30
Jul

Thursday Mega Post

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Please excuse the long post today, lots of stuff going at the macro and micro levels so it couldn't be helped. WLL and OII beat estimates and they, like almost everyone else today,  will have their conference calls at 11 am EST, see the calendar tab for all of them. I will be on the WLL call and will listen to the replay of the OII call. SWN and FSLR report after the close.  By the way, XOM missed and that could act as a minor drag on the indices which otherwise look fairly positive this morning.  Market appears to be pleased with jobless claims of 584,000 which were in line with forecasts and much better than some traders had feared.

In Today’s Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Natural Gas Preview
  4. Natural Gas Supply Review (data through May 2009) - Still very little noticeable declines outside of Texas.
  5. EIA Oil Inventory Review
  6. Stuff We Care About Today - Earnings Watch: WLL, OII, TSO; Pre earnings thoughts for FSLR, SWN
  7. Odds & Ends

 

Holdings Watch:

  • $10KP:
    • $25,100
    • 47% Cash
    • The Wiki tab is updated.

Yesterday's Trades:

  • WLL - Added (10) more WLL August $45 calls (WLLHI) for $1.00 with the stock at $42, off 5% on the day.

 

Commodity Watch:

Crude oil dropped $3.88 to close at $63.35 yesterday on a bigger than expected build in crude stocks. Although the build was the result of a large jump in imports (which is more often than not unsustainable) traders took the opportunity to book recent profits as the demand scenario for products continues to be less than rosy (see below).  This morning crude is trading back up nearly a buck as teh dollar retreats.

Natural gas fell in sympathy with oil ending the day down $0.14 at $3.55. This morning gas is trading up a few pennies in front of the natural gas storage report.

Natural Gas Preview

  • My number: 70 Bcf
    • History:
      • Last Week: 67 Bcf on CDDs of 70.
      • Last Year: 68 Bcf
      • 5 Year Average: 54 Bcf
    • Weather: Cooling degree days were 64 last week, quite a bit cooler than normal for this time of year.
    • Imports: up 0.2 Bcfgpd from the prior week; down 0.3 Bcfgpd from last year.
  • Street Consensus: 73 Bcf

ZComment: Not to put to fine a point on it but the weather is too mild for mid Summer. Without more cooling load, storage is not only going to get full this season but it is going to get full faster than I previously thought which will lead to gas on gas competition on a regional basis. At this rate, if we don't see some sustained heat soon or some storm related shut ins in the Gulf I would expect a serious test of the $3 level by September. As far as today's number goes, anything less than 70 Bcf probably produces a rally; anything over the 75 probably sends gas down towards $3.20.

Natural Gas Supply Review: (data through May 2009)

EIA released its natural gas supply figures through May yesterday.

  • Step 1 - find a magnifying glass
  • Step 2 - look closely at the charts showing Lower 48 and Wyoming gas growth and you will see another slightly month to month decline in gas volumes. Texas isn't as hard to see but its nothing to get excited about.
  • Step 3 - wait for next month for declines outside of Louisiana to be more obvious.

EIA Oil Inventory Review



CRUDE OIL - Bearish looking crude build was entirely attributable to a big jump in imports. Putting aside the imports number for a moment, refinery utilization did fall as I've been expected for the past couple of weeks. This will probably slide a bit more before leveling out for the remainder of summer as a number of refiners have announced production curtailments due to weak margins.





 

 

GASOLINE - Production is down which is a requirement given persistently weak demand. Imports remain benign.


 

 

DISTILLATES - Production continues to inch lower but not fast enough to counter weak demand.




 

Stuff We Care About Today

SWN Pre Earnings Thoughts


Additional Thoughts:

  • They have a history of bumping up production guidance as the year progresses due to better than expected well performance.
  • EUR talk in the Fayetteville - good chance we see a slightly bump here.
  • Should see a return to higher average IPs in the Fayetteville after a break in that string last quarter
  • Outside of the Fayetteville Shale they should have completed a second Haynesville well and if it does well we could see them start to focus on the play more.
  • Hedges for 2010 will likely get some scrutiny; they were lightly hedged as of last notice
  • SWN reports after the close with a conference call Friday morning.

FSLR Pre Earnings Thoughts

First, some graphs: Metrics continue to improve quarter after quarter here:

  • Cost per Watt should continue to fall. It was 93 cents last quarter and should slide into the high 80 cents in the next few quarters as low cost Malaysian production ramps up.
  • Annual guidance of $1.9 to $2.0 B in sales...They've been here for a couple of quarters, I'm looking for them to maintain this level; its probably early to ask for a 2010 level but the call will be leaning towards guidance there.
  • This could be an interesting quarter to see U.S. sales growth; FSLR is still mostly a European sales company but the push is on in the U.S.  We should also get an update on U.S. government initiatives to encourage production/consumption although frankly I've not seen much progress in promoting widespread financing of solar projects yet.
  • Canadian sales could be interesting too as they start to ramp up.
  • Details on French JV, expectation for more similar deals with volumes substantially pre sold.
  • Outlook:
    • Street is currently looking Revenue of $1.1914 B in 2009 and EPS of $1.62. They had 90% of 2009 volumes contracted as of last quarter so wins this quarter
    • One thing we need to see is the unspoken for portion of this year's revenue not grow.
  • FSLR reports at the close with a conference call at 4:30 pm EST.

 

Earnings Watch:

 

WLL Reports Beats; Guides Production Higher, Costs Lower

The 2Q Numbers:

  • Production of 5.033 MMBOE came in above the top end of the guidance range of 4.8 to 5.0 MMBOE.
    • This up 3% from 1Q09’s production of 4.89 MMBOE and
    • 25% from 2Q08 levels. Note also that oil production was up 35% yoy so they are getting oilier at the right time.
  • Revenue of $230 mm vs $192 mm expected
    • Company wide differentials improved from 1Q09
  • Cash Costs: Slightly better than expected
    • LOE of $11.44 per BOE vs $12.20 per BOE guidance and $12.47 in 1Q09
  • EPS of ($1.83) reported but this includes a non cash loss of $1.89 vs ($0.27) expected
  • CFPS of $2.16 vs $1.74 expected

Guidance:

  • Production:
    • 3Q09: Initiated at 4.8 to 5.0 million barrels of oil equivalent (MMBOE)
    • 2009: Increased from a range of 18.90 to 19.30 MMBOE to a range of 19.20 to 19.60 MMBOE. Essentially this means what was 8 to 10% growth for 2009 is now 10 to 12% growth.
  • Pricing:
    • differentials for both oil and natural gas seen improving over prior guidance
  • Costs:
    • Lease Operating Expense (LOE) falls from prior ‘09 guidance of $12 to $12.30 / BOE to a range of $11.70 to $12 / BOE.
    • Other cash and non cash (DD&A) costs fall as well
  • Capital Budget: Going up. Planned spending goes from $420 to $440 mm. Extra cash to be spent in their extended oil recovery plays.

