30
Sep

Wednesday – Oil Preview Plus More IPAA Comments and The Natural Gas Supply Slide Show

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Market Sentiment Watch:  ADP employment came in at - 254K vs Action Economics's forecast for ADP of -170K and last month's reading of -298K. The second quarter GDP revision came in at down 0.7% vs a forecast of -1.2% and the last read of -1.0%. We will get a look at the Chicago PMI 15 minutes after the bell. Oil is gaining early on dollar weakness but natural gas is trading tentatively following the release of supply figures that were, on the whole, an improvement over previous 2009 monthly data (see supply slide show below).

In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Oil Inventory Preview
  4. Stuff We Care About Today
  5. Odds & Ends

Holdings Watch:

  • $10KP II:

    • $18,000
    • 46% Cash

 

  • Yesterday's Trades:  None


Commodity Watch:

Crude oil eased $0.13 to close at $66.71 yesterday. After the close, the API released another mixed set of data with a bigger than expected build in crude inventories due to higher imports and a surprising drop in gasoline stocks. This morning crude is trading up around the $67.50 with a small retreat in the dollar. 

Natural gas inched up $0.04 to close the day at $4.88 yesterday after having fallen as much as 20 cents early in the day. Gas rallied from its lows before the EIA released their 914 (gross withdrawals estimates) which showed more noticeable declines in lower 48 natural gas production. This morning gas is trading off a dime plus this morning on no news, reversing early gains...some traders obviously still not satisfied with the pace of production declines.

  • Tropics Watch: All quiet on the Atlantic Front - lots of shear is keeping system formation down.
  • Early Read On Natural Gas Storage: 63 Bcf (looks a bit heavy to me given the weather)

Oil Inventory Preview


API Watch:

  • Crude UP 2.8 mm barrels
    • Utilization only off 0.1%
    • Imports up again, up 278Kbopd (so that would be most of the delta to analyst estimates
  • Gasoline DOWN 1.7 mm barrels - expected a small build here which would be normal for this time of year.
  • Distillates UP 2.3 mm barrels - last week API showed this down sharply so perhaps they are squaring their numbers. Still expect a smaller than expect build or a draw down on distillates tomorrow from the EIA report. 


Natural Gas Supply Slide Show:

 

The EIA released their 914 (gross withdrawals) data and their Natural Gas Monthly with data for the month of July 2009 today. Each month we prepare a slide show highlighting the key moving pieces of this of the U.S. natural gas production picture. Each month this year, we along with many analysts and traders have been left unimpressed with the declines demonstrated in the key producing regions and in the aggregate production data. Not this month. 


Key Takeaways and Caveats: Most of this is contained in the slide show that follows but for those of you who don’t like pictures …

  • Total production for the first time since May 2006 is down on a year over year basis without the aid of hurricane related shut ins.
  • U.S. Lower 48 natural gas production was 58.9 Bcfgpd,

    • down 0.2 Bcfgpd from year ago levels.
    • down 0.6 Bcfgpd from June
    • Since the Spring 2009 peak, Lower 48 produciton is off 0.9 Bcfgpd (1.4%)
  • Texas, the largest piece of the U.S. production pie (32% of production), continues to show noticeable declines

    • Texas production is down 1.5 Bcfgpd from its November 2008 peak (down 7%)
    • Production is donw 1.0 Bcfgpd since March 2009
    • Rigs have recently stabilized but I don’t expect a meaningful bounce until gas prices are firmly above $6 / MMBtu.
    • Caveat: There are lots of drilled but not completed wells in Texas (100s) so expect to see a slower decline as prices creep higher and these wells are quickly turned to sales.
  • Louisiana: Hockey stick action – Haynesville Shale completions continue to impress.

    • At 7% U.S. production, this is one of the few growth drives at current prices.
    • Company after company plans to hike their well count by the beginning of 2010, regardless (or nearly so) of prices (from HK’s mouth today) but CHK and others are looking to add rigs despite low prices to get acreage into HBP status.
  • Other States production is plateuing.
  • Wyoming – production took a dive, numbers are probably in part related to crude shut ins that occured over the summer as the Bakken play bumped up against capacity and weak gas prices in late Spring. This probably bounces back a bit later this year.
  • New Mexico – trending lower.
  • Oklahoma – Blame NFX and FST and host of others for following their Woodford Shale success with a non shale horizontal play in the Granite Wash.
  • Nutshell: The long awaited production declines are beginning to become more noticeable. As basis differentials shrink in various regions, it becomes clear that curtailments are not the only limiting factor in the recent smaller than expected weekly storage data.

Stuff We Care About Today

SD Inside Buys: Welcome change from the recent spate of E&P insider selling.

  • Two directors adding 20,800 and 25,000 shares respectively.
  • Nothing says confidence in your current thinking on a deal like insider buys. --

GMXR Operations Update:

  • 3Q09 Production ~ 3.4 Bcfe, in line with prior guidance

    • up 2% sequentially
    • down 4% YoY
  • 1 rig running in the Haynesville,
  • Costs continue to come down with most recent ~ 5,000 lateral well coming in under $7 mm,
  • 2 most recent long lateral Haynesville completions had first 30 day average production of 5.7 MMcfepd each which is solid for this part of the play,
  • They present at IPAA at 7:10 pm EST 

IPAA Day 1 Wrap

HK Wrap - Nothing in the way of new well data to see but:

  • Floyd seems more than a little confident they will beat their 2H09 volume guidance
  • Think they will have all their Haynesville leases captured by mid 2011, spending same next year as this year to do it. Getting a lot more wells per rig per year.
  • Floyd noted that they will be able to talk about some Bossier shale tests in the near future. This could mean significant incremental reserves on the same acreage.
  • After the recent stock deal and the Permian asset sale, HK is about 30% net debt to equity. Their borrowing line was reaffirmed at the expected $1.5 B, or $1.3 B after the sale closes, all available.


