particularly well in light of the broad market and crude rallies.

  38. 38
    zman Says:

    Dman – third week of July. We usually get some ops updates before it. Very quiet now.

  39. 39
    nifkin Says:

    any read on Coal equity weakness?

  40. 40
    zman Says:

    Nifkin – Yeah, I think it is mostly natural gas related. The two are inextricably linked and gas is trading back below $4 so the coal stocks are not moving. The second issue that may be depressing gains vs the broad market is the energy bill. But again, they are all flat, not tanking.

    Interesting to see the Majors are all up and outperforming other energy today while solar, which people bet on as an Energy Bill winner is down again on the key names.

  41. 41
    Dman Says:

    Z – do you have any particular expectation for the April supply report?

  42. 42
    zman Says:

    Re 40. Nothing drastic, the trickle of completions of previously drilled but not completed wells is muting the declines.

    I think that won’t be enough however to show another decline in Texas and a stronger decline in the “other states” category.

    In Oklahoma and Wyoming, where returns have been rotten I expect to see the beginnings of a more pronounced decline.

    In the Gulf, I expect flat to very slightly down production.

    Overall, I would not expect a decline of more than 0.5 Bcfgpd from March levels (about 0.8%). Much more than that and people might start to notice.

  43. 43
    zman Says:

    Imports:

    LNG 1.3 Bcfgpd – still no tsunami
    Canada 6.5 bcfgpd off the lows but still down a point from last year.

    Electricity consumption was up 6.5% from the prior week.

    I’d bet on a number in the 75 to 80 Bcf range for this week. Have not yet seen consensus.

  44. 44
    zman Says:

    Got an emailed question about the Chinese SPR. They mentioned a 160% increase earlier but I was not sure of the context. CNBC says it is the increase in the size of their SPR between now and 65 years. Estimates vary on the Chinese SPR but word is they are going from 0 a year ago to over the size of the U.S. at about 730 to 740 capacity now.

    Paint drying all over the stocks right now. Unbelievably slow.

  45. 45
    Nicky Says:

    Good afternoon to all.

    Indices I am looking for the 930 – 935 area to stop this rally if its going to. That said its tricky here and a move above 843 has us going to new highs which is not exactly helpful as a comment I know as we will nearly be back at the highs!

    Commodities may be giving us the heads up that in fact we are heading for new highs which oil powering away today. I do think oil is going to make new highs and I believe we are in v up which started at 66.36. We are now in iii of v.

    Metals – gold I suspect could get towards 960 and then fall.

    $ should make new lows and pound and euro new highs. Euro and pound are in triangles and very close to breaking out to the upside.

  46. 46
    zman Says:

    Thanks Nicky, 943 point of last resistance?

    Gasoline seems to be powering ahead with refinery outages just in time for the holiday. That chart looks constructive to me.

    Odd that the stocks are not paying attention to crude and the market rally. Thought is 1) apathy, 2) energy bill. Am questing about to see if Wall Street analyst opinion is behind the sluggishness to respond to crude today.

    Crude now up 2.45 at 71.60, closing on the 2009 highs…stocks, anything but near the highs.

  47. 47
    zman Says:

    Citibank comments on Waxman bill indicate they think Senate passage could drag into 2010.

  48. 48
    zman Says:

    Tropics Watch:

    Nothing really brewing but we are seeing the pattern firm up:

    http://www.accuweather.com/news-seasonal-headlines.asp?partner=accuweather&traveler=0

  49. 49
    zman Says:

    Stocks continuing to drift, I am doing some CE work so I’m here but, like everyone else, am going to be quiet. Knock if you want something.

  50. 50
    zman Says:

    Johnson Rice provided an Eagle Ford update today; went through the PXD well and the SM wells I highlighted last week in my update.

    Said HK is expected to post an update on their EFS wells mid July. Said that HK said that the EFS is the best play in their drilling inventory. Strong words given their position in the Haynesville shale. Says laterals may go to 6,000 feet from the average 4,000 to date and that drilling time on last well was 17 days, down from average on first five of 48 days.

    Also mentions MUR is in the play now and EOG has permitted wells (not sure what county) to test in the second half.

  51. 51
    zman Says:

    West, where was that 2,000 bopd Texas EOG well you mentioned last week.

  52. 52
    kyleandy Says:

    ron paul on energy bill http://www.house.gov/htbin/blog_inc?BLOG,tx14_paul,blog,999,All,Item not found,ID=090629_3005,TEMPLATE=postingdetail.shtml

  53. 53
    zman Says:

    Emailed in thought from RMD:

    listened to Don Coxe replay, who noted XOM’s interest in Alaska pipeline which Gov. Palin was pushing: his conclusion was XOM must think nat gas is much higher bu 2016.