Operational Highlights:

  •  Williston Basin:
    • Sanish Field:
      • Announced completion of two nice middle Bakken completions at rates of 2,528 BOEpd and 2,376 BOEpd. These would be just north of WLL’s average well drilled to date.
      • Announced a Three Forks Sanish well in the southwestern portion of the field with an IP of 551 BOEpd - this is the second TFS well in the Sanish Field drilled by WLL
      • WLL commented that it has offsetting acreage just to the north of the Sanish field adjacent to BEXP’s recent 2,000+ BOEpd TFS well.
    • Parshall Field -
      • In mid June, field operator EOG began completing 16 previously drilled middle Bakken wells in which WLL has an interest. 10 have been completed and the other 6 should be completed in the next 4 weeks. EOG’s has routinely brought on some of the biggest wells in the play with numerous wells coming on north of 3,000 BOEpd in Parshall.
    • General comments on Williston:
      • CWC continue to fall; now estimated to cost $5 to $5.5 mm per well from $5.5 to $6.0 mm per well just last month.
      • Despite rising total capex for the firm, the $ number for the Williston actually shrank lightly in their new budget as they are getting that much more drilled for their buck.
      • The one nit to the quarter may be the slightly slower than expected completion of their 65,000 bopd oil line which would connect their oil to Enbridge and from there to markets in the midwest (reducing transportation costs greatly). Previously mentioned as a Q3 event, now Q4,
  • Enhanced Oil Recover Plays
    • Continue to see strong production growth in both plays. Both fields are growing via workovers alone but at higher prices, WLL would be likely to add new injector and production wells.

Balance Sheet: Better at 27 debt to cap, down from 40% at year end. They mentioned in the press release a willingness to live within cash flow in 2H09 which sounds like no more deals soon which would be a welcome change.

Nutshell: Production guidance increased with cost guidance coming down is rarely a bad thing. An improved balance sheet and increasingly oily mix mean that WLL will have the firepower when prices improve to accelerate operations in both its the Bakken and EOR areas. Meanwhile, the stock is relatively cheap at 5.8x 2009 estimated CFPS of $7.34, a number that will be rising by at least $1 to take into account this quarter’s outperformance and the lower costs in the second half of the year.  As to 2010, the Street is already looking for the first half acceleration of activity management alluded to in the press release and is already forecasting a stout $11.60 CFPS target.

Conference Call: Today, 11 am EST.

I’ll add the notes from the CC to the bottom of this page following the call. This page will be archived on the reports tab.

OII Reports Better Than Expected Numbers, Narrows Guidance Range Around Mid Point

The 2Q Numbers:

  • Revenue of $451 mm vs $460 mm expected
  • Gross margins sequentially and YoY flat at 24%
  • Operating margins flat as well at 16%, flat with both last quarter and last year
  • Net margin up 1% to 11% from year ago and 1Q09 levels
  • ROV Stats:
    • Utilization: flat with last quarter at 80%
    • Operating margin of 31%, flat with last quarter - hard to pull off flat margins these days for most of your service names.
  • EPS of $0.87 vs $0.81 expected
    • the company had guided the Street to a range of $0.75 to $0.85 on the last quarterly conference call
    • OII has a history of coming in near the top of their guidance ranges due to strong near term visibility and occassionally exceeds guidance by a wide margin.

Guidance:

  • 3Q09: EPS guidance of $0.82 to $0.90; Street is at $0.86 now. 
  • 2009: EPS guidance moves to $3.25 to $3.45  from a previous range of $3.10 to $3.60.
    • the Street is currently looking for '09 EPS of $3.31.

Highlights:

  • Backlog increased to $350 mm from $282 last quarter - this something analysts were looking for in the quarter, a sign that the umbilical market was not continuing to fade.
  • PBR umbilical contract - more details on the call. Management indicated that it continues to expect

Nutshell: Good numbers, OK guidance, may not be enough to keep the Street happy but looking around at the competition it probably should be. 

Conference Call: Today, 11 am EST.

TSO Reports Loss; The Future Looks Less Than Bright

  • 2Q EPS of ($0.33) vs ($0.41) expected
    • weak margins, weak throughput (down 7% from year ago levels),
    • They commented that narrowing price spreads between heat and light crude also hurt margins in California. This lessor discount for California heavy should be a benefit to names like BRY and WRES.
  • Notable Quote Watch:

“As we began 2009, we were prepared for a very difficult year, and in the second quarter it arrived,” said Bruce Smith, Chairman, President and CEO. “Declining industrial production, weak distillate demand and excess inventories have crushed distillate margins. Gasoline margins, which were strong in April, weakened in the quarter and dropped to half the April levels in July. ZComment: Just in case you wonder why I've been avoiding the group."

"Already, we are seeing temporary closures and units running at less than full rates at a number of refineries."

  • 3Q Outlook: "we expect to continue to see difficult market conditions."
  • Conference Call: 8:30 am EST

 

Odds & Ends

Analyst Watch:

  • Nada

212 Responses to “Thursday Mega Post”

  1. 1
    zman Says:

    TSO call starting now.

  2. 2
    zman Says:

    TSO call fairly depressing.

    Comment on California. Improving. Seeing gasoline flat YoY, seeing distillates slightly down to flat.

  3. 3
    zman Says:

    Analyst Watch: Dahlman cuts RRC to Hold from Buy.

  4. 4
    zman Says:

    TSO – no plan to raise debt or equity. Conditions in the 3Q difficult.

    If WLL opens close to the $43 level I’m likely to add a little more, depending on what happens to implied volatility in the options now that the quarter has been released. I may go out a month too.

  5. 5
    zman Says:

    Analyst Watch: RBC takes WLL target from $45 to $51, keeps Outperform rating.

  6. 6
    Wyoming Says:

    Bill,

    Careful on the CRR ceramic = higher economics via conductivity. The real difference will come later after some depletion and fluid phase change; by then everyone will have moved along. Sand, resin coat, ceramics will all give IP and PIP’s a good show, there are a few exceptions but your example is not one.

  7. 7
    BirdsofpreyRcool Says:

    TechTrader — 60/40 long trade for today.

    HeadTrader — “imho, gap up over 980 on spoos takes us to 1000 quicker than u think”

    Credit Market absolutely en fuego this morning.

    IG 110

    HY 90

    wowowowowow

  8. 8
    bill Says:

    crr on bexp well

    Over 2 million pounds of CARBOECONOPROP® were pumped for Brigham Exploration Company (Brigham) in conjunction with the completion of the Strobeck 27-34 #1H well in North Dakota’s Williston Basin. In their announcement, Brigham stated that the initial production rate from this Three Forks formation well was 2,021 barrels of oil equivalent per day, and further reported that this appears to be the second highest initial rate for a Three Forks completion. This result once again shows the validity of Economic Conductivity(TM) and how an incremental investment in high quality proppant can improve production and help optimize an operator’s return on investment.

  9. 9
    bill Says:

    ty for # 6

  10. 10
    zman Says:

    Wyoming – any rules of thumb you could provide on when you have to have ceramic (what bottom hole pressure regime, type of rock etc) vs RCS vs Sand to keep the fracs open would be helpful.

  11. 11
    zman Says:

    Someone needs to run a scheduling service for conference calls so that companies in the same industry don’t pile onto the same hour on the same day. OII opening well, I will listen to the WLL call at 11 EST and then hit the replay on OII.

  12. 12
    zman Says:

    If this broad market rally punches through to 1,000 I’ll be adding more VLO and perhaps some TSO puts. Light at the end of tunnel is tiny (in the form of stabilizing demand) vs the train that is over-stored distillate levels.

  13. 13
    zman Says:

    ZTRADE:

    WLL – Added (10) WLL September $50 Calls (WLLIJ) for $1.05 with the stock at $43.80 See today’s post for results of their quarter. Conference call today, 11am EST.

  14. 14
    choices Says:

    Very good on WLL, OII, Z. You nailed them both.

    Thanks.

  15. 15
    choices Says:

    Dman-what is your view of the commission schedule on options for Think or Swim-I’ve been trying to use them because they have so many bells and whistles but option commissions are about twice what I’m paying on TD Ameritrade.

  16. 16
    zman Says:

    re 14. Thanks.