VQ - analyst day next week.

  • Seeking a partner in California oil play
  • Texas -  they have an override interest, carried by DNR
  • AXAS - convoluted financials. Sounds like they are coming out of a long tunnel.
  • highly hedged for the long term
  • long reserve life - 16.9 years
  • They are taking MLP assets into a C-corp structure next week. Long life reserves, largely HBP, cash flowing, highly hedged.... hmmm.--
  • Areas of interest: Bakken - acreage 60 K net acres with 2nd TFS well about to spud (small interest), Cana, Eagle Ford, Haynesville, Ellenburger test successful in W. Texas
  • Push is for oil,
  • Selling properties  that don't fit. I may work this up after the dust settles a bit. 

IPAA Day 2 Thoughts:

See full schedule here

PXD - 11 am EST

  • What I’m Looking For: Comments on well #2 in the E.F.S. Unlikely but could give us a hint as to where it is and perhaps more on the mechanically botched #1 well.

UPL - 11:50 EST - High multiple gas, always worth a listen

ROSE - 12:15 EST

  • What I’m Looking For: Possibly results from two E.F.S. wells and an update on their first test in the Montana Bakken.

RRC - 12:40 EST - ditto the UPL comment

SWN - 1:30 EST

  • What I’m Looking For: Confirmation that things are progressing better than expected with repairs to takeaway capacity coming out of the Fayetteville Shale. Would like to hear them say the gas strip is forcing them to take on some hedges in the early part of 2010.

CRZO - 1:55 EST

NOG - 8:25pm EST - I don't recall listening to this Bakken player speak before, time to listen.

Odds & Ends

Analyst Watch:

  • Zip, nada, nothing

Worth Reading Watch:

 

173 Responses to “Wednesday – Oil Preview Plus More IPAA Comments and The Natural Gas Supply Slide Show”

  1. 1
    zman Says:

    If you saw TPH’s comments on natural gas you know that I pretty much agree with their read. Good use of the word Eureka! in the sentence “not a Eureka moment” but their point is that declines will be bumpy and we are moving in the right direction. They pointed out that sell siders are already disappointed with the numbers and I can tell you having been one, many will be slow to adopt a more bullish tone on gas as many of them don’t like to see change until it slaps them in the face, especially on the macro. They all know the declines are coming but will pooh pooh the numbers until they can show you a chart that looks like a cliff divers dream and as TPH correctly states, gas will be $8 (or I’d say, some significantly higher than $6 number) and you will have missed a big move in the gas levered group.

  2. 2
    BirdsofpreyRcool Says:

    KOG with some impressive pre-mrkt moves on no new news.

    It must be that “morning star” thing-y… thanks, Jerome!

  3. 3
    BirdsofpreyRcool Says:

    Between TPH and SMH, here are a list of gassy go-to names (in no particular order and ignoring services) — XTO, XCO, KWK, CRZO, SD, GMXR, RRI

  4. 4
    BirdsofpreyRcool Says:

    (make that, “here IS a list”… how i do hate bad grammar…)

  5. 5
    BirdsofpreyRcool Says:

    Ramdom Comments —

    Last day of the quarter… Cramer out with an article this morning that says the Bearish Funds are going to get smacked, when quarterly results are emailed out… just like Bullish Funds got smacked, one year ago. Will make for redemptions. And redemptions make for liquidations. And liquidations of Bearish Funds means more buying.

    TrimTabs out with their weekly data, showing that mutual funds have only 4% cash on the sideline. But, that does not measure the affect of investors in fixed income funds moving into equity funds at some point.

    TechTrader at 60/40 short today.

    HeadTrader thinks we are stuck in a trading range.

    Employment Report on Friday… can’t see moving much (one way or the other) ahead of that.

  6. 6
    zman Says:

    NG down a penny now.

    RRI? RRC maybe.

  7. 7
    BirdsofpreyRcool Says:

    Funny… TPH wrote RRI in their morning note… but, you’re right, has to be RRC. Good catch.

  8. 8
    BirdsofpreyRcool Says:

    Interesting that HK is NOT on either list… think Floyd has stepped on just a few too many 2ndary toes. But, if the stock starts running, people will forget.

  9. 9
    zman Says:

    BOP

    Maybe that’s the case. I think its a short sighted though. Why?

    Highly hedged – maybe that’s the minus.

    Capital budget – getting more set in stone than in recent memory

    Operating costs – lower than most of the group

    Production growth – 30 to 40% next year, that will be Best in Show or runner up.

    Deals done recently – no need for one soon. Line undrawn at $1.3 billion, more monetization of non core will occur.

    Debt to Cap at 30% now, far cry from the high 40%s we are used to seeing, so the balance sheet has been smartly bucked up.

    Valuation – not at the normal high for the stock but a couple of multiples low suggesting a move on 30 isn’t out of the cards.

  10. 10
    1520sbroad Says:

    article in the WSJ this morning about small local fleets of trucks converting to CNG for their delivery trucks. Cites a couple of big beer distributors in the NYC area. I couldn’t find a link at wsj.com – article is in 2nd section page 5. I didn’t realize the federal stimulus can kick in up to $32,000 for purchases og cnf trucks

  11. 11
    BirdsofpreyRcool Says:

    z — forgot to include CHK on TPH’s list. SMR is less keen on ir, as they think Aubrey gets sucked into looking for international shale plays and loses focus again. Interesting that HK is not on the list tho, for all the reasons you cite above.

  12. 12
    zman Says:

    TPH – sour grapes over not being on the last deal cover.

