24
Feb

Wednesday – Oil Inventory Preview Plus More Earnings

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Market Sentiment Watch: Weakened by weak sentiment, very hesitant trading. This morning load demand for homes fell to the lowest level since 1997 and the only thing keeping futures from sliding further this morning is expected testimony from Bernanke today. We also get January new home sales data at 10 EST (forecast of 355K vs 342K for December).  We have a number of names that reported overnight (see the Stuff section) including XCO which looks set to have a strong day and year.

 

In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Oil Inventory Preview
  4. Stuff We Care About Today -  XCO, SGY, RRC, PQ
  5. Odds & Ends

Holdings Watch:

  • $10KP II:

    • $9,800
    • 28% Cash

 

  • Yesterday's Trades:
    • HK – Added (10) HK March $22 Calls for $0.75 (on the mid) with the stock down $0.80 on the day at $21.35 after earnings and during the conference call. See post and comments for more color.


Commodity Watch:

Crude oil fell $1.45 to close at $79.30 yesterday. After the close, the API released a mixed set of data, with a big crude draw and a draw on distillates which at least was in the right direction, prompting small recoveries in crude and heating oil overnight. This morning crude is trading essentially flat.

 

Natural gas fell $0.12 to close the day at $4.78. I'm expecting gas to return to the lower $5's in the next couple of weeks, unless we get an ugly supply report (big growth in the December numbers) this Friday. This morning gas is trading up 6 cents. 

  • Early Read On Natural Gas Storage: Street is looking for a 166 Bcf.

    • Last Week: 190 Bcf withdrawal
    • Last Year: 90 Bcf withdrawal
    • 5 Year Average: 149 Bcf withdrawal
    • 10 year Hi: 24 Bcf withdrawal
    • 10 year Low: 171 Bcf withdrawal

Walk Through From Now To End of Withdrawal Season Storage:

  • Assuming we get a withdrawal in the 150 to 175 Bcf this Thursday, and 175 plus next Thursday (it’s definitely colder this week), you are well on the way to dropping storage towards that 1.5 Tcf level. Call it 350 Bcf for the two weeks to put you at 1,675 Bcf, then you have 4 weeks to eat that down 1.5 Tcf.
  • The average March draw for the last 10 years has been 184 Bcf with a range of -100 Bcf  to -319 Bcf.

Oil Inventory Preview


API Watch:

  • Crude: DOWN 3.137 mm barrels
  • Gasoline: UP 1.738 mm bbs
  • Distillates: DOWN 0.834 mm bbs

ZComment: As usual the data are a sea of contradictions with imports seen up but a big drop in crude stocks. On the distillates side they did see a large rally in demand but this came on the heels of a similar sized fall in the last two weeks so you can 't really point to this and say "there's the long awaited bump in demand" because both API and EIA so far are just not reflecting such a move. Thankfully, gasoline demand is holding up better and we should begin to see a seasonal move higher in demand in the next several weeks. 


Stuff We Care About Today


Quick Quarterly Reviews: (I'm not in them but I find them interesting)

The Good: XCO Reports  Strong Quarter; Stronger Guidance

The 4Q Numbers:

EPS of $0.29 vs $0.22 expected
EBITDA of $168 mm vs $138 mm vs expected

Reserves:

  • 1.0 Tcfe, down from 2008 due to divestitures
  • They break down their finding costs for the year by play type and from this its easy to see the attraction of the big shale plays:  Haynesville: $0.71/ Mcfe; Conventional plays: $3.60/ Mcfe

2010 Plan:

Haynesville : 13 rigs now, going to 14; 2009 wells cost $9.5 mm a piece, sees 2010 coming in below that. They completed 25 wells in 2009 and will step that up, with the help of their carried interest from BG, to  over 100 wells in 2010. They are also seeing significantly reduced spud to first sales times.

Marcellus: 1 rig planned, still poking about

Guidance:

 

  • Due to divestitures in late 2009 it's appropriate  to look at them on an apples basis with begi8nning of 2010 production of 234 MMcfepd and current production of > 265 MMcfepd (the ramp coming from the Haynexsveille. )
  • 2010 guidance: 315 to 330 MMcfepd
  • See 4Q10 at 360 to 380 MMcefpd.

Nutshell: Good guidance, quick, focused growth. Along with FST and RRC, I plan to be a more frequent participant in XCO this year.

Conference Call: 10 am EST

 

The Bad: SGY Reports 4Q And Guidance Fails To Impress

  • Production:

    • 4Q was 220 MMcfepd (preannounced and sligtly light to origina. guidance)
    • 2009 was 215 MMcfepd
  • 2010 Guidance: 205 to 215 MMCfepd so flat on the mid point with 2009. That's not going to please anyone.
  • Highlights:

    • Reserves were 411 Bcfe, off sharply from last year but inline with prior expectations, they simply didn't replace reserves and were hit by low gas prices
    • Capex of $400 mm, 75% gomex (shelf, deep shelf, deepwater) / 25% appalachia
    • No ops update but on the call they should discuss Marcellus plans (have successfully drilled verticals, time to go to horizontals)
  • Conference Call: 11 am EST. Nutshell. I'll be staying away from the name for awhile.

