Market Sentiment Watch: As nervous as she gets. Everyone eying the S&P 1040 level which was broken temporarily in late trading yesterday. Fundamentals are already on holiday and technicals are in charge as we approach the last day of the quarter.
What Took So Long Watch: State Department says it will start to accept the help from other countries with the Gulf spill. This is day 72. State went on to say that this does not mean the U.S. has not already accepted some help. Uh huh.
In Today’s Post:
- Holdings Watch
- Commodity Watch
- Natural Gas Supply and Demand Slide Shows – Supply Data For April Shows Flat Production Vs. March; Demand data shows a 5th Up Month for Industrial Consumption on a YoY Basis.
- Oil Inventory Preview
- Stuff We Care About Today – KOG Operations Upate
- Odds & Ends
ZCAT (Zman Catalyst portfolio):
- 99% Cash
- Positions for the quick view are updated on the ZCAT, ZIM, ZLT page.
ZIM (Zman Inefficient Markets portfolio)
- 7% Cash
- Yesterday’s Trades:
BEXP – Added (10) more July $17.50 Calls for $0.34 with the stock at 15.76. These are the same ones I added for $0.90 yesterday.
BP – Added (10) July $31 calls for $0.60 with the stock at 27.70. Two comments in last 2 days from BP and Coast Guard that the relief wells are closer than previously thought. I don't plan to hold through the actual intersection of the wellbore as there is still a good chance they miss on the first try.
Crude oil retreated $2.31 to close at $75.94 yesterday. After the close, the API released a fairly bullish looking report (see below). Multiple OPEC ministers in the last 48 hours have said the $70 to $80 per barrel range is comfortable for now.
Natural gas fell as well, dropping $0.19 , or 4% to close the day at $4.55 yesterday. See following sections on natural gas supply and demand comments/charts.
- Natural Gas Supply For the Month of April – Quick Charts here, more indepth charts and comments in the section below.
Early Read On Natural Gas Storage: Street is at 65 BCF for tomorrow’s report.
- Last Week: 81 Bcf Injection
- Last Year: 73 Bcf Injection – supply is probably about 2 Bcfgpd (14 B's per week) higher than it was at this time last year
- 5 Year Average: 80 Bcf Injection
- 10 year Hi: 99 Bcf Injection
- 10 year Low: 60 Bcf Injection
Natural Gas Supply Slide Show – Flat Month To Month, Nothing To Get Excited About On The Supply Front …
- April was flat with March production
- and up 1.75 Bcfgpd from year ago levels.
- So little hear for bulls to be happy about …. yet … and again.
… However The Demand Front Is Showing Signs Of Interesting Strength From The Industrial Sector
- Industrial demand up year over year for the 5th straight month
- Electrical demand benefiting from lower gas prices relative to coal
Oil Inventory Preview
API Watch: Nutshell: Bullish
- Crude: DOWN 3.4 mm barrels
- Big drop in Cushing inventories, down 1.9 mm barrels. This would be very much welcomed by the market.
- Gasoline: DOWN 0.9 mm barrels
- Distillates: UP 4.0 mm barrels
Stuff We Care About Today
KOG Operations Update
1) KOG is obviously having trouble getting in line for frac crews. This is not surprising given their small size and the 128+ rigs now operating in the Williston Basin. By the way, if you or a friend are looking for work you can probably find it there as this is a boomtown play now.
2) The rate on their #13 well, of 1,517 BOEpd, is impressive for a short lateral. It seems clear they're honing their completion methodology.
3) Three more wells waiting on completion, not far away (one in July, one in August) but still well behind where we thought from the 1Q call. Again, having two rigs is nice but not a guarantee that you can make your time lines, especially if you are a minnow.
4) Their Three Forks test was set to spud in the first half. This has not yet spud and is said to be a 4Q completion. Slow, slow, slow.
5) They are drilling outside of the FBIR in their Grizzly acreage (in the Elm Coulee area) which is a good to see as the story will need to move off the Reservation, so to speak, to really leg up from here. One re-entry that will be completed in 3Q and then a new drill long lateral, both targeting the Bakken. Along with their Koala area they now have 9,565 net acres in McKensie county, N.D..
6) If I were a modeling analyst on the name I'd be thinking to push numbers out into the future as their time lines are soft. A modest offset is the marketing deal announced in the update that will help reduce transportation costs from a portion of their original acreage position.
Odds & Ends
- TBA —-
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