    They left out GDP too. Note on their list they have a who’s who among highly shorted gas names. GMXR, SD, KWK all big shorted. GDP is big shorted too, not a lot of debt, unhedged (if they like that) and growing 20+% this year and next.

  13. 13
    1520sbroad Says:

    #10 – last line is – purchases OF CNG trucks. brain not cooperating with fingers

  14. 14
    BirdsofpreyRcool Says:

    If Bearish Funds get liquidation notices, then it makes some sense to weight your portfolio toward heavily-shorted names. Guess that is what David Einhorn is (or was) doing…

  15. 15
    zman Says:

    Market dying off on PMI.

  16. 16
    BirdsofpreyRcool Says:

    Chicago Purchasing Manager’s index came in more negative than expected… 46.1 vs 52.0 expd.

  17. 17
    BirdsofpreyRcool Says:

    TechTrader’s 60/40 short trading call today working.

  18. 18
    BirdsofpreyRcool Says:

    This feels a lot like the end of last quarter, June 30th. The SPX closed down 8 points, then continued to fall into the first week in July. People were worried about the Summer Sell Off. But if they sat on the sidelines, they missed a heck of a rally from July 13th…

    October is always a fearful month. We get Congressional Activism capped by Hallowe’en. Makes people very jumpy.

  19. 19
    zman Says:

    Its early, group moving off the lows … moot moves until we get the oil numbers.

    PMI pretty awful, no wonder the POTUS is flying to the IOC to get Chicago some business.

  20. 20
    zman Says:

    BOP – Did you get a final answer on the window dressing question?

  21. 21
    BirdsofpreyRcool Says:

    z — nope. No final answer from the pros. Don’t know if mutual funds have to stick to T+3… but if they do, they are offset by private funds which get to do what they want. It just matters that funds are consistant. You can’t be Trade Date one month and Settlement Date the other. Just have to be consistant.

  22. 22
    zman Says:

    Broad market will need a boost from the oil report to get out of downshift mode today. If we do get a pull on distillate inventories and benign crude numbers I’m highly likely to go back to an overweight position in WLL for a quick trade.

  23. 23
    zman Says:

    Ok, hear ya, thanks.

  24. 24
    zman Says:

    SD – insider buying, nice to see, reason for slight green in a sea of red.

  25. 25
    zman Says:

    From yesterday’s comments from Nicky:

    SPX has support at 1060, 1055/56, 1053 and then 1048.

  26. 26
    zman Says:

    EIA Oil Inventory Report

    Crude up 2.8 mm barrels – a bit high
    Gasoline down 1.6 mm barrels – low
    Distillates up 0.3 mm barrels – low

    Gasoline demand 9.1 mm bpd, good
    Distillates demand 3.409 mm bpd, better

    crude at report time down 30 cents

  27. 27
    bill Says:

    OIL NUMBERS CLOSE TO API NUMBERS

  28. 28
    zman Says:

    re 26 – Nutshell – modestly bullish. Crude up a little post report. Gasoline up 2 cents. API got it basically right. Welcome news for the refiners.

  29. 29
    zman Says:

    Bill – distillate pickup is a good thing, the smaller number on builds there not really noticed by the market yet but it takes awhile to filter through. If you look at API over a few weeks time they are roughly matching the moves at EIA.

    Group showing signs of warming back up.

    May add a little of the $55 WLLs back to my current (5) call position there for a swing trade.

  30. 30
    zman Says:

    ZTRADE:

    WLL – Added (5) WLL $55 October calls (WLLJK) for $3.10 to my current (5) call position after the EIA reported better than expected product demand figures in its Wednesday report. This is a swing trade and I will continue to trade this cheap Bakken name on oil movements until it is no longer cheap. They speak tomorrow at IPAA. I continue to hold a position in the $60 strikes as well.

  31. 31
    1520sbroad Says:

    Z – do you have a distant past distillate demand number in the back fo your mind that shows peak demand? How far are we from that with this week’s report of 3.4mm bpd? Obviously some seasonal piece in there but i’m just looking for a rule of thumb.

  32. 32
    zman Says:

    1520 – peak is quite a bit higher and comes in the cold of winter, close to 5,000 mbopd, usually in February. We should be closer to 4,000 mbpd now.

  33. 33
    zman Says:

    PXD presentation in 15 minutes, worth a listen for Eagle Ford update, spraberry/wolfberry acceleration chatter.

  34. 34
    1520sbroad Says:

    32 – thanks that is what i was looking for.

  35. 35
    Dman Says:

    BOP – thanks for your inflation/deflation piece. Can’t find much to argue with. It boils down to prices rising for stuff people need (food, energy) & prices falling for consumer stuff people used to want (what Jim Kunstler calls the “Cheez Doodle / infotainment / professional sports matrix of idiocy”). Houses: well people do need them but don’t actually *need* to own them.

    If your view of the USA is accurate, I wonder where it leaves the rising Asian economies. I’m guessing they generally go up, but with some major wobbles & maybe the hit a wall when energy spikes in a serious way.

    BTW, there is a final frontier for globalization: Africa. The Chinese are busy colonizing it… whoops, did I really say that?? I mean …er … they are investing their hard-earned assets in Africa as part of their general munificence towards the people of unfortunate countries.

  36. 36
    zman Says:

    Crude up 50 cents now to $67.19. Could be a head fake but it does not feel that way. If the broad market tanks all bets off of course.

    Basically people have to look at the EIA data as ok, not great distillate demand yet, but not terrible either though and picking up, not moving lower.

    We should see distillate pick up again next week with this cold spell. People have put off filling their home HO tanks as long as they can. Also trucks rolling picks up seasonally the most in Oct/Nov.