Other Stuff:

  • RRC, another strong quarter, with good reserve metrics, and guidance for 2010 and 2001 are in line with past commentary. Conference call at 1 pm EST today but I have a meeting then so I'll miss it. I plan to circle back in a few days after going over their 2010 game plan and letting the stock settle out a bit.
  • PQ - reported 4Q numbers as well, guidance is lower than people are looking for here so the stock may go ahead and break down a bit. Conference call at 9:30 EST.

 

Odds & Ends

Analyst Watch:

  • EOG - Goldman raises to Buy; ups target from $111 to $119
  • XCO - GS adds to Conviction Buy list, target $26

Insider Watch: MMR director on the tape buying 67K shares for $16.31.

Interesting Article Watch:

 

How I Look At E&P Company Earnings - Part I.  I got asked over the weekend how I look at E&P company earnings given that they may or may not have positive net income. I'll bullet point this and add it to the Dictionary page along with more comments on other items in the releases to be covered in Part II tomorrow.

Forget EPS. This is a reinvestment business so people are concerned with how much cash flow from operations a firm can kick off. Moreover, earnings are not comparable from E&P to E&P due to differing accounting treatments for exploration activities. These treatments, which either result in the expensing of exploration efforts via the income statement or capitalizing them via the balance sheet can significantly different results for net income

Instead, we are concerned with the ability of the firm to fund its future operations: Cash Flow per Share (CFPS) or Earnings Before Interest Taxes Depreciation and Amortization (EBITDA).

CFPS - This is essentially the operational cash flow portion of the cash flow statement. A quick cheat to get there involves taking Net Income and adding back your non cash expenses including depreciation, deferred taxes, mark to market hedge gains or losses, etc from the cash flow statement and stopping when you get to the changes in working capital section.  In this case we are looking at Price of the stock divided by the operating cash per share of the stock. This puts companys' cash flow power on par with each other and provides a metric similar to PE in the non E&P world. 

EBITDA - This approaches the cash flow issue from the opposite end, essentially taking cash costs from revenues but stopping before interest is deducted. In this case the multiple in question is Total Enterprise Value (TEV) to EBITDA. TEV being defined as market cap plus debt less working capital. This is a more comprehensive look at the company since it takes into account the balance sheet and not just the equity of the firm. Using a pre-interest denominator levels the playing field among the names.

Both of these metrics trade in ranges for the company versus their historic norms and relative to the other names in the group. Tomorrow I'll run through the key costs from the quarterly releases. 

 

 

 

140 Responses to “Wednesday – Oil Inventory Preview Plus More Earnings”

  1. 1
    TEXWS6 Says:

    EXCO comment, Haynesville well prices are NOT going to decrease, they are only going up from here!

  2. 2
    zman Says:

    Tex – every operator is saying the opposite. The cost of each item may be going up but spud to rig release continues to fall getting the aggregate well price decline. Are you looking for your completed well cost to rise this year? Several of these guys have locked in some piece of their service costs for 2010 back in 2009 as well.

  3. 3
    zman Says:

    CNBC oil quote is wrong by the way, stuck at up 39 cents for awhile now. I have it off a dime at 78.76 now.

    NG up 7 cents, looking for a bounce there in the near term but supply on Friday a wild card.

  4. 4
    zman Says:

    Have to borrow this quote from TPH this morning ~ “We’d make some sort of pithy, insightful commentary about energy stocks, but don’t really have anything. It is hard grind right now to make money.”

  5. 5
    BirdsofpreyRcool Says:

    z #4… funny. I was going to post that too. It sums up the situation so nicely.

    2010 will be a tough year to make money as there is no definable “trend” to follow. Depending on the outcomes in November, 2011 could be a good year (like the 4Q of 2004 and 2005-6 were). But not this year. Too much stuff to whallop you in the head, pushing the mrkt from one corner to the other.

    So, either trade it with no tears… or find a few income-producing securities and head to the beach until 4Q. Them’s my thoughts. FWIW.

  6. 6
    zman Says:

    PQ call about to start, will listen to the first 30 minutes.

    XCO going higher this morning.

    NG up 9 cents, good to see it trying to reverse.

  7. 7
    zman Says:

    BOP – any credit market thoughts, anything from HT or TT?

  8. 8
    zman Says:

    MMR up a quick 4% on that big insider buy.

  9. 9
    zman Says:

    PQ Call – sees capex double 2009 levels

    Woodford

    2009 – 15 wells drilled

    Core wells had IPs of 6.5 mm/d,
    Latest wells were drilled in < 30 days for less tan $1 / Mcfe Adding a second operated rig in the play this year. Stock slipping as per post comment, down 5%, here's to hoping it falls further so I can fell pretty comfortable getting back in. ....

  10. 10
    tomdavis12 Says:

    Z: Bot 10K of EXXID last 3 days. Now on the Triad Team. Did not pay over 19.25. Will be out on any good news.

  11. 11
    zman Says:

    PQ Call

    Horizontal Cotton Valley program on the rise, but not a big piece of the capex pie which is a bit odd given the potential they highlight.

    Fayetteville Shale: tiny, inching forward, gets 10% of the budget (all non operated, small working interests)

    35 days out on a TD in a Gulf Coast exploration well.

  12. 12
    zman Says:

    Tom – hear ya risk taker. Good to see that director buy more at MMR and the management buy ins in the prior week at EXXID. News should be any hour to any day now.