    Current thoughts on the lack of real follow through on WLL. 1) people look at the chart and nervously at the broad market and say that both have had a good run

    2) got a comment from the JPM analyst that makes it sound like the second TFS test was disappointing given the rate. I bet they explain that better on the call. At 500 bopd and these prices it should still be quite economic. It is the second well, give the guys a break. The comment about acreage surrounding the BEXP well is just as good a news if you think this TFS test is a disappointment. The fact that the TFS is showing up across a broad swath of the play is more important than one well’s numbers.

  17. 17
    zman Says:

    OII breaking out now.

    As we are in the early middle of earnings season I once again have to give a positive review of the Sennheiser wireless headphones. Never miss a question or an answer because you had to hit the head, the water cooler or walk out to grab something from the car. Plus they have that cool 70s disc jockey look.

  18. 18
    zman Says:

    Ahh, there goes the WLL onward and upward but it is a move tied to the broad markets so a fade there likely means a fade here. Conference call in 1 hour, gas numbers in 30 minutes.

  19. 19
    zman Says:

    Crude up $1.80, taking back half of yesterday’s losses. Products notably stronger than oil itself.

    The move in refiners this morning is unconvincing.

  20. 20
    Dman Says:

    choices – yeah, good question. I tried changing it to one of their “ex/rate” schedules for when I wanted to trade larger numbers of cheap calls (eg expiry week). But I ended up just going back to their standard rate because it is very good for small order sizes, so that way you can scale into a call position without horrendous commissions.

    According to their commissions page, you can select your commission schedule to be the same as any of the major firms, including Ameritrade.

    i.e. go to

    https://www.thinkorswim.com/tos/myAccounts/displayRates.tos

    and click on the “step 2” menu & you’ll see Ameritrade there.

  21. 21
    zman Says:

    APA out with strong results by the way, didn’t have time to review, especially since I’m not in it now. They drilled 3 wells in the Horn River Basin (B.C.) with average IPs of 16 MM/d. Good news for EOG in terms of prospectivity, bad news in the form of “great, more gas, just what we need”

  22. 22
    choices Says:

    Thanks, D

  23. 23
    zman Says:

    Tater – when you get a chance can you peg resistance on OII. I know end of run is probably mid $50s but I figure there arre some points in between that are important too. Psych barrier at $50 for one.

  24. 24
    Nicky Says:

    Morning all.

    V up underway for the indices having had a few sessions of sideways for iv.

    I feel fairly sure we will hit 1000 on spx, after that 1007 but I am not really looking for anything beyond that and of course this can stop anywhere here.
    Then a correction back to the 950 area. Alternative – this is going to complete the whole rally and down we go.

  25. 25
    zman Says:

    Thanks Nicky.

    By the way, from a fundamentals refusing to get in line with demand and storage for natural gas, the latest supply numbers somewhat auger for me eating a hat in I think late August or early September.

  26. 26
    zman Says:

    OII touching $50. Those August $50 calls are waking up.

  27. 27
    zman Says:

    OII strongest name on the day in the OIH, CRR weakest. Missed taking puts on that one but have burned messing with their wide spreads one too many times

  28. 28
    Dman Says:

    http://www.film.com/features/story/ascots-first-edible-hat/28712456

  29. 29
    zman Says:

    71 Bcf, Street at 73, Z at 70

  30. 30
    zman Says:

    The Western region saw another slight withdrawal (down 1 Bcf). It was out there and Rockies Express is taking more gas east (to better priced markets). WLL and others have noted the shrunken Rockies gas differentials they are now benefitting from. Gotta be outstanding to see the plan working in the real world pricing environment. Very much tempted to go long some BBG.

  31. 31
    zman Says:

    Dman – I wonder if she would deliver the hat to my office.

    By the way, did you see my question regarding Think or Swim yesterday and whether or not it has a dynamic ticker graph for industry groups. I know I should try them out for myself but I’m lazy and it’s just easier to ask you.

  32. 32
    VTZ Says:

    choices – cheap commissions = interactivebrokers.com

  33. 33
    BirdsofpreyRcool Says:

    Seeing a Black Swan in the credit markets… companies lining up to do “drive-by” debt issues IN AUGUST. This never happens. NO ONE EVER issues debt in August!! They are viewed as pathetic losers, if they even try.

    This is a very real indicator of the demand for risk assets and the desire of people, institutions, SWFs to put money to work in our market.

    Deny it at your own risk.

  34. 34
    1520sbroad Says:

    BOP – talked to a bond fund wholesaler yesterday. she sells a short term corporate credit fund and said they have been stunned at the amount of supply they see coming. I think a lot of bond fund managers have had big inflows as folks bail out of equities but still want more return than treasuries.

    I do not see the 7 year auction going well later today. Problematic is the word.

  35. 35
    Dman Says:

    Z – #31 nope, must have missed it. Not sure exactly what you mean by dynamic ticker graph…

  36. 36
    zman Says:

    Of all the names I am playing for a positive move off earnings or the accompanying operations update, I have to say that I have the least conviction in my FSLR calls. Was pouring over old notes last night and I have enough for me to stay in through the call this afternoon but that one is often like GOOG on earnings day. Tumultuous to say the least. Numbers can beat and they can tumble on the wrong phrasing in the conference call (witness a couple of quarters back). Everything around here is buy at your own risk as you well know but I just want to communicate that that one, being out of my normal area of E&P and traditional energy is a bit more of a wildcard pick that my normal play.

  37. 37
    Dman Says:

    Ag commodities up with the stock market today, just like they were down with it yesterday. Seems like pretty much everything trading together. I just wouldn’t think that demand for wheat would be all that sensitive to unemployment claims. But apparently it is!

  38. 38
    choices Says:

    V-agree-IB is prob the lowest out there but they are a little more cumbersome in my mind in finding the option strike and month but maybe that is just me-must stay away from the video game mentality and do the work.

  39. 39
    Nicky Says:

    re #25 – you need a hurricane Z and fast!

  40. 40
    zman Says:

    Dman – basically it allows you to enter a ticker list and then watch live as bids build or fall – gives a percentage and a sideways bargraph – red = bad, green = good. As you’d guess they all pretty much move together and you can turn your head and it will have moved from one extreme to the other. Computer trading at its finest. One thing it does help with is entries and exits and especially for names you are watching that aren’t tracking group that day. I don’t focus on it but it is interesting.

  41. 41
    BirdsofpreyRcool Says:

    1520s — i know you know this, but i’ll say it for people who don’t know the debt mrkts well… the 7 yr auction not going well is not necessarily an indicator of the credit market weakening. As a matter of fact, in a recovery, you typically see treasuries sell off (or auctions are weaker), as people move out of riskless assets (treasuries) and into risky assets (corporate bonds, stocks).

    What IS problematic, is a govt with run-away deficit spending.

  42. 42
    bill Says:

    Did these guys act stupidly?

    http://news.yahoo.com/s/ap/20090730/ap_on_re_af/af_nigeria_violence

  43. 43
    zman Says:

    Nicky – Far be it from me to wish for one to head your direction.

  44. 44
    Dman Says:

    Z – I was looking at buying SPWRA at $22 not long ago. But my only fundamental argument was “a guy at Minyanville who knows his semiconductors really likes them”, which seemed a little thin. I guess I can wait for gap fillage 🙂

  45. 45
    kyleandy Says:

    another entry in the hat to eat contest http://www.odditycentral.com/wp-content/uploads/2009/06/edible-hat4.jpg

    z – when u paste something how do u hilite it??

  46. 46
    BirdsofpreyRcool Says:

    1520s — not sure people are bailing out of stocks… might be bailing out of money market and treasury funds. Can you check on that for us?