    On the gasoline number, this was actually big. Higher than the 5 year average for this week and last year and tied with 2007 levels. Impressive, odd but impressive. Maybe people are driving to more interviews. Maybe gas stations are restocking after the holiday still.

  37. 37
    BirdsofpreyRcool Says:

    Thanks, Dman.

    One thing the US has, that other countries are not so abundant in, is natural resources. Water, arable land, timber, coal/nat gas, minerals, and excess manufacturing capacity. And — i’ll say it again — water. These assets will keep us from falling by the wayside, as will our geographic isolation and (largely) independent mentality.

    China has been all over Africa for over a decade. When China puts together a Long Range Plan, she doesn’t just look out 5 – 10 yrs… China is thinking 100 yrs down the road… and doing what will benefit China.

  38. 38
    zman Says:

    Listening to PXD presentation – he does a good job for a guy with such a low multiple trading stock. Says critical well drilling in EFS now, (that would be their second), more details in a minute.

    Oil up $1.43. Heating oil and gasoline up more on a % basis.

  39. 39
    elijahwc Says:

    OT – For you “players”, I posted this on a different forum this morning.

    I went long a small piece of CIT pr Z this am in the premarket. Reason: this is Senior paper of CIT packaged as a mandatory preferred. The underlying security are CITs 7.75% Sen Nts maturing 11/15/15. The mandatory date (into common stock) is not until 11/15/10 thus not forcing conversion while the company does the workout. Thesis: Company reaches agreement for reorg then this 25.00 par issue traded currently at 8 to 9ish will get a exchange offer for 15 – 16 in common equivalent (just like all the BAC issues earlier this year) or if things don’t work out then it’s off to bankruptcy, go to the front of the line and get a slug of common in a company that is reconstituted with a clean balance sheet.

    Now back to O&G.

  40. 40
    choices Says:

    eli-you must have quite a following-cit-z up >27% today, still yields about 20%.

    Thanks for the post.

  41. 41
    BirdsofpreyRcool Says:

    elija — thanks for posting!

  42. 42
    jiveyjr Says:

    nice move on those WLL calls….

  43. 43
    Dman Says:

    BOP – actually, for all their long-range planning, the Chinese don’t have a whole lot of experience with colonization. They might find it isn’t as smooth or as lucrative as they hoped. And I sure wouldn’t want to be charged with the task of feeding a billion people.

  44. 44
    zman Says:

    Thanks Jivey… nice to make those kind of calls.

  45. 45
    zman Says:

    POS Toshiba laptop crashed during the PXD presentation as they were about to talk about EFS. What I heard up to that point was very positive for Sprayberry/Wolfberry (Wolfcamp), Alaska on trace, Tunisia good, EFS = “critical well” not at TD yet, did not here if they said what part of play, did hear they are planning 5 more back to back. Really liking the name, may add as a common stock position.

  46. 46
    BirdsofpreyRcool Says:

    … Which is why the Chinese are not really interested in “colonizing.” They work with the current leadership and really don’t give a hoot about that leadership’s politics, policies, or position on human rights. The Chinese prefer to be the Man Behind the Throne, if you will, pulling some strings… but not enough to irritate the current ruler. I worked with an ex-member of the Chinese Diplomatic Service for several years. He had been assigned to Saudi Arabia… it was fascinating to hear the framework of Chinese diplomacy, dealmaking, long-range planning, and careful manipulation. Admirable, really.

  47. 47
    zman Says:

    Got stuck on phone.

    Crude up almost $2 at $68.66. I like getting the HO portion of the inventory read better than I do getting those WLL calls at the LOD.

    NG back to even, has been up.

    UPL call about to start.

  48. 48
    zman Says:

    and ROSE call after that.

  49. 49
    zman Says:

    Crude up 3.6% or $2.40 at $69.11

    led up by products.

  50. 50
    zman Says:

    ZTRADE:

    ROSE – Added (5) ROSE November $12.50 Calls (RESKV) for average cost of $2.84. Thin trader as options go. Presentation at IPAA in a few minutes, probably no definitive well results from their first efforts in the Eagle Ford and Bakken but we should get some flavor. I went with long options to cover me through the quarterly release.

  51. 51
    jat Says:

    PXD say anything on Wolfberry downspacing?

  52. 52
    rseidman Says:

    Z: RSEKV?

  53. 53
    VTZ Says:

    Youre the only open interest on that contract πŸ™‚

  54. 54
    zman Says:

    Jat – was talking about that when my pc blew up. Sounded like more water injector wells for the periphery, was talking about how this is a bit different type of flood, introduction of water from the formation vs a high pressure injection but then my laptop blew up.

  55. 55
    zman Says:

    RSeidman – yes, I type as fast as I can to get these out when they are filled.

    VTZ – yep. It’s thinly optioned all around, having a devil of a time splitting those bid/ask spreads.

  56. 56
    zman Says:

    UPL – all good, not a lot new I’m hearing. ROSE call up next.

  57. 57
    zman Says:

    Second day of big outperformance for EOG. Hmmm.

    HK – those $26 strikes are up 43% on the bid from my cost. I won’t hesitate to punt them or even the $25s if the broad market weakens. I called them high risk for a reason. I will likely hold the $24s a little longer.

  58. 58
    zman Says:

    Interesting to watch CLR vs WLL. Valuation seems to matter.

    ROSE call starting now.

  59. 59
    VTZ Says:

    Gold and Crude B-lining since the dollar started dropping.

  60. 60
    zman Says:

    ROSE Presentation

    E.F.S. 40K acres, up from last count of 35K

    1st – Spring Ranch – > 5.5 MMcfepd 7 day IP
    2nd – well drilled vertical set up to go horizontal
    3rd at TD

    Bakken – drilled and cored.

    ….