  13. 13
    Jerome Blank Says:

    Good morning…there are a few possibilities I’m wathcing this morning, first BEXP is holding the topside ascending triangle trendline on a solid retest, looking good right now…if you look at the 30 min, stops are relativly easy to manage…

  14. 14
    zman Says:

    WRES schedules 4Q / reserves for March 3 so not a big wait time left on those oil price related reserve adds.

  15. 15
    zman Says:

    JB – thanks, was just watching it pop back up. These valuation dowgrades are often short lived as long as the group doesn’t roll over, pretty easily forgotten. When looking at NAVs on these names (and that’s what Pritchard was doing with a minor discount to it) a minor tweak in your recovery factor, EUR assumption, spacing, etc can swing the NAV pretty largely. So these are judgment calls. As the analyst said, it’s richly priced on flowing barrels and $/ Mcfe of reserves but the success of the extended lateral Bakken program is there too.

  16. 16
    bill Says:

    pq beat after adjusting for the one time items

    why did it drop 5 %

    Are people confused with the write downs?

  17. 17
    zman Says:

    PQ Q&A:

    Woodford held by production: at end of 2009, more than half is held by production, won’t lose any acreage in 2010 based on the current budget.

    W.S.; $4.4 mm well cost for a 4.6 Bcfe well (so again, below $1/Mcfe)

    Seeing some service cost appreciation but their time to drill is down to mid 20 days spud to rig move.

    So rig 1 can do 12 wells a year,
    Second rig will be on the play soon.

  18. 18
    Jerome Blank Says:

    NOG…NOG also looking really good this morning, bouncing right off triangle trendline and moving avg support…

  19. 19
    zman Says:

    Bill – It’s the guidance. People wanted more growth. I’m watching it to add. Good call. Those drill times coming down also include longer laterals vs the past (now at 5,000 to 6,000′ so expect to see big EURs here. Also thinking about going to longer laterals, say 10,000 footers (sounds like they are watching NFX’s SXL wells to determine if its worth it).

    Woodford production is about 30 mm/d

    Sugar Loaf is that prospect, could be a catalyst, 35 days out.

  20. 20
    zman Says:

    JB – that WLL chart also has that basing, tightening, pattern going into earnings later this week.

    BEXP – earnings this week should contain a number of new, important wells.

  21. 21
    VTZ Says:

    Anyone expecting any tightening talk today? I sure don’t.

  22. 22
    BirdsofpreyRcool Says:

    Comment on the MMR insider purchase… the director who bought 65,005 shares is not just “any” director. Robert Day is the founder of TCW. He has historically shown particular expertise in his resource-based investing, both personally and professionally. Therefore, this insider’s purchase needs to be viewed as more than just the average “good news.” Mr. Day can put his money in a lot of places, the fact that he has shown such conviction here is noteworthy.

  23. 23
    BirdsofpreyRcool Says:

    New Home sales DOWN 11.2%. Mrkt was expecting UP 3.5%.

    Also, bloomberg picking up comments from Bernanke re: “Fed will have to tighten at some point”… but he doesn’t make it sound like it will be anytime soon.

  24. 24
    zman Says:

    Switching to the XCO call now. This should be a more goto name for me this year.

    V – I think he talks about it but says we stay low for the long term.

  25. 25
    zman Says:

    BOP – thanks for the director color, good point. MMR up 4.4% pretty much all on spec that he knows something.

    Somewhat surprised market isn’t tanking yet on the housing numbers. Case Shiller yesterday said things will get worse before they get better there.

  26. 26
    zman Says:

    Sustained recovery still in question: Bernanke

    http://www.marketwatch.com/story/sustained-recovery-still-in-question-bernanke-2010-02-24

    How the dollar doesn’t slide on this I don’t know. Greek turbulence? Sheesh. He’s signally that more “stimulus” is going to be needed to just keep the economy limping along.

  27. 27
    hoggzilla Says:

    Z
    What are your thoughts on the refiners in general at this time. I noticed the crack spreads are starting to improve.

    Thanks

  28. 28
    PackMan Says:

    XCO usually a GS Conviction list add is good for 5% or more – it got that pre market, but only up 1% now as market sells off.

  29. 29
    zman Says:

    Hog – Neutral to slightly bullish short term (say for the next 3 to 5 months) but pretty bearish long term. A lot depends on whether or not we see 1) the seasonal increase in gasoline demand over the next few weeks or instead a divergence, and 2) and increase in gasoline imports this summer. There is more foreign capacity geared up to come here, not as finished product but as a component for blending with ethanol. That could bump up this year, which would be just one more knock on the group. So for now, I wait and watch. I think if you see the demand pick up for a couple of weeks in a row the group will be good for a quickish trade.

    Market reddening.

  30. 30
    jy Says:

    Re:#22. Have worked w/Bob Day in the past. BOP’s comments mirror my experience exactly.

  31. 31
    Jerome Blank Says:

    Re: #20, WLL-posted charts and comment…

    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3724280

  32. 32
    zman Says:

    Pack – yeah, not a great day to announce. Listening to the call now (very long as they walk through 35 slides), could be an opportunity to grab a name that has a lot of potential this year, pretty much a Haynesville story with a much better balance sheet.

  33. 33
    zman Says:

    Thanks much JB, voted.