  47. 47
    1520sbroad Says:

    41 – bingo – why tie it up with lame yield when you can go buy a decent corp credit at a far better yield? or go buy equities?

    What you mean we can’t keep selling this stuff at super low yields? How are we going to pay for all this then?

  48. 48
    zman Says:

    Dman – yeah. I blew that SPWRA call when you last inquired.

  49. 49
    kyleandy Says:

    just answered my own question. hit submit!!!!!

  50. 50
    zman Says:

    Kyle – if you mean in a comment I don’t know. I’ll ask my tech guy if that is what you mean.

  51. 51
    zman Says:

    Speaking of yield, LINE closing on $22

  52. 52
    zman Says:

    Kyle – eh?

  53. 53
    zman Says:

    WLL and OII in 10 minutes. I will be on WLL.

  54. 54
    VTZ Says:

    One thing that could impact the bond auctions coming up is that the IMF has pledged to sell 400 tonnes of gold to central banks. If China decides to buy those instead of bonds… could get ugly for the bond market.

  55. 55
    choices Says:

    OII up over 8%.

  56. 56
    1520sbroad Says:

    #46 – sorry i was trying to say why buy government paper when you can go buy equities that have a lot more upside. I do see some good volume coming into stocks today.

    Last year there were a lot of folks that sold their equity exposure and have been trying to figure out how to get more return than the 19 basis points in money markets – i do think this group has been pushing into the fixed space in 09

  57. 57
    zman Says:

    Somebody really has to work out coordinating calls so they don’t overlap. Or cloning. If they could clone me that would be acceptable.

  58. 58
    zman Says:

    ATW – Anyone see a comment, stock rallying hard. Missed it again.

  59. 59
    Dman Says:

    Z – #40 I’ve seen something like that on other systems, but haven’t yet seen it on TOS. I’ll keep a lookout for it 🙂

  60. 60
    zman Says:

    WLL car should be started, cannot get in .

  61. 61
    Dman Says:

    crude up 4.5%, but the chart looks a bit of a mess. The gap to $62.25 didn’t quite get filled.

  62. 62
    zman Says:

    WLL CC Call #1

    just reading the press release so far

  63. 63
    zman Says:

    Dman – gap filled.

  64. 64
    zman Says:

    WLL changed accounting for hedges to a more simple method used by most of their peers (ie, mark to market).

  65. 65
    BirdsofpreyRcool Says:

    There are 45 slides in this presentation… WLL conf call is gonna take forever at this rate.

  66. 66
    zman Says:

    BOP – hear ya.

  67. 67
    zman Says:

    Re WLL – I think the stock is waiting for an explanation on that TFS well.

  68. 68
    zman Says:

    BOP – and I agree, they shouldn’t cover every detail. Hit the high points and take questions, don’t read the release!

  69. 69
    BirdsofpreyRcool Says:

    WLL — yeah… thought they might say it was only partial success on the frac job… but, they didn’t say that.

  70. 70
    zman Says:

    BOP – did they comment on it earlier in the call, I missed the first 6 minutes, or did they just read what was in the release?

  71. 71
    BirdsofpreyRcool Says:

    WLL — maybe they have a record number of people on the call and are taking the oppy to do a “This is Whiting” conf call.

    On the other hand, they already did the perpetual prefereds… they better not be gearing up for another equity issuance…

  72. 72
    BirdsofpreyRcool Says:

    WLL — they mentioned it, but didn’t say it was screwed up, or anything. So, assume it wasn’t.

  73. 73
    zman Says:

    Press release indicates they want to live within cash flow for back half of year. They try to do a deal now and they have to know it will be priced 20% in the hole.

  74. 74
    zman Says:

    Re 72. I would not assume that is the case. Question will be asked in the Q&A.

  75. 75
    BirdsofpreyRcool Says:

    yep… didn’t say i assumed no one would ask… i assume they WILL ask.

  76. 76
    zman Says:

    Hear ya BOP. Nothing new in the slides relative to last night’s pr so far.

  77. 77
    BirdsofpreyRcool Says:

    slide 19 is why KOG thinks their south of river acreage could be the best acreage… the pinchout of the Bakken increases the oil recovery.

  78. 78
    BirdsofpreyRcool Says:

    slide 22… didn’t know that WLL had such a large NRI. Thought they were more junior. So, this is positive.

  79. 79
    BirdsofpreyRcool Says:

    WLL is using almost 700 mboe of recoverable reserves for the Bakken play… bet that includes nat gas and NGLs too… you think?

  80. 80
    zman Says:

    EOG has said in the past they thought the TFS was more prospective outside of Parshall. Perhaps that applies to Sanish as well, not sure how many TFS wells have been drilled in the Sanish so far. WLL’s Louis and Clark prospect (that southern acreage referred to by BOP above) seems to be the focus for future TFS activity for WLL.

  81. 81
    zman Says:

    OII call just ended.

  82. 82
    Jay Reynolds Says:

    This is really worth reading… scathing, specifically mentions challenges to infrastructure protection and oil production. Summary: “Time to declare victory and go home”

    “A senior American military adviser in Baghdad has concluded
    in an unusually blunt memo that the Iraqi forces suffer from
    deeply entrenched deficiencies but are now capable of
    protecting the Iraqi government and that it is time “for the
    U.S. to declare victory and go home.”

    Read More:
    http://www.nytimes.com/?emc=na

  83. 83
    kyleandy Says:

    WLL call may never end!!

  84. 84
    zman Says:

    WLL CEO spoke for 50 minutes.

    Q&A starting now

  85. 85
    zman Says:

    WLL Q&A #1

    Efficiency gains – dwop – drill well on paper program – go through all efficiencies on paper to take to minimum days. They think they can get to 21 days, now 40. Drilled one in 25 days.

    WLL looking at increasing frac stages –

    Louis & Clark – when start drilling – early 2010 drill

    ….

  86. 86
    BirdsofpreyRcool Says:

    Duane is an ex-geologist, i think… he was with Unocal…

  87. 87
    BirdsofpreyRcool Says:

    oops…. nope. Duane is an ex-engineer. But, he did work at Unocal. We need more ex-geologists on the sell-side, IMHO.

  88. 88
    bill Says:

    i like wll oil hedges

    4 or 5 years 50 % hedged

  89. 89
    zman Says:

    WLL Q&A #2

    WEST or BOP – have you seen some good wells out of private Kaiser Francis in the Bakken, this is the JV partner.

  90. 90
    BirdsofpreyRcool Says:

    #89 is a West question… west seems to have a keen insight into the individual well program in the Bakken. Hugely impressive, west!!

  91. 91
    BirdsofpreyRcool Says:

    WLL — i missed a bit of Q&A… did anyone ask about the TFS well yet?

  92. 92
    zman Says:

    BOP – No

  93. 93
    zman Says:

    WLL Q&A #3

    $25 mm for 3 more wells at Sanish,
    $6 mm at EOR
    reductions at one of the exploration areas

    Their old presentation vs their new presentation doesn’t show an increase in the Bakken so this is new to me.

    reduction in an Eagle Ford project – didn’t know they were that far south and planning on playing that play

  94. 94
    West Says:

    Kaiser mainly investor ie SD & CHK,

  95. 95
    zman Says:

    WLL Q&A #4

    EFS – own some acreage in the Greenbranch Field, its HBP, people want to get in on their acreage. Have not had a good enough offer yet, may just develop it themselves.

    Reef – you know where Greenbranch field is?