  61. 61
    Nicky Says:

    Afternoon all. Great call on oil Z – you said it would be taken bullishly today and it has! Dragging the broader market higher.

    The fall in the broader market this morning was a touch unnerving for the bulls but I was hopeful and still am that a low will be found today with a cycle low due today and then higher highs into early October. The depth of the fall today makes me think we are actually still in wave iv and are completing or have completed 4c with v up still to come. We may need a slightly lower low to finish this wave. Any move above about 1056 favors the low for the wave being in.

    Oil looks very bullish and I think is now likely to retest the highs. It was the missing link and is now falling into place along with metals and the dollar.

  62. 62
    Nicky Says:

    I better just add that if the bearish count for the indices is in play then we need to see a lower low for this wave and then a corrective 3 wave rally.

  63. 63
    skimo Says:

    Ok its a newbie with a question-please go easy on me.
    Is there enough upside risk with the Iranian situation to pay additional premium, buying the Dec/Jan calls rather than Oct/Nov for WLL and Rose?

  64. 64
    zman Says:

    Thanks Nicky, fun to be right occassionally

    BOP – slide 15 in the ROSE presentation is up your alley.

    They are seeing same stratigraphic sequence over in Montana as seen in traditional Bakken.

    Coring 180′ foot of interval.

  65. 65
    VTZ Says:

    Thanks Nicky.

  66. 66
    zman Says:

    ROSE – CF of $150 mm this year, capex only $115mm – building cash.

  67. 67
    zman Says:

    ROSE – adding a little more hedge exposure second half of 2010.

  68. 68
    BirdsofpreyRcool Says:

    SWN CFO on bloombert TV making bullish noises about nat gas production drops… seeing the headlines scroll past now.

  69. 69
    BirdsofpreyRcool Says:

    “bloombert”?? is that like “Catbert”???

  70. 70
    zman Says:

    Ski – welcome. I’m not basing any purchase decisions on Iran premium. It is a supportive factor but as Kuwait pointed out this am, OPEC has ~ 4 mm bopd of spare capacity on hand to offset any disruptions. I generally play first or second month out as I’m a creature of habit. ROSE is tough on options anyway as its not exactly a popular name. WLL is thin also, so I trade it rather quickly.

  71. 71
    zman Says:

    And Ski – I sometimes answer obliquely as I’m not in the advice business any longer but am in the “I’m just telling you what I’m doing and thinking” line of work. If I don’t answer something, ask it again.

    By the way we have a Bios page at upper left where many of the regulars have left abridged resumes…feel free to drop up one at zmanadmin@gmail.com

    RRC call starting.

  72. 72
    zman Says:

    SWN speaks in an hour at IPAA. Good for him. Take that Schork, Flynn et al.

  73. 73
    zman Says:

    Anybody see what lit a fire under the SP? Or does PMI just not matter anymore?

  74. 74
    zman Says:

    RRC CEO Quote Watch – Street is waking up to the fact that only 10% of the “Core” in the Barnett Shale is really Core. Get outside of that and you are talking 2 to 2.5x less productivity.

  75. 75
    zman Says:

    Crude up $2.90. Stocks really not keeping pace. That’s ok in my book as there is always tomorrow. Crude eying $70 now. I’d like it to trade sideways for a month between $65 and $70. It could go through $75 but not sustainably. Let’s get more demand data under our belt. Let’s get Iran out of the price (or at least out of focus).

    Can someone take a TA read at EOG, WLL, HK please? Thanks.

  76. 76
    zman Says:

    HDY – announcing 2D off coast. I listened to their call from August and on it that was one of the steps they had planned. 2D, not 3D because of the size of the acreage blocks.

  77. 77
    BirdsofpreyRcool Says:

    wow, z… a double on your WLL $55 calls already! sell ’em.

  78. 78
    BirdsofpreyRcool Says:

    ha! ignore my “advice.” You do great on your own.

  79. 79
    zman Says:

    BOP – my strike is up about 33% on those bought today.

  80. 80
    zman Says:

    CPE – about to start, worth a listen.

  81. 81
    BirdsofpreyRcool Says:

    oops… pulled up the Novie calls by accident (offered at $6.20).

  82. 82
    zman Says:

    BOP – I fail to listen to you and Nicky from time to time to my own detriment.

  83. 83
    VTZ Says:

    This steady climb in all assets is quite telling of what the consensus trade is among money managers.

  84. 84
    zman Says:

    Nice reiteration the other day on gold by the way V.

  85. 85
    VTZ Says:

    I think we are churning to build a solid base for blastoff which comes before Christmas, probably November.

  86. 86
    VTZ Says:

    Conversely I think the dollar moves inversely. I find it funny that “dollar strength” over the past few days means moving from just below 76 on the USD index to 77. Strength means not falling further now.

    72 is the next stop.

  87. 87
    1520sbroad Says:

    57 – EOG – did they speak at any of these conference or is this just some rub off from others around EOG’s acreage in various plays + crude + NG not at $0?

  88. 88
    zman Says:

    I was wrong. CPE not really worth listening to. Up next SWN.

  89. 89
    zman Says:

    Re 87 – Reaction to oil I guess. They are not speaking at this conference. Only half the big caps do.

  90. 90
    Nicky Says:

    Z – the low should be in with this reversal above 1053 on spx. Market should not make its high prior to Monday of next week. This is only wave i of v so we will need to see a wave ii pullback. Same with oil.
    When the top comes it should align with the low in the dollar and likely a top in metals. I know that is contrary to what most on here are expecting.

  91. 91
    zman Says:

    BOP – Do HT or TT have thoughts on a post quarter sell off?

  92. 92
    Nicky Says:

    We will sell off hard once this top is in imo – maximum of two weeks of upside left and likely much less.