  34. 34
    Jerome Blank Says:

    Re: #33 Zman, thank you…

  35. 35
    zman Says:

    EIA Oil Inventory Report

    Crude before report: flat at $78.90

    Inventories:
    Crude: up 3 mm (81% utilization which is up slightly)
    Gasoline DOWN 0.9 mm
    Distillates DOWN 0.6 mm

    Crude imports: big up at 9.1 mm bopd

    Demand:
    Gasoline: 9.064 mm bpd, very good.
    Distillates: 3.662 mm bpd, holding the weak end, could be worse, could be better.

    Nutshell: Not a bad report, oil off slightly here but I think it moves with market today as the big headline oil number is just imports related and throughput was at its highest level in recent memory …

  36. 36
    zman Says:

    That was the highest level of refinery through put since October and was up slightly vs year ago levels. They must be prepping for higher gasoline demand.

  37. 37
    bloodystupidjohnson Says:

    Z: Denver Business Journal (2/17/10) had an article about the possibility of a big oil discovery in nothern Colo Denver – Julesburg basin.

    Papa was asked about northern Colo during the last conf call: “EOG doesn’t discuss areas where we are STILL LEASING acreage.”

    Do you know of any other companies that have acerage in this area?

  38. 38
    bill Says:

    when does wll come out

    last week they hinted we would be pleasantly suprised this week

  39. 39
    zman Says:

    BSJ – Noble Energy (NBL) is big there, but there are lots of Rockies names in the DJ.

    Bill – Tonight for a call tomorrow.

  40. 40
    BirdsofpreyRcool Says:

    bill — not that it means anything… but in my experience, when a company’s mngmt “hints” something like that… RUN AWAAAAAY!!

    Just some color commentary on a slow day.

    HT is snoozing. TT isn’t in the mrkt (volumes too low).

  41. 41
    BirdsofpreyRcool Says:

    jy — #30… thx for the additional color there. Thought it was worth noting.

  42. 42
    zman Says:

    XCO – still listening, I would expect analysts to pound the table here with the name up only 2% on this guidance, still not into the Q&A yet. Tempted to replace HK for options trading with these guys, just a more trusted name and they’ve done the balance sheet repair that everyone wanted and they don’t have a history of using the shares like an ATM, at least lately.

  43. 43
    BirdsofpreyRcool Says:

    ha! just when i thought it would be boring… Dow up 100 pts.

    Ben making some perky comments about the economy (larbor mrkt and consumer demand).

  44. 44
    BirdsofpreyRcool Says:

    Snowing here (in Detroit) again… heard NYC gets it tomorrow. As much as 10 inches expected to hit that city. Cold, snowy, energy trader-toes on the train platform…

  45. 45
    zman Says:

    XCO – they have their first Bossier test about to complete. Nothing in their guidance for Bossier success. Sounds like they won’t pr it until the 1Q call. If successful, it’ll lends confidence to the big growth they are looking for this year.

  46. 46
    Jerome Blank Says:

    BEXP…really looking good right now, but I noticed an interesing divergence on the daily…out of the intraday time frame keep an eye on this…BEXP view #2…

    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3724280

  47. 47
    zman Says:

    S&P 1105.

  48. 48
    PackMan Says:

    Is it just me, or does Ron Paul sound like a crazy person just released from the asylum ?

  49. 49
    zman Says:

    XCO – call still not to Q&A, good comments on Hayensville wells to date, oldest one has produced 3.2 Bcfe which is more than most Barnett wells drilled in that much older play have drilled to day.

    XCO – says the Bossier play will be the next big thing. Pipeline is already in place for that one.

    Senate passes tax breaks for small businesses to hire new workers.

  50. 50
    PackMan Says:

    Ben “Congressman some of your allegations are absolutely bizarre”

  51. 51
    zman Says:

    Pack – You know I agree with a lot of his ideas but they simply are not workable in the real world. So yes.

  52. 52
    zman Says:

    E&P still not participating to the degree of the market move.

    XCO going to Q&A. Very good tone here.

  53. 53
    VTZ Says:

    Ron Paul loses focus and doesn’t know which battles he should and shouldn’t fight. He could be much more effective although I do find myself agreeing with him at least half of the time.

  54. 54
    bill Says:

    xco ceo bullish on ng if supply gets to 1.5tcf

  55. 55
    zman Says:

    XCO CEO

    On natural gas:

    We think demand is a little better than the market thinks and supply is a little lower than it thinks.

    If we see storage fall to 1.5 Tcf or below for the trough then we could see some pretty strong prices and we will hedge into that.

  56. 56
    West Says:

    BEXP….I went thru production reports last night and most of the wells seem to holding up extremely well. They have several wells in the rough rider area that will make a 100k bo in the first year. They are getting all their wells hooked up to the gas line which in a lot of cases is enough production to pay loe. Short of them doing something dilutive, Brigham should be able to show extremely strong production growth yoy….It is estimated that 100k boe is payout for 10k horizontal in this area, dependent on number of frac stages and price of oil.

  57. 57
    zman Says:

    Was Ron Paul the one who inspired the bizarre comment out of Ben?

    XCO back up to up 3%, I think it goes higher post call. Lots of the analysts sound pretty pleased. I’m not in yet but am warming to the idea, been awhile since I was and as I recall it’s a thin option trader. I may find a home for it in my stock portfolio instead.