  96. 96
    BirdsofpreyRcool Says:

    25% royalties is awfully high… don’t blame WLL for not chasing the EF

  97. 97
    zman Says:

    WLL Q&A #5

    EFS – they have enough acreage to drill 24 wells. That’s news.

  98. 98
    zman Says:

    Hear ya BOP – sounds like they may work up a well and drill next year … maybe then monetize it to some other sucker. Acreage is held by production so they can cherry pick timing. Look at the minute chart rally on the mention of anything EFS!

  99. 99
    ram Says:

    No Hurricanes!

  100. 100
    zman Says:

    WLL Q&A #6

    think the TFS works for the western half of the Sanish, maybe all the Sanish.

    BOP – I just missed it if he spoke about that well.

  101. 101
    zman Says:

    WLL Q&A #7

    Sounds like no acquisitions through year end at least, always looking but nothing waiting in the wings. Want to “drill their way through 2010”

    Is plan to stay within cash flow 12 to 24 months out? A bit coy on the answer, 25% bigger drilling program in 2010 based on current price strip. If they do a deal it would be for an accretive acquisition. Doesn’t sound like a deal happens to fund drilling.

  102. 102
    zman Says:

    WLL Q&A #8

    Service costs still coming down across the board, including the Bakken.

    “Hopefully we are again” – commenting about the recent conservatism of guidance.
    In other words they will continue to Bag the Street.

  103. 103
    BirdsofpreyRcool Says:

    if deal prices are not coming down with lower oil and nat gas prices, this rather indicates that industry people don’t think low energy prices are here to stay. I think some are talking about 1Q10 starting to see nat gas prices move up (depending on the weather, of course)… but low nat gas prices have a way of taking care of low nat gas prices. Interesting to hear deals aren’t shaking loose at “good prices,” tho… supports a recovery that is sooner than later.

  104. 104
    zman Says:

    WLL call ending. I will hang on to my calls for a bit, not adding for now, want to see the post call squawk box move. They ran through the list of upcoming conferences they will be at. I will see them at IPAA in San Fran at the end of September.

  105. 105
    BirdsofpreyRcool Says:

    hey, z… you going to host an “Energy Brain” hospitality room at IPAA??? You can drink California wine with Jim Volker.

  106. 106
    zman Says:

    Possibly. The last time I offered to buy drinks for the gang only Wyoming showed up and he’s a bud light kind of guy.

  107. 107
    BirdsofpreyRcool Says:

    ha! so is BHO, apparently…

  108. 108
    zman Says:

    Not that there’s anything wrong with that. Bud light kills brains cells as handily as any big thick Cab.

  109. 109
    BirdsofpreyRcool Says:

    For anyone who wants to see the poster child of the affects of debt on equity… look at GGC today. They restructured their debt and Moody’s took them off the “near-death” list and put them on the “highly-leveraged, but still have a chance at living” list. wow.

  110. 110
    West Says:

    BOP, did u get a hold of KOG and see if they r fracing that well this week ? Some thought out there that they have been waiting to get XTO crews that have been fracing their wells. Any color would be helpful. I’m definitely long going into that call with 1,000 bopd increase in production and maybe the results from the 5th well.

  111. 111
    BirdsofpreyRcool Says:

    West — thanks for the nudge. Give me a sec…

  112. 112
    BirdsofpreyRcool Says:

    West — not sure that thought is correct. XTO called to congrat KOG on their handling of the last well they drilled together. KOG operated and XTO said it was their “best Bakken well yet.” Will get back with more color…

  113. 113
    West Says:

    bop what was that well # ?

  114. 114
    1520sbroad Says:

    #109 – GGC – Wow is right.

  115. 115
    BirdsofpreyRcool Says:

    MIDDAY OVERVIEW

    · Another big rally with risk bought across asset classes; SPX +16pts (5pts off highs), credit tightens meaningfully (HY12 up over a pt), and crude breaks back above the $66 level. That said, our equity desk has not seen sponsorship of this move higher and have become better for sale throughout the morning (i.e. – people not necessarily chasing as we approach the much watched 1K level but buyers very much present and providing support to the market).

    · Strength today really just a continuation of last week’s rally (picking up where things left off on Thurs…..we had been in consolidation/digestion mode for Fri-Wed), though some specific catalysts helping: 1) Asian central banks calmed market worries – PBOC, BOJ, and others, all signaled to the markets that monetary policy would remain loose. 2) Earnings: Europe traded well overnight on back of earnings. In the US things look good on the whole – cards very strong (MA, V), life insurance rallies post results (LNC, HIG, AFL), and others too; 3) GE climbs 7% on the Goldman upgrade and B Frank comments; 4) Eco data: today’s jobless claims point in the right direction.

    · Sectors: strength pretty much across the board. Financials, industrials, and materials are strongest groups. Health care is up “only” 0.8% and is the weakest major group.

    · Corp Credit tightening nicely inline w/move in stocks; IG12 was 4bps tighter at best levels and HY12 still trading up over a full point as noon approaches

    · TSYs: 10s a bit lower today (yields are up ~4bp vs. yesterday). The 7 yr auction today (1pmET) the next catalyst. After today, the next coupon sales aren’t until Aug 11. The Fed will announce Aug 5 the size of the next coupon sales (the Fed will be selling 3s on Aug 11, 10s on Aug 12, and 30s on Aug 13).

    · Jobless claims –- Initial jobless claims rose to 584,000 in the week ending July 25 from 559,000 in the week ending July 18. The latest report is actually reasonably good news on the employment front. This is because July’s seasonal adjustment problems should now be largely behind us, and at this point in time claims are down 33,000 from four weeks earlier and 90,000 from the late March peak. Obviously claims are still high and pointing to substantial payroll losses, but things appear to be gradually improving.

  116. 116
    BirdsofpreyRcool Says:

    west — #113… #4 on KOG’s map… the long lateral at TSB

  117. 117
    BirdsofpreyRcool Says:

    7 yr auction went well

  118. 118
    zman Says:

    WLL – still not sure on the name of the field holding their EFS acreage. I don’t see a Green Branch field on the list, Greenbrier and Gilbert Ranch fields are in the wrong place for EFS. Hmmm’

    Stock at HOD and importantly, above previous high for this recent run.

  119. 119
    bill Says:

    did bexp announce results discussed in my posting # 8

    do you think bexp will get a pop

  120. 120
    zman Says:

    Starting the OII replay. Will let ya know if they said anything interesting.

  121. 121
    zman Says:

    Bill – that well was previously announced according to WLL. WLL did say BEXP has another well they are either fraccing or preparing to frac with 20+ stages so BEXP could run up into the expectation of those results.

  122. 122
    zman Says:

    Oil staying up $3+. So I guess yesterday’s sell off was indeed an overreaction.

    WLL setting sights on $45

  123. 123
    bill Says:

    yes i just found it

    http://finance.yahoo.com/news/Brigham-Exploration-Announces-iw-1537294448.html?x=0&.v=2

  124. 124
    zman Says:

    Bill – sounds like there is big expectations on the second well. Don’t know if they have that completed with data available by their call.

  125. 125
    zman Says:

    OII – still listening to the replay. Nothing bad to warrant the sell down from up 8% to the current up 6% falling the call. Probably just a bit of too far too fast. Continuing to hold.

  126. 126
    zman Says:

    Crude up $3.50 to 66.80, almost offsetting all of yesterday’s swoon now. The 12 month strip is up about that much as well, puts it around $73.

  127. 127
    zman Says:

    BOP – do you look at preferred’s in addition to bonds? Wondering about the WLL.A’s hitting a new high here.

  128. 128
    zman Says:

    Interesting, I now see strikes in dollar increments on SWN. Did not see those yesterday.