  93. 93
    zman Says:

    Cushing stocks fell to a new 2009 low. Odd. Very supportive for NYMEX prices.

  94. 94
    zman Says:

    Thanks Nicky, much appreciate your view.

    SWN about to start. Depending on what they say about Boardwalk and Nat Gas I may add a little.

  95. 95
    BirdsofpreyRcool Says:

    z — i’ll go ask. By the way, TT made his typical boatload of money, being short this morning. When he makes his technical calls, it is typically for morning trading only. He commented around 10:30 ET that he was flat and done for the day and if you weren’t you should be.

  96. 96
    BirdsofpreyRcool Says:

    HeadTrader says there are too many eco-#s out in the near-term to call it. But, he said if it wasn’t for the eco-# uncertainty, he thinks the mrkt trends lower for a while. We will know more by Friday (employment #)

  97. 97
    Dman Says:

    BOP – #46 Sounds fascinating. Maybe you can ask him how they will play the Iran situation. But they did get into trouble lately with the “Man Behind the Throne” strategy. I forget which African country, but the peasants didn’t like their land being given to China while the rulers got rich. So they took the land back.

    BTW, if only bloombert was half as funny as Catbert πŸ™‚

  98. 98
    zman Says:

    SWN –

    Talking E. Texas well

    1st – Ok well
    2nd 13.3 MM/d – that’s a state high for the E. Tx Haynesville play
    3rd well – just announcing at 16.6 MM/d

    Pretty positive.

  99. 99
    zman Says:

    Hear ya, boatload of eco data.

    I count 7 reports tomorrow that could move markets,

    Then payrolls on Friday and all the numbers that go with it and factory orders.

    I’m going to raise cash again soon.

  100. 100
    zman Says:

    Crude up $3, trading very jumpy.

  101. 101
    zman Says:

    SWN – saying they have some 6 MM/d IPs in the play with extended laterals, thinking 7 MM/d is next. Your good well here has been 4.5 MM/d

  102. 102
    BirdsofpreyRcool Says:

    One thing to watch out for, in mid-October, is the banks. I know how touchy this subject is… So, I will just point out that GS and BAC report on Oct 15th and 16th… with the rally in toxic assets we have seen in the credit market over the last 3 months, I don’t expect those earnings to miss. And I would not want to be short those names…

  103. 103
    zman Says:

    SWN – Boardwalk – supply lateral will be back in service this week, was originally 3 months, then said 2 months, now just over 30 days and done. Better pricing from mid October on. Pretty strong news.

    Adjusted guidance by 15 Bcf anticipating a 60 day interruption, may take guidance back up by a few Bcf.

  104. 104
    VTZ Says:

    RE 90: I can buy into this being i of v and after a bit of a rally we have a more significant pullback. A mid-Oct to mid-Nov kind of pullback

  105. 105
    zman Says:

    103 also good for HK, PQ, CHK, XTO in order of relevance from most to least or something close to it.

  106. 106
    VTZ Says:

    On your count where are we in terms of ABCs and Numbers?

  107. 107
    elijahwc Says:

    Interesting Exchange located elsewhere which just happened to contain the quote of the day, “keeping the federal funds rate down where the earthworms can chew on it.”.

    Comment:

    Fed Chairman From The Black Lagoon

    Greenspan has a certain dermatological quality; he won’t kill you and he won’t go away. Now he’s making a path-dependent forecast for 3-4% annual growth over the next six months followed by a flattening produced by a stall in the stock market.

    This is from Mr. Bubble-Up himself. Well, I’ll tell you what, unlike the still-fawning crowd that follows him around and actually listens to such nonsense (he’d be lucky to forecast tomorrow being Thursday) I’m going to hold his feet to the fire. We’ll track both parts of this forecast, the growth and the stock market flattening leading to a slowdown in growth.

    Oh, and let’s go for the trifecta. If we do put up a 4% print over the next two quarters, I want to hear his justification for keeping the federal funds rate down where the earthworms can chew on it.

    Retort:

    Greenscam

    the Feds want to hang onto 0% interest rates for as long as possible to promote another bubble in financial assets. They will use lagging indicators like employment to justify the decision, but a financial bubble is their endgame.

    They realize that the economy cannot afford to delever ever again, so they need asset prices to resume an upward trajectory. They will print/borrow/buy us into oblivion long term to achieve a rally in stocks and bonds.

    I somewhat agree!

  108. 108
    ratberto Says:

    Russia said to be supplying Iran 300 advanced interceptors to defend against an Israeli attack

  109. 109
    zman Says:

    9 cent moves on HO and RBOB. Both up 5+%.

  110. 110
    zman Says:

    Re 108 – Got a link on that?

  111. 111
    Dman Says:

    Z – bit of a disconnect with crude up almost 5%. Stocks up but not that sort of up. Thoughts?

  112. 112
    ratberto Says:

    no link. Second-hand from friend with whom I spoke regarding source before posting. That’s all I can say.

  113. 113
    Nicky Says:

    VTZ re 104 – yes thats exactly what I am thinking. Most ewavers think that when it tops in the next couple of weeks that is it and we plunge to new lows. But I am not seeing that because the cycles call for more upside into March. So what I think we are seeing is actually only 1 of 5 of a C wave to the upside and the correction we will see into November will be 2 and likely take us back towards 950 on the spx.

  114. 114
    zman Says:

    Thanks Rat – sounds plausible as Russia is selling them uranium so they have a vested interest in keeping the plant open.

  115. 115
    zman Says:

    Dman – Nobody trusts this market starting Oct. 1. If this were a weak ago I think you would have seen 5 to 10% up moves on this kind of day.

  116. 116
    zman Says:

    Daily chart on WLL looks interesting, any PF or regular TA looks appreciated. I have an email into Tater who is busy doing something called work.