  58. 58
    zman Says:

    West – I think the growth becomes apparent with the 1Q call. The 4Q numbers should be no great shakes as they’ve previously indicated, some of that is USEG impact.

    MMR up 6% now, EXXID flat. PXP up 1%.

  59. 59
    zman Says:

    Crude back over $80.

  60. 60
    bill Says:

    lol xco said he beat aubrey on a deal–1st time

    interesting that they have a different strategy to hk who has restricted gas flow. They opened up the chokes

  61. 61
    bill Says:

    bot a few xco march 17.5 calls at 1.80

    only concern is lack of hedges in future

  62. 62
    PackMan Says:

    Z – yes.

    Ron Paul — he is popular in a libertarian sense b/c he is tapping into people’s frustrations w/ gov’t failures; corruption; financial shenanigans etc.

    But he is not a credible political figure IMO b/c he is a rambling conspiracy nut and associates w/ many fringe elements (or these elements associate w/ him and he doesn’t push them away). His question to Ben (rambling speech about Saddam Hussein and Watergate before ever getting to a question) was completely bizarre.

    He is also an isolationist, which I don’t subscribe to.

    No disrespect intended to those of you who like they guy; I just don’t think he stands up well to close scrutiny (but most pols don’t). He is certainly cut from a different mold than most of the career politicians.

  63. 63
    BirdsofpreyRcool Says:

    An awful lot of short-traders jumped on energy over the last few days. They seemed to be pretty indiscriminant about which ones they shorted too (lumping the oily ones in with that nat gas ones, the hedged with the unhedged). This could have the effect of ending badly for them. If Ben is talking about economic stability and some sparks in the labor market, that removes at least the short-theory on the oily kids. Nat gas should probably stabilize here too.

  64. 64
    zman Says:

    XCO – we are 100% HBP in the Haynesville.

  65. 65
    1520sbroad Says:

    #44 – weather here in NY/NJ will keep toes cold on the platforms thru the end of the week. I love it. I grew up in the midwest and got used to winter as about 6 months a year. The complain-o-meter is at stratospheric levels here.

  66. 66
    BirdsofpreyRcool Says:

    PackMan — i love the Libertarian ideals… but they have never been able to float a credible candidate. I agree on the Ron Paul “isolationist” comment too. He gets a lot of things right… but there are some glaring wrongs and some just plain nuttiness.

    Oh well.

  67. 67
    zman Says:

    XCO – saying it sees costs rising 30% in the Haynesville as EFS competes for the same equipment.

  68. 68
    Jerome Blank Says:

    MMR-30 min chart perspective…

    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3724280

  69. 69
    bill Says:

    xco had a crisp presntation

    i like how the ceo goes beyond answering the question. Very forthcoming

  70. 70
    bloodystupidjohnson Says:

    I see where Credit Suisse is calling for RIG to spin off its jackup rigs like it did with its 2004 TODCO sub.

  71. 71
    zman Says:

    Doug Miller at XCO holding a class on how to give a conference call. Papa used to do it this way, so did Floyd.

  72. 72
    zman Says:

    BSJ – high costs for their quarter caused the miss I hear at RIG but have not read it yet. Wonder if CS is just speculating or not.

  73. 73
    PackMan Says:

    HK very weak again after a decent start …

  74. 74
    PackMan Says:

    66 – BOP — me too, in each respect.

  75. 75
    zman Says:

    Pack – re HK – yep, it’s acting very poorly.

  76. 76
    BirdsofpreyRcool Says:

    HK — think it’s shorts pressing and longs just snoozing on the sidelines.

  77. 77
    zman Says:

    … and its at about the low end of the chart (last resistance) before it breaks down.

  78. 78
    bloodystupidjohnson Says:

    RE: 72 They are just making the case for a spin out.

  79. 79
    Jerome Blank Says:

    KOG…near short term support at about $2.30, updated chart…

    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3724280

  80. 80
    West Says:

    # 58 agree on BEXP forward statements the most important. Also interesting there are now 8 rigs running in KOG’s area of the Reservation between Big and Little Missouri Rivers, Questar-2, Zenergy-2, Petro-Hunt-2, Simray and KOG.

  81. 81
    zman Says:

    West – Have you seen any more evidence that makes you think some of the 24 hour IPs at BEXP could be suspect? You sound like you might be more comfortable with them after seeing the longer production histories.

  82. 82
    bloodystupidjohnson Says:

    Z: are you surprised at the lack of follow through on good earnings reports — HK, FST and XCO? Yesterday you could blame the market, but you can’t blame it today.

  83. 83
    zman Says:

    BSJ – Seems like more of the same from last week, also from last quarter. I don’t read a whole lot into the reactions just yet. You had gas falling pretty hard from last week and these have been gassy names. Also, with so much noise in the market, I think things are getting missed for longer than normal. EOG just getting a nod for its good quarter today from GS, a week or so after they reported. NFX delayed reaction as well. I think the oilier names will have an easier go of it as long as they don’t miss numbers or blow up their reserves.

    West – It will be interesting to see what BEXP does in terms of bookings per well in the Bakken, hopefully they break it out some as some of their peers are starting to do.