  129. 129
    BirdsofpreyRcool Says:

    z — prefereds are a bit of a different beast… altho, they pay dividends (and not “interest”), so, would guess they have a tax advantage over debt. 1520s, is that correct?

  130. 130
    zman Says:

    ZTRADE:

    SWN – Added (10) SWN August $42 Calls (TKQHC). Obviously risky with earnings tonight and their call tomorrow.

  131. 131
    1520sbroad Says:

    #129 – right now corp preferred divs and interest on bonds are treated the same – 15%. Corporations can exclude 70% of div income if they pay tax.

    this may change shortly for individual tax payers.

  132. 132
    1520sbroad Says:

    big difference between prefs and debt is the idea that preferred divs can be suspended without default/bankruptcy. How they are treated after being suspended vaires depending on how the prefs were issued. Some prefs can set up as convertibles, floaters off a certian interest rate, loads of new variations now that everyone had to issue tons of them in late 2008-2009.

  133. 133
    zman Says:

    1520 – any thing odd about pfd divs in a non taxable account? I’d guess not since the distribution has already been taxed.

  134. 134
    tater Says:

    Wow 130 posts by mid-day. You guys are busy.

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

    60 min chart at the bottom of the list. Price is playing in the Fib lines that I have drawn, but there is really no help for trading purposes to be found there. Playing in that top third just above 48.83 so it could easily make it all the way back up to 54.21 gap or it could just roll over and die here. I peg the number 54.21 as resistance, but not much help other than that.

    Very much agree with Nicky’s SPX level around 1007 (I see 1009, same thing).

  135. 135
    zman Says:

    Thanks much T. You may not have noticed but you’ve been pretty spot on with the levels lately on the ones I’ve been asking for.

  136. 136
    1520sbroad Says:

    pref divs treated like any other div in non-taxable accounts.

    Only odd ball quirky thing i can think of would be some sort of MLP preferred that paid out a distribution that would then push someone over the $1000 phantom income limit. I don’t know if there are any MLP’s that have preferreds though.

  137. 137
    zman Says:

    1520 – that’s what I was thinking of and yep, doesn’t apply here. Are the preferreds issued in the last couple of months paying much better yields on the whole. I don’t normally play em by I like the idea of getting paid to wait in something like WLL that will have some nice growth when prices recover more. Only 6.25% dividend when issued, thought it would have been higher.

  138. 138
    zman Says:

    NG up 18 cents, more than recovering everything from yesterday. Still think I’ll be eating a hat, shorts just not brave in the face of this big equity rally. They will reload soon. Heck, if gas does someday get back to $10 it will just get regulated anyway, lol.

  139. 139
    tater Says:

    Seriously been sitting with lawyers for the past week. Lots of fun. I swear some of these guys know more F’ing ways to get cute than a 2 year old. I always thought that I wasted my law school tuition by not practicing, but I think I’ve saved that much and more this last week by knowing when to call BS on more than a few little contract clauses.
    Sorry for the rant. Insert Shakespeare quote here.

    I’ve been looking at levels late at night. I’ve been wrong about this move from the beginning of the year. It just keeps going and going. Sage advice I saw somewhere, don’t argue with the market. Fortunately I’ve been too occupied to have played and lost, so I am still idle looking for the turn back down. Wonder if it will come at 1007ish. Looks to me to be the 1/3 retracement from Oct ’07 highs to lows. That is an area that should be approached very carefully, as I’m sure that it will be (is?) all over any TA posts.
    .

  140. 140
    elijahwc Says:

    Hee Hee: From Zerohedge

    http://www.zerohedge.com/article/cnbc-viewership-down-28

  141. 141
    1520sbroad Says:

    Z – i was just looking at that WLL pref – it has a conversion feature that added some interest when they issued it. That is likely how they got away with only 6.25%.

    The conversion feature is convertible to common at holders discretion to 2.3033 shs of common. right now you buy the pref and you pay roughly $53 per common -not a great deal. The 6.25 isn’t really worth that kind of premium unless you thought the common was going above $53. You do get paid to wait though.

    If you look at their common when they issued this back in mid June the stock had been trading above the conversion price when they issued it. It was issued at $100 and converted to 2.3033 shs of common = $43.4163/common. Basically they timed the pref sale very well.

    Watch the spreads on $100 par preferreds – the spread on that WLL pref is $1.25 right now.

  142. 142
    zman Says:

    Thanks much 1520.

    Eli – LOLOLOLOL. Wow, and I thought I was the only one sick of Kudlow. Fast Money is right up there too, rated down 39%. LOLOLOLOL. Funny that JC is close to flat.

  143. 143
    zman Says:

    Also, make sure to click on the cleavage link in 140. I recall when she was on the morning show a few weeks back and thought she did a good job.

  144. 144
    ram Says:

    The comments in the cleavage section can be somewhat entertaining.

  145. 145
    1520sbroad Says:

    Z- quick list of high yield preferreds that are still paying: not for the faint of heart. Some very interesting stuff still out there in the preferred space.

    AKF – ambac 5.95% trading at 4.30 yield = 34.50%

    RAS pr A, B, C – RAIT Investment Trust (a reit) all trading around $8-9.00 – yields in the mid 20% range. They just declared divs to be go ex on 9/1/09.

    F pr A – Ford Motor – 7.50% trading at $17.50 yield is a relatively tame 10.75% – goes ex on 8/24/09

  146. 146
    Wyoming Says:

    Bud Light = 4 hour drive home after an early rise. Clue to the past is “Animal House” no kidding. Got to go.

  147. 147
    zman Says:

    Thanks 1520.

  148. 148
    choices Says:

    agree on Kudlow but I think Dennis Kneale far surpasses Kudlow in levels of nausea-it usually boils down to a shout fest, much like many of the shows these days.

  149. 149
    zman Says:

    FSLR rallying into the last hour, again, that one I have less visibility on than I’d like which is why I’m in a September call.

  150. 150
    zman Says:

    SWN also improving as we approach the close and 2Q numbers.

  151. 151
    RMD Says:

    LINE followers might want to listen to VNR’s conf. call this morning as they both are fully hedged, both have internal mgt, in different areas though. It’s quite clear on the call that VNR will be doing a financing to pay for a 2nd S. TX acquisition from Lewis Energy, and maybe more after that. Lewis is pvt but sounds like they are going after the Eagle Ford in an increasing way.

  152. 152
    BirdsofpreyRcool Says:

    a sell program just kicked in

  153. 153
    AAA Says:

    No kidding…any news?

  154. 154
    zman Says:

    RMD – not a lot of yield for an MLP, what am I missing?

    BOP – yep, persistent one too.

  155. 155
    zman Says:

    AAA – nothing I see.

    For VTZ

    Merrill trims $ forecast:
    http://www.marketwatch.com/story/merrill-cuts-us-dollar-view-as-stocks-gain-2009-07-30

  156. 156
    BirdsofpreyRcool Says:

    The sell program kicked in on no fundamental news. My trading desk (HeadTrader) got im’d about 1 sec before it happened. I’ll pass along more color when i get it.

  157. 157
    BirdsofpreyRcool Says:

    HeadTrader called it an “eprem sell program”… has to do with the difference between the cash and futures market + a little something else (which I don’t know)

  158. 158
    Denise Says:

    Godd afternoon,
    Not to be a killjoy at your party
    but wanted to share this by Jeff Cooper(whom I respect very much )told a large consulting client today.

    “I could always be wong but I would sell my positions between now and the weekend.
    The market could go higher but the upside is peanuts and the risk is the elephant in the room”

  159. 159
    Denise Says:

    Excuse my poor spelling-
    great earnings calls lately Z. You have been spot on!