  117. 117
    elijahwc Says:

    WLL to zman: “days not over”

  118. 118
    AAA Says:

    Any idea what goosed PZE? Can’t find any news.

  119. 119
    zman Says:

    Eli – that’s two beers you now owe me.

    Are you saying you are expecting a pull back in the market before day’s end? A sell off into the fear and loathing that is October? Like a gnome, plummeting from a cliff perhaps?

  120. 120
    jat Says:

    Z,

    Any guess on why gasoline demand rebounded so hard? I’m scratching my head.

  121. 121
    BirdsofpreyRcool Says:

    Russia has a vested interest in getting oil prices up. When oil was over $100/bbl, russian billionaires were swaggering all over the world. Now… not so much. But Russia is a resourced-based economy. They would love to see “anything”** that pushed oil prices back up. And they know the U.S. will not be quick to step in the way.

    ** little squirmish in the Gulf maybe?

  122. 122
    Dman Says:

    Russia has been teasing Iran on air defense missiles for years. I don’t see any news that says the sale is actually happening.

  123. 123
    zman Says:

    Jat – I it is partially restocking post holiday that wasn’t reflected earlier, also we have a good drop in imports, so they are probably solving against the stocks level and generating a bit of a swollen number. But … that being said, we are continuously showing YoY improvements in demand. Not complaining but I bet when the monthly numbers are out long from now, we see somewhat less surprisingly strong figures.

  124. 124
    elijahwc Says:

    # 119 No, On WLL I expect the 60 strike to go w/i a point of in the money.

  125. 125
    zman Says:

    Eli – Ok, got ya. Honestly I don’t watch it that closely and am wondering if I should go longer term on the options on this one as I really do think it moves on the $70s in a benign market where oil is $75 at year end.

    Watching the HK more close for an exit on the high strikes. I got nothing of what I wanted from their presentation yesterday. Nothing wrong with the story, improved after the 2 deals and my expectations were too high. But I have like to have more to chew on in here besides one well rising two months after IP in the EFS and an reaffirmed borrowing line and the better than good chance of production beats in 3Q and 4Q.

  126. 126
    BirdsofpreyRcool Says:

    CIT to solicit votes for a prepack BK — CNBC

  127. 127
    zman Says:

    Oil up 3.75 at 70.50 at the close. Wow.

  128. 128
    zman Says:

    Note the complete lack of a move in CLR.

  129. 129
    zman Says:

    Eli – What’s your take on action in the next two weeks… does the data need to be better than expectations on payrolls, orders to tread water here to keep the drive alive? Do you think we face a significant post quarter exhalation event starting tomorrow or Friday?

  130. 130
    Jerome Blank Says:

    Just catching up…WLL looks great from a P&F perspective, currently on a buy signal, resistance at $59 to $60, no worries until a print of $53

  131. 131
    elijahwc Says:

    I’m long small on the WLL Nov 60’s. Have been for a while so the decay is getting to me and I’m cheerleading for a couple of the good old 5 buck days to juice the beta.

    Think you are spot on in expecting $75 year end price.

    Housekeeping: EEE yesterday. I am told the push will revolve around Cap & Trade

  132. 132
    zman Says:

    Thanks Jerome

    ZTRADE:

    WLL – Sold the overweight position in WLL (5 of 10) of the $55 Calls for $4.10, up 32% in a few hours with the stock trading a little over $58.

  133. 133
    zman Says:

    I only took the WLL piece off from the swing trade, nothing fundy, just don’t trust this market which seems in desperately in need of Prozac.

  134. 134
    zman Says:

    Re 131 – this is why I often say the longer dated options off the illusion of security. Still, with that name, given it is still cheap and my view of oil, I think those are my next roll.

  135. 135
    zman Says:

    SWN – moving now on that Boardwalk pipe news and production comments. Or is the E. Texas best in show wells? Problem to have. I continue to hold my $45s and will add something in a similar strike on the next set of big red days.

  136. 136
    zman Says:

    EOG at $84.20, within 2 dimes of its 2009 high. Strong on a chart. Easily trouncing the group for a second day.

  137. 137
    zman Says:

    In other cheap name news, NFX looking ready to move higher again. Not speaking IPAA. Strong long term outlook. Am holding $45s and may punt and reload in the near term. Will be one of the ones I play for 3Q earnings. I think they are likely to exceed on the volumes line.

  138. 138
    elijahwc Says:

    # 129: No and No and I’m a bear.

    See the retort section in #107 above. It is from Bob Marcin of Defiance Asset Mgmt, one of the greats.

    That is what we are up against so I have resigned myself to letting the market determine the date and rational for a correction as despite my efforts I am unable to devine either.

    Still I watch supply knowing that spoting Black Swans is not within my skill set. .

  139. 139
    Jerome Blank Says:

    EOG experienced a classic “bear trap” with its recent print of $79, only to reverse back into X’s, goes back on a triple top break buy on a print of $85

  140. 140
    zman Says:

    Thanks Eli – when the perma bears are willing to accept their fate I get nervous about the bull.

    Thanks Jerome.

  141. 141
    zman Says:

    See Eli, this rapid sell off in the S&P is your doing.

  142. 142
    BirdsofpreyRcool Says:

    HeadTrader thinks that it’s tough to call the next few days with eco #s, but w/o those,** we head south for a little. It will be healthy.

    ** how do you go “without eco #s”?

    Just passing along comments. Agree with the “healthy” part, tho.

  143. 143
    Dman Says:

    BOP – #142 HT obviously finds the many-worlds interpretation of Quantum Mechanics to be convincing:

    http://en.wikipedia.org/wiki/Many-worlds_interpretation

  144. 144
    bill Says:

    z

    you or someone had a link to the webcasts at ipaa

    could you repost it

    ty

  145. 145
    BirdsofpreyRcool Says:

    Dman — i saw a NOVA program on that once… it made my brain blow up.