  84. 84
    PackMan Says:

    This Congressman nailing the irresponsibility of Congress on spending and agencies.

    Let’s see how Ben responds.

  85. 85
    bloodystupidjohnson Says:

    RE: 83 — PWE report a good quarter and it has done fairly well. I guess its that Canadian/Olympics effect — lol

  86. 86
    bill Says:

    lets tax the Indians

    http://news.yahoo.com/s/ap/us_tribal_oil

  87. 87
    zman Says:

    Something to keep an eye on:

    http://finviz.com/map3d.ashx

    We’re on the left about 2/3rds of the way down under basic materials.

  88. 88
    bloodystupidjohnson Says:

    RE: 87 — this could be a new check by police for a sobriety test — “see if you can find EV sir” — lol

  89. 89
    zman Says:

    BSJ – 3D market watch that helps you notice things more easily.

    MMR standing out today after the drubbing yesterday. We are getting closer to news, we have a good sized insider buy.

  90. 90
    BirdsofpreyRcool Says:

    MMR/PXP/EXXI — hearing that Moffett is thinking about doing a production test using the current drilling rig. This would delay any announcements, but could prove to be the definitive data he is seeking.

    Moffett has mentioned that he is willing to sell down some ownership in his ultra-deep prospects to fund the overall development. Production info at DJ would make that sales brochure nice and glossy. This might attract the interest (and balance sheet) of a Major. I don’t see a MOC buying into the play in a big way ahead of production data. But if a MOC does buy into the ultra-deep play, watch out… we’re going ballistic (i would think).

  91. 91
    1520sbroad Says:

    #87 – pretty slick.

  92. 92
    tomdavis12 Says:

    Z: 87. How do you use that site?

  93. 93
    West Says:

    # 81. Would like to see standard IP test for all wells or more exact description of what measurement was used and was it an actual 24 hour test. Since many wells stay on confidential status for 6 months it is hard to get an accurate production rate for wells. The slick water multi stage frac is definitely the key to success in the shale plays.

  94. 94
    PackMan Says:

    stupid algos front running my orders again ! I hate that crooked stuff.

  95. 95
    bill Says:

    http://denver.bizjournals.com/denver/stories/2010/02/15/daily43.html?ana=yfcpc

    and what do you do if you own 400,000 shares here?

    you take it private and screw the shareholders

    >8:30AM Pinnacle Gas Resources enters into agreement to be acquired by investor group for $0.34 per share of common stock (PINN) 0.26 -0.02 : Co entered into a definitive agreement pursuant to which an investor group will acquire Pinnacle in an all cash transaction for $0.34 per share of common stock. The investor group is led by Scotia Waterous and includes certain members of Pinnacle’s management team. The Agreement and Plan of Merger was unanimously approved by Pinnacle’s Board of Directors, upon the unanimous recommendation of a Special Committee of the Board, which was comprised solely of independent directors. The Board has recommended that Pinnacle shareholders vote in favor of the merger agreement.

  96. 96
    reefguy Says:

    90. Although I would love this, I think it is unlikely given the unknown pressure/gas composition.

  97. 97
    BirdsofpreyRcool Says:

    reef — #90 the only reason i lend any credence to this is the fact that they had an “unscheduled” production “test” about 2? weeks ago. I think it was before TD, tho. So unknowns added since then. Still… any chance they might try it?

  98. 98
    BirdsofpreyRcool Says:

    Moffett’s SIPES presentation from last Thursday.

    http://www.mcmoran.com/presentatn/2010/SIPES_JRM_FEB10.pdf

  99. 99
    tomdavis12 Says:

    Z: Barclays investment strategy in one line – “Continue to sell ralies in US equities, with an emphasis on reducing exposure to expensive cyclical sectors (materials, energy, financials)”

  100. 100
    bill Says:

    sd with a 7 dollar ahndle

  101. 101
    TEXWS6 Says:

    Re #67 on costs, told ya so…frac costs, steel, and proppant are drivers, CRR is SOLD OUT!!

  102. 102
    choices Says:

    http://www.bloomberg.com/apps/news?pid=20601087&sid=aMcIbQ0_TjIk&pos=7

    BOP-seems to be taking a page from your playbook.

  103. 103
    BirdsofpreyRcool Says:

    choices — ha! Saw that. Venturing into HY is fairly new for Pimco… but i totally agree with that strategy. Triple-Cs and Double-Bs. You don’t get paid enough for the risk inbetween.

    That said, you gotta be out of these Trip-C puppies when the economy turns down. They take the first (and hardest) smack down.

    Our (beloved) EXXI 10s are Trip-C rated. But I think that is more to do with the size and concentration of assets, than it does with interest coverage and leverage there. I know how the rating agencies approach E&Ps… the number 1 determination of ratings = size of 1P reserves.

    EXXI 10s at 101 now. 🙂

  104. 104
    BirdsofpreyRcool Says:

    Rule of Thumb… when “high yield” bonds tighten to +200bps, SELL.

  105. 105
    jiveyjr Says:

    WRES…still looks good to me…I keep buying…diversification not my strongest suit

  106. 106
    zman Says:

    Stepped out to lunch, last longer than I realized.

    Tom – that’s a heat map site, I just use to spot anomalies that maybe I should track down news on.