  160. 160
    BirdsofpreyRcool Says:

    Denise — fwiw, i agree with the short-term sell sentiment. It’s like the rubber band has been stretched too far, too fast.

    But, the underlying structure is there for the market to fall back, consolidate, then continue to move higher. The credit market is pouring waterfalls of liquidity (private capital, this time around) into the hands of corporations. This whole thing started with the Credit Markets cracking, then freezing up completely. We have almost completely reversed that now. Amazing rally in bonds over the last couple of weeks. And fund flows into corporate bond funds (including high yield funds) insure that the credit rally has legs.

  161. 161
    jat Says:

    GE financing newsire

  162. 162
    zman Says:

    Thanks Denise. And I don’t disagree with your guy on the market in general. Don’t know if 1 day left is all there is but the upside would seem to be stunted from here for the broad markets. I have finger on several triggers, more concerned about the broads than the fundamentals for my individual names by a mile.

  163. 163
    zman Says:

    Definitely has that saved by the bell feel to the end of the day. What’s news on GE, thought no breakup and all were happy, lol.

  164. 164
    zman Says:

    Beerthirty

    FSLR jumping $10+, don’t see pr yet

  165. 165
    john11 Says:

    I heard comment by Credit Sight re GE needing as much as 14B rather than 7 -12B that street was looking for.
    BOP would be more qualified to comment than I.

  166. 166
    jiveyjr Says:

    First Solar trading up ~$10 following earnings (173.55 +5.56)
    Spiked as high as $188.55 Resistance at $187.50. Last trade at $184.40

    way to go Z

  167. 167
    BirdsofpreyRcool Says:

    Obama making comments about expecting 2Q GDP to show contraction when it’s reported tomorrow… but he “hasn’t seen the official figures yet.”

    HA! I SEE nothing… I HEAR nothing…

    right.

  168. 168
    BirdsofpreyRcool Says:

    CHK on the tape talking about “involuntary NG production curtailments later this summer.”

  169. 169
    BirdsofpreyRcool Says:

    CHK also talking aboout boosting their reserve estimates for YE.

  170. 170
    1520sbroad Says:

    Z – i think you are going to be busy this afternoon…

  171. 171
    jat Says:

    165 was the comment to which I was referring. Credit insight saying needs 14bln injection

  172. 172
    zman Says:

    1520 – yep, but its a good kind of busy

  173. 173
    BirdsofpreyRcool Says:

    Nothing we don’t already know… but this is targeted at debt investors.
    ————————————-

    Fitch: U.S. Oil & Gas Sector’s Credit Quality to Weaken
    2009-07-30 20:20:32.408 GMT

    FITCH: U.S. OIL & GAS SECTOR’S CREDIT QUALITY TO WEAKEN AS
    COMMODITY FUNDAMENTALS REMAIN UNDER SIEGE

    Fitch Ratings-Chicago-30 July 2009: In its semiannual ‘Oil &
    Gas Insights’ special report, Fitch Ratings expects that lower
    commodity prices will further weaken the credit quality of the
    U.S. Oil & Gas sector through 2009 and into 2010. Fitch expects
    the drilling & services and refining subsectors to remain the
    most pressured as they have less flexibility to cut capital
    expenditures in a timely manner than upstream companies in the
    current downturn. Current supply and demand fundamentals for
    both crude oil and natural gas continue to point toward
    weakening prices, although natural gas prices remain under more
    intense pricing pressures as supply from U.S. onshore
    production and expectations of increased LNG imports continue
    to weigh on the market.

    The report, released today, says the drilling & services sector
    is suffering from an imbalance between supply and demand with
    weakened commodity prices having reduced demand just as supply
    of newbuild rigs continues to hit the market. Fitch expects the
    sector to continue to be under pressure from customers to
    reduce prices, driving margins lower in 2009 and 2010. Upstream
    companies continue to reduce capital expenditures in response
    to lower commodity prices, and falling 2010 strip prices would
    indicate little propensity for a significant increase in
    spending levels. While drilling and service companies are
    benefiting from previously signed contracts, Fitch expects
    credit profiles to decline from current levels.

    For the downstream, the combination of soft product demand, low
    plant utilizations, and compressed crude oil spreads continues
    to pressure refining economics and suppress industry earnings
    despite the presence of decent crack spreads. Deep conversion
    refiners with significant coking capacity have been
    particularly affected by current market conditions, as crude
    oil differentials, which historically created feedstock
    advantages for this group, collapsed. Fitch notes that one
    rising threat that emerged over the first half of the year was
    fast-rising crude oil, which appears to have become somewhat
    decoupled from underlying product demand in North America.

    For crude oil markets, falling demand levels continues to be
    the biggest driver of falling prices. The last time demand for
    oil declined due to a severe economic recession and demand
    destruction from high prices, it took 10 years for demand
    levels to reach their previous highs. Global oil supply
    concerns have also been mitigated due to the significant
    increase in spare capacity from OPEC producers. While
    fundamentals continue to indicate depressed pricing for oil,
    Fitch acknowledges that non-fundamental factors could again
    drive crude prices higher. Fears in the market of rampant
    inflation stemming from the quantitative easing actions by
    central banks around the world intended to stem the global
    economic recession could be a catalyst for higher crude oil
    prices.

    While oil markets continue to struggle with falling demand
    levels, natural gas markets are plagued with rising supply and
    falling demand levels. Despite falling natural gas prices,
    supply of natural gas during the first four months of 2009 is
    up 2.6% over 2008 levels. Demand, led down by weak industrial
    demand and mild weather conditions, has only served to compound
    the problems facing natural gas prices. Because of the
    significant negative fundamentals facing natural gas markets,
    Fitch sees little opportunity of a rebound in prices in 2009.
    Falling 2010 forward prices could support reduced drilling by
    upstream companies and help bring the market into equilibrium
    during 2010. Fitch continues to expect natural gas prices
    during 2009 and perhaps 2010 to be closer to the Fitch stress
    case prices of $3.50/mcf (2009) and $3.75/mcf (2010).

  174. 174
    zman Says:

    I’ll have something out late on FSLR.

  175. 175
    zman Says:

    FSLR announced rebate program in Germany to defend their position. Might as well have shot the stock in the head.

  176. 176
    zman Says:

    FSLR CEO could give lessons in snatching defeat from the jaws of victory. Great numbers, but a hazy view of a rebate program in their biggest geographic regions just took the stock from 190 to 165.

  177. 177
    bill Says:

    swn just reported

    http://finance.yahoo.com/news/Southwestern-Energy-Announces-prnews-534080043.html?x=0&.v=1

  178. 178
    john11 Says:

    SWN selling on release, not sure why.
    http://finance.yahoo.com/news/Southwestern-Energy-Announces-prnews-534080043.html?x=0&.v=1

  179. 179
    john11 Says:

    I took some at 39.

  180. 180
    zman Says:

    SWN guidance is way low Q3

  181. 181
    bill Says:

    good news is they are doing 1 bcf pe day

    bad news boardwalk problems will limit production guidance lowered

    range for 2009 from 289 to 292 Bcfe to 278 to 288 Bcfe, or approximately 45% over 2008 levels (using midpoints

  182. 182
    bill Says:

    i asked the question the other day if boardwalk would be an issue

    actually , swn is being forced to shut in production

    on 3rd thought, thats good isn’t.. why sell in the 2’s when you can get 4 or 5 in q4

  183. 183
    zman Says:

    I was aware of the boardwalk lateness but SWN didn’t broadcast they’d be up against it if it didn’t get down by 3Q. Agree, better to sell at higher prices, but this is a pricey name and people are used to seeing growth get revised up quarter after quarter. I’ll probably add more if it tanks tomorrow. The quarter was big, just not pipe to get out more, a bit surprised to see them not able to get volumes at least as big as 2Qs out in 3Q.