  146. 146
    zman Says:

    Bill – I only have a the schedule

    http://www.ipaa.org/meetings/pdf/092009OGISSanFranSchedule.pdf

    All times PST. I go to the indiv. companies to get the broadcast.

  147. 147
    john11 Says:

    http://www.vcall.com/CustomEvent/conferences/IPAA/20090929/agenda.html

    Ogis ipaa

  148. 148
    Dman Says:

    BOP – lets just say that QM is still very much a work in progress…

  149. 149
    zman Says:

    Thanks for that John.

  150. 150
    Dman Says:

    BOP – is HT energy focused or broad market?

  151. 151
    BirdsofpreyRcool Says:

    HT is broad mrkt focused. He gets his energy info from me! Poor guy…

  152. 152
    Dman Says:

    BOP, if HT is a Kogger, he should have no complaints…

  153. 153
    zman Says:

    Pretty much a wash of a day despite crude and crude products up 5+%.

    Declaring beerthirty 10 minutes early.

    Will listen to the GMXR and NOG calls later tonight.

  154. 154
    BirdsofpreyRcool Says:

    Dman — funny you mention that… i pounded the table to get HT to buy KOG at $1.00, prior to the last operational update. He passed. But i do have to say, he pays a little more attention these days.

  155. 155
    VTZ Says:

    RE 113 – Thanks Nicky, I’m on board with that. It falls in line with some of my expectations for a pullback and my view of a minor rally in the USD (or sideways correction) before we see its fate.

    I also believe that the broader market cannot be stopped on the upside for now, especially if we see a decent correction to allow some new money to pile in or add to positions.

  156. 156
    Jay Says:

    US giant bunker-buster bomb project rushed since Iran’s Qom site discovered

    September 28, 2009, 6:26 PM (GMT+02:00)
    Estimated location of Qom enrichment plant

    Estimated location of Qom enrichment plant

    The Pentagon has brought forward to
    December 2009 the target-date for producing the first 15-ton super bunker-buster bombs (GBU-57A/B) Massive Ordinance Penetrator, which can reach a depth of 60.09 meters underground before exploding. DEBKAfile’s military sources report that top defense agencies and air force units are also working against the clock to adapt the bay of a B2a Stealth bomber for carrying and delivering the bomb.

    http://www.debka.com/headline.php?hid=6288

  157. 157
    Jay Says:

    I would presume that if you are in the vicinity than the last .09 meters of penetrating capability are pretty academic after the first 60 meters : )

    …..”which can reach a depth of 60.09 meters…..”

  158. 158
    zman Says:

    BOP – thanks for finding that gas storage number for tomorrow, now 61 Bcf from 63 Bcf last night … thought it looked high.

    Jay – good point, lol.

  159. 159
    jat Says:

    I hear you on the gasoline restocking.

    But YoY comps on such depressed bases don’t mean a ton to me on gasoline… should they? They stopped meaning much to me once we hit September.

  160. 160
    Wyoming Says:

    http://screencast.com/t/QfqavOjkxTU

  161. 161
    zman Says:

    Jat – they mean less, true enough as heating oil gets into the drivers seat. Still, a decline in stocks is better than a build, and four YoY up demand numbers is a unique event in 2009. I don’t think it means much, except maybe people are driving about looking at houses and trying to find work. From everything I read people are pretty tire of not shopping, eating out, etc.

  162. 162
    zman Says:

    Re 160 – Canadian tax dollars with a sense of humor.

  163. 163
    zman Says:

    Well Duh Watch: DVN CEO says most U.S. gas drilling is now subeconomic.

  164. 164
    elijahwc Says:

    #156 157

    Are you suggesting we now have the possibility of surface fracking without the need for all those polluting fluids?

  165. 165
    elijahwc Says:

    #141 “See Eli, this rapid sell off in the S&P is your doing.”

    Had to happen the minute I hit the market command & control button on this site. Its called “Submit Comment”

  166. 166
    zman Says:

    XCO – on the tape with another asset sale, this one much bigger, all of OK props for
    $540 mm (or $2.14 / Mcfe on the proved reserves which is pretty good for the reserves and very good for XCO’s balance sheet.

  167. 167
    VTZ Says:

    Z – You or somebody asked for a list of major Horn River players the other day:

    E&Ps
    Apache, Conoco, Devon, Encana, EOG, Imperial/Exxon, Nexen, Pengrowth, Suncor, Quicksilver

    Pipelines
    Transcanada, Alliance, Spectra, Pacific Trails

    Private Cos
    Kitimat LNG (owned by Galveston LNG), Stone Mountain Resources

  168. 168
    VTZ Says:

    Sorry Pacific Trails is private, subsidiary of Kitimat/Galveston and is a play on their LNG export terminal.

  169. 169
    zman Says:

    V – Greenpeace blocking another oil sand mine.

  170. 170
    VTZ Says:

    Yeah it’s at Suncor. Heard about it. Apparently they didn’t let them on any equipment until they had appropriate safety harnesses.

  171. 171
    VTZ Says:

    Personally I think the bigger issue here is security. I have no clue how they got passed security at both sites with those trucks.

  172. 172
    VTZ Says:

    At Shell, they were invited in to discuss what they were protesting and discuss the facts and merits of what they were saying and they refused.

  173. 173
    bill Says:

    The group (greenpeace) should be disbanded and members thrown in prison, imho

    The so called eco terrorists, wack jobs are blowing up natural gas lines, Hummer dealers, ski resorts,spiking lumber, now oil sands.

    Ayers got away with it

    Where is J edgar when we need him?

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