    Bil – re 95. I wrote up PINN when they came public, same week as SD if I recall. I said I was staying away from PINN and I bought SD that week.

    BOP – that would be good news on a well test but I sort of thought that would be extremely risky for the well as well given the equipment in place, maybe not even possible.

  107. 107
    zman Says:

    ROSE – Anyone see a broker note, falling off hard, counter group again today.

  108. 108
    elijahwc Says:

    Talisman Energy / Utica Shale / 12 million cubic feet of gas a day

    http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/quebec-shale-gas-find-could-redraw-canadas-energy-map/article1478900/

  109. 109
    zman Says:

    Lazy market, WLL after the close. Looking for in line production there and upbeat guidance on volumes, tightened guidance on costs (but not by a lot as they are oily). They should have 6 to 10 m Bakken wells to talk about at Sanish so look for some large IPs in there with comments about flat to slightly down cost per well comments. Also, looking for increased recovery factor in the non-Bakken CO2 plays to boost reserves there.

  110. 110
    zman Says:

    FSLR approaching the $100 mark.

  111. 111
    zman Says:

    “Snow Hurricane” to hit east coast:

    http://abcnews.go.com/Technology/snow-hurricane-threatens-east-coast-snow-flooding-winds/story?id=9931285

  112. 112
    zman Says:

    Glad to see HK exhaust the selling today and roll up a nickle. I’ll give the calls another week here to start working.

  113. 113
    zman Says:

    ROSE broke support, can’t find any comments, they report next week.

  114. 114
    Jerome Blank Says:

    Re: #113, ROSE..from a technical perspective, might be a good buying opportunity in ROSE coming up…ROSE is currently trading down to lower channel line and 100 day SMA support…we’ll see how it reacts down here…could be a good buy point…

  115. 115
    Jerome Blank Says:

    Re: #114, updated the ROSE chart…

    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3724280

  116. 116
    zman Says:

    JB – make or break well news for them on March 1 or before if they choose. If they have more than 1 Montana Bakken flowing, and the two are far apart, people will start to extrapolate value across their large acreage base. KWK and NFX would participate as well due to their interests in the NW part of the state. I don’t like to see it slip so hard on no news and on bigger than normal volume.

  117. 117
    zman Says:

    Re 114/115. Thanks, so $17.88 is 100 day. Question, do a lot of trades pay attention to the 100 day?

  118. 118
    Jerome Blank Says:

    Re: #117, a good deal of the stocks we follow seem to respect the 100 day SMA…I actually only recently started plotting it after one of our other members (I cannot recall who mentioned it) suggested it…especially when there is add’l support like the bottom channel line which is going to be watched…plus the P&F is getting a bit tired to the downside, having worked off that “high pole”…

  119. 119
    zman Says:

    Beerthirty

  120. 120
    zman Says:

    Thanks again JB.

    WLL already on the tape …

  121. 121
    AAA Says:

    Z, I might have missed it, but did you comment on the RIG report?

  122. 122
    zman Says:

    AAA – I saw they missed on costs but beyond that I haven’t had a good look at it. Stock took a hit drifting lower all day. I have not seen if what comments they had yet re utilization and rates.

  123. 123
    bill Says:

    wll had a 79 cent estimate

    they reported a loss so a huge miss

    z help me, wtf??

    bop was right

  124. 124
    zman Says:

    WLL missed but not a huge loss. You have to back out 90 cents of non-cash hedge loss.

  125. 125
    zman Says:

    On CFPS they missed by 2 pennies.

    LOE and G&A per BOE were on the low end of guidance.

    It may be DD&A was high, checking.

  126. 126
    choices Says:

    WLL-includes non-cash hedging loss of $45.7 mil or $0.90 per share.

  127. 127
    zman Says:

    WLL – it was a big variation in exploration expense, had been running around $1 / BOE, was $4 / BOE in the fourth quarter. That comes out of earnings as they expense it but it gets added back to cash flow. So it dings earnings but not cash flow from operations.

  128. 128
    zman Says:

    WLL 4Q – still walking through it.

    Production just over the top end of the range: 5.22 mmboe vs 5.0 to 5.2 guidance

    2 cent miss on CFPS

    2010 volume guidance:
    9.5 to 11.5% growth.

    5 more Bakken wells at Sanish with an average IP of 2,802 boepd, one TFS well at 1,262 boepd, not bad. Sanish field production continues to jump up, good exit on December rate.

    The CO2 projects continue to produce stronger than anticipated results.

    Not a great report, not terrible, just not great… still going through it.

  129. 129
    zman Says:

    3 big dry holes during the quarter. These guys are successful efforts. Other guys who are full cost would not show the ding on their income statement.

    This site has an explanation of the difference between Full Cost and Successful Efforts.

    http://wiki.answers.com/Q/Explain_and_critically_evaluate_the_full_cost_and_successful_efforts_methods_of_accounting_for_pre-production_costs

    This is one of the reasons I look at CFPS and not EPS on E&P companies. Some guys use SE method, other guys use Full Cost.

    The full cost method means you drill a well and whether good or bad it goes into your depreciable assets on the balance sheet. Successful efforts guys put their good stuff on the balance sheet but expense the bad stuff (dry holes) on the income statement.

    When analysts look at CF from operations they generally add the exploration back to net income, DD&A, deferred taxes and other non cash expenses to get to the number. In the case of WLL today that gets you to $3.34, Street was at $3.36.