    My thought: yes, and they see the Russians wanting a bigger piece of Sakhalin 3 and 4 and giving it to Shell, not as much to XOM. They want to be long gas going to the U.S., just not sourced from the U.S.

  54. 54
    zman Says:

    Kyle – not surprising he is not in favor.

    T Boone congratulated Waxman and Pelosi on passing it. Talk about gamesmanship.

  55. 55
    zman Says:

    From email:

    Z: What is your quick two cent thought on each. Positives and negatives. Thanks. S

    NAT – I have no current thoughts on.

    GMXR – I think it has become much more interesting after the selloff following the secondary. Still going to be weighed on by natural gas until gas gets a footing but this one can ratchet up activity quickly. Starting to like these sort of secondary players in the Haynesville (GMXR, CRK, SM).

  56. 56
    zman Says:

    Volumes awful. Complete buyer’s strike in progress. Not exactly what people were thinking would happen into the close of the quarter.

  57. 57
    zman Says:

    Hey, good news, headline going across saying Wall Street buoyed by oil sector, window dressing. Well, they got the second one right. Early Beerthirty. I’m bored so am going for a swim. If you have questions hit me with them and I will address overnight.

  58. 58
    md Says:

    EIA Monthly Gas Report is avail

  59. 59
    zman Says:

    Thanks MD, early, will have a look.

  60. 60
    zman Says:

    Thanks for that headsup MD.

    More rounding top action. Very small decline in gas production, as I wrote earlier, was not expecting a big decline in total, max of 0.5 Bcfgpd, got 0.08 Bcfgpd out of the lower 48 with that falling a little more (0.15) if you just look at the onshore.

    Texas fell the most but not by much, other states, Ok, flat, Wyoming down a hair. I’ll have the slide show out tomorrow.

  61. 61
    Wyoming Says:

    Ice sheet flow on the North Slope

    http://www.break.com/usercontent/2009/6/oooguruk-island-june-23rd-2009-790036.html

  62. 62
    zman Says:

    Re 60. I like how the camera pans down near the end. Was that a drilling pad in Alaska?

  63. 63
    Wyoming Says:

    As I understand it.

  64. 64
    zman Says:

    They should get climate change pay.

  65. 65
    Wyoming Says:

    This is actually the good time of year up there. You just have to make sure that there are no brown bear around when you leave a building. Most doors have a protective cage outside them to give you a chance to make sure of the all clear.

  66. 66
    zman Says:

    Wyo – sent you a question via email.

  67. 67
    md Says:

    As I recall YOY Canada and LNG cancelled each other out

  68. 68
    zman Says:

    Md – yep, more than offsetting.

  69. 69
    zman Says:

    Strange to see such follow through on oil, now up 1.46 in the overnight session to 72.96.

  70. 70
    West Says:

    Z, Sorry for late response on EOG question,all I have is that it is in Karnes Co.,TX, tight hole, with a lot of leasing activity in the county. Another interesting bit on EOG’s Wyoming Upper Creataceous stacked horizontal play in Converse and Campbell counties; they plan to drill 3 horizontals targeting the Niobrara,Turner and Mowry formations from the same pad. Then they are going to drill a 11,500′ offset monitor well to detect and record microseisms and use these to create a real time image of the frac.According to recent article in RMOJ , June 12,2009 issue, “This data can be used for optimizing individual frac treatments, optimizing length, verfing effective pay-zone coverage, or optimizing an entire field development in terms of well spacing and layout. The company plans on using similiar techniques in ND for the horizontal Bakken..” Once again EOG on the leading edge of technology in action… I will try to update KOG infor from offset operators soon. One thing that probably needs to be added to financial consideration is that SWD is running $ 6.00/bbl from Peak ND filing. I will try to get some fiqures but there are not many available yet, most wells are still on confidential status. Hopefully KOG has small SW production volumes.

  71. 71
    Jay Reynolds Says:

    After two years of small scale field trials I have found the proper flow improver to mobilize oil off of our sand. Did about a year of trials including individual well “innoculations” then going back and seeing how the produced fluid composition changed. One early tip off was that when I had produced an amount of oil in excess of that which I calculated could be held in the casing (standing fluid height to bottom) that oil had no trace of connate water. Hence the objective of doing oil/water separation in the reservior is working.

    Now to scale up…. if this works out then everything in the Nacatoch B sand(covers about 40 square miles in the area) changes. I was getting tired of a 0.1% oil cut anyhow.

  72. 72
    zman Says:

    Congrats Jay. You should talk to Wyoming and TexW. Please repost this when I publish today’s post in about 30 minutes so they see it.

  73. 73
    la red tv online chile Says:

    la red tv online chile

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