  184. 184
    bill Says:

    production for q3 is 66 to 68 bcf and 50 of it is hedged

    As of July 30, 2009, the company had protected approximately 50 Bcf of its third quarter 2009

    as far as im concerned, i dont care if they curtail 20 bcf to a later period

    i have 2 concern

    1. next yr lack of hedges
    2. swn valuation vs it peers

    the ceo seems to have left (retired) right at the top

  185. 185
    bill Says:

    does this impacts hk?

    so far, i havent seen any pops in the ng space on earnings news

  186. 186
    zman Says:

    NFX is 70% ng.

    Re HK – yes, it would, too a much smaller extent though.

  187. 187
    bill Says:

    hk down after hours 2 % down with swn

    aaaaaaaarggggg

  188. 188
    bill Says:

    chk has an update

    ALERT ALERT

    http://finance.yahoo.com/news/Chesapeake-Energy-Corporation-bw-2268416321.html?x=0&.v=1

  189. 189
    zman Says:

    Just reading through the SWN pr now, the reduction is due to lateral repairs. In general, companies receive a “get out of jail free pass” for that kind of thing after the initial reaction in the stock.

  190. 190
    bill Says:

    MENTIONS KEY BUZZWORDS

    Completes Prolific Wells in the Haynesville, Marcellus and Barnett Shale Plays and Announces Strong Results from Granite Wash Plays in the Anadarko Basin

  191. 191
    bill Says:

    The company is not currently curtailing production, but may do so again later this summer or fall as market conditions dictate. The company also expects that rising pipeline and gathering system pressures during the next few months will likely result in involuntary natural gas production curtailments across the industry.

  192. 192
    zman Says:

    Bill – there’s not a lot of volume in the after market. It is subject to bigger swings. Unlike SWN, HK’s main growth is not derived from the Fayetteville and in my book this is an over reaction.

  193. 193
    ram Says:

    A lot of people, with a fair amount of volume is dumping SWN in AH trading – bummer.

  194. 194
    bill Says:

    HAYNESVILLE IS A GAME CHANGER

    THE US NEEDS NG POWERED CARS

    * The CLD 23 H-1 in Caddo Parish, LA commenced production on June 22, 2009 and achieved a peak rate of 29.1 mmcfe per day and a pipeline-constrained first 30-day average rate of 15.3 mmcfe per day.
    * The Frith 29 H-1 in De Soto Parish, LA commenced production on June 27, 2009 and achieved a pipeline-constrained peak rate of 23.7 mmcfe per day and a pipeline-constrained first 30-day average rate of 14.2 mmcfe per day.
    * The Chesapeake Royalty LLC 30 H-1 in De Soto Parish, LA commenced production on June 27, 2009 and achieved a pipeline-constrained peak rate of 22.6 mmcfe per day and a pipeline-constrained first 30-day average rate of 15.2 mmcfe per day.

  195. 195
    zman Says:

    Ram – I show maybe 10,000 shares in the last 20 minutes. A lot of it seems to be buying. I personally think the AH is pretty meaningless until the big boys with cash weigh in. If it gets clocked in the morning I will likely be a buyer. The quarter was a lot better than expected. The problem is logistical and that will get solved. In the meantime they are in no cash crunch and will still be quite productive. Not a bummer.

  196. 196
    zman Says:

    Bill – those results should be as least as good for HK as the SWN news is “bad”.

  197. 197
    ram Says:

    That’s a lot of ng that has to be put to good use.

  198. 198
    bill Says:

    Granite wash is even better than Haynesville has oil too

    hree notable wells completed by Chesapeake in the Colony Granite Wash during the 2009 second quarter are as follows:

    * The Balzar 2-7H in Washita County, OK commenced production on June 11, 2009 and achieved a peak rate of 23.6 mmcfe per day (including 1,800 bbls per day of oil) and a first 30-day average rate of 17.1 mmcfe per day (including 1,300 bbls per day of oil).
    * The Miller 1-21H in Washita County, OK commenced production on June 27, 2009 and achieved a peak rate of 22.7 mmcfe per day (including 1,500 bbls per day of oil) and a first 30-day average rate of 16.0 mmcfe per day (including 900 bbls per day of oil).
    * The Martin 1-16H in Washita County, OK commenced production on May 30, 2009 and achieved a peak rate of 19.7 mmcfe per day (including 1,400 bbls per day of oil) and a first 30-day average rate of 15.4 mmcfe per day (including 1,100 bbls per day of oil).

    chk would be a money machine with ng at 7 or 8

  199. 199
    ram Says:

    Sorry – I will crawl away.

  200. 200
    zman Says:

    Ram – not trying to discourage dialogue, I just don’t think the SWN news is that bad. The quarter was outstanding, much higher than expected production, lower costs and I have not gotten to the operations update yet but IPs in the Fayetteville resumed their upward trajectory which is one of the things I and other analysts were looking for with this release.

  201. 201
    BirdsofpreyRcool Says:

    ram — don’t crawl away… I would miss you! 🙂

  202. 202
    bill Says:

    197

    >That’s a lot of ng that has to be put to good use.

    i was thinking the same thing, drilling has been cut to the bone and everyone is reporting gains in production

    wheres the drop

    i think the weak prices extend into 2010

    bho is missing out on jumping on ng bandwagon– i id like to see govt money put ng stations all over the place and cash for clunkers for new ng vehicles

    the dems dont like any fossil fuel

  203. 203
    zman Says:

    Bill – I think gas gets weaker before it recovers. It’s going to take time to work through the deferred completions and the big horizontal IPs. But at the end of the day, conventional production is still the majority of gas production and that declines by 30 to 35% in aggregate per year. Can’t fight that with the current rig count. I suspect gas troughs late 3Q into October and November. Then, forward looking futures prices will be looking at Bastardi’s weather forecast.

    I completely agree on the transportation front but you already knew that!

  204. 204
    Wyoming Says:

    http://www.moscowtimes.ru/article/1009/42/379963.htm

  205. 205
    bill Says:

    bho doesnt allow drilling off of florida but the russians and cubans can come in and do it..amazing

  206. 206
    bill Says:

    clunker for cash stopped

    lasted 3 days lol

    http://finance.yahoo.com/news/AP-sources-Govt-to-suspend-apf-3529110957.html?x=0&sec=topStories&pos=1&asset=&ccode=

  207. 207
    zman Says:

    Packman – you picked Towlie as an icon at SA? Now that’s funny.

  208. 208
    zman Says:

    SWN post is up.

  209. 209
    Wyoming Says:

    BHO does not even want to drill on the mainland.

    Confiscate “illegal” Bush leases
    Repeal tax incentives
    Increase existing royalties
    Repeal “Halliburton” frac fluid exemption and attempt to make it a hazardous material
    Ignore Nat Gas in all alternative fuel plans, takes an Okie to introduce legislation, and thankful for that.

  210. 210
    PackMan Says:

    http://market-ticker.org/archives/1274-VIDEO-Ticker-TRIN-Data-Dislocation-Spikes-Market.html

    must watch this…

  211. 211
    PackMan Says:

    Z – glad it amuses you ! (that’s the point)….

  212. 212
    RMD Says:

    re: 154: VNr yields about 200 BP more than LINE (but I turned off my stock stuffso that’s a guess).

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