    Since there is no way to know which holes are dry and which are good the companies usually only loosely guide exploration expense per quarter, if at all. Analysts generally just trend it from quarter to quarter. This quarter’s exploration expense however was nearly 4x the size of last quarter’s expense.

  130. 130
    bill Says:

    mcf is Successful Efforts and results get lumpy and Peak does nothing to explain it

    so wll in essence met expectations, let see if it trades that way

  131. 131
    zman Says:

    In a nutshell WLL 4Q stats:

    Production was 5.22 mmboe vs range of 5 to 5.2,

    Revenue was $316 mm vs $287 mm

    Cash costs were at the low end of the $/BOE range

    Exploration expense was nearly 4x last quarters amount due to

    EPS misses, came in at $0.66 (after removing non cash items) vs $0.79

    CFPS misses by 2 cents

    Guidance of 9.5% to 11.5% for 2010.

  132. 132
    zman Says:

    Bill – I would expect it to get knocked at the open and then trade higher unless the market falls out of bed.

  133. 133
    zman Says:

    Dry holes are rarely a good thing. One was a Niobrara test and I see they plan to spud more so that one could have at least provided information that didn’t discourage them on the concept.

  134. 134
    zman Says:

    When I say higher in 132, I mean off the opening low, not green on the day. People don’t have a lot of patience for messiness in results and while dry holes expense is often easily forgiven I don’t think there is enough in the pr, at least not what I see so far, to overcome the first blush reaction. I don’t think the guidance is big enough to wow people, I see good but not “big kahuna” wells in the pr, will check the forward cost guidance but by the time people get down to that they’ve stopped paying attention.

  135. 135
    elijahwc Says:

    From the deepest darkest recesses of specultion an update ERHE as I had mentioned the name a while back.

    Sinopec & Joint Dev’l Zone for Sao Tome and Nigeria have apparently reached agreement the on the release of JDZ drilling results. Something SNP had no real interest in doing. This is causing a super speculative dog with fleas (ERHE)and circle of death portfolio member (MHR TRGL ATPG ERHE)to spike on the best volume in two years. They were partnered and carried with APC, Sinopec & Addax as the operators in four blocks of the JDZ that they had rights to. APC left, Addax sold to Sinopec and Sinopec picked up the APC piece. Frankly the APC folks didn’t care for their business partners and wanted to be gone. So it’s all SNP now and I am hearing that they want it all. We’ll see.

    In any case I’ve been long this name way too long and will be watching the volume the next few days for follow through. I’m just a sucker for ugly and horrifically tainted investments. Ones that at the point of investment offer you only a remote chance of a payday but a decent one if it happens. It happened with Addax. Just for the record this is called gambling and with a light hand at that.

  136. 136
    bill Says:

    bexp out with a miss

  137. 137
    john11 Says:

    BEXP also out with a nice Three Forks well.
    AUSTIN, TX–(Marketwire – 02/24/10) – Brigham Exploration Company (NASDAQ:BEXP – News) announced that its operated Liffrig 29-20 #1H produced 2,477 barrels of oil equivalent per day (2,037 Bopd and 2.64 MMcf/d) from the Three Forks formation during an early 24 hour flow back period. Brigham maintains an approximate 72% working interest in the Liffrig, which was completed with 29 frac stages, ceramic proppant and perf and plug. Brigham has now completed 13 consecutive high frac stage long lateral wells with an average initial rate of approximately 2,379 barrels of oil equivalent per day.

    More info here…
    http://finance.yahoo.com/news/Brigham-Exploration-Announces-iw-505759527.html?x=0&amp;.v=1

  138. 138
    zman Says:

    BEXP – I see what the headline says about an unexpected loss of 4 cents:

    This is the paragraph in the BEXP release:

    Our reported net income for the fourth quarter 2009 was $2.5 million ($0.03 per diluted share) versus net income (loss) of ($180.6) million (($3.95) per basic share) for the same period last year. Our after-tax earnings in the fourth quarter 2009 excluding our unrealized mark-to-market hedging losses were $3.8 million ($0.04 per diluted share)

    That’s a positive, not negative, 4 cents.

    The rest of the paragraph on 4Q earnings reads like this:

    while our after-tax earnings (loss) in the fourth quarter 2008, excluding our unrealized mark-to-market hedging gains and ceiling test write-down were ($1.9) million (($0.04) per basic share). After-tax earnings (loss) excluding the above items is a non-GAAP measure and a reconciliation of GAAP net income (loss) to after-tax earnings (loss) excluding the above items is included in our accompanying financial tables found later in this release.

    That 4 cents loss is FROM LAST YEAR … 4Q08.

    Look at the income statement. It’s not a loss. It’s 3 cents bottom line and then you add back the unrealized (non cash) loss getting you to positive 4 cents.

    Volumes came a little over the mid point of guidance.

    Revenues were $22.7mm vs $22mm expected

    CFPS was $0.14 vs $0.12 expected

  139. 139
    bill Says:

    OH! lol

  140. 140
    zman Says:

    Bill – I just sent

    arup.roychoudhury@thomsonreuters.com

    in Bangalore the above blurb on earnings as he’s the fella who wrote it up, asking him to check into it.

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