28
Jul

Thursday’s a Beach

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Short post today as I'm on vacation through next Tuesday or Wednesday. I will try to drop a post daily so you guys have some place to converse.  BOP and Nicky are in charge so if the site is slow complain to them.  I'll be out of touch most of today and this post was written late last night so it won't contain all of the avalanche of earnings today but I did get to look over WLT and WLL and both are covered in the Stuff section below.

By the way, that other well that's leaking in the Gulf, the one in shallow waters that was hit by a tug, has now yielded a sheen of 6 square miles. The well is an "orphaned" well (neither producing nor plugged and abandoned often due to the insolvency of the responsible party). There are thought to be over 340,000 orphaned wells in the United States, many of which are decades old. Look for Congress to add new provisions to the Blow Out Preventer Act of 2010 for orphaned wells in the near future.

In today's post:

  1. Holdings Watch
  2. Commodity Watch
  3. Natural Gas Inventory Preview
  4. Stuff  We Care About Today - WLL, WLT, SSN, LINE

Holdings Watch ZLT (a little more active than usual but I won't make a habit of it)

  • AEZ – Sold all for an average $7.135, up 33% since entry in late May. See site for further details.
  • OAS - Added a third bit of stock at an average $17.22 (brings my overall average to $15.92).

Commodity Watch

Crude oil fell $0.51 to close at $76.99 yesterday after the EIA reported a much bigger than expected build in crude stocks due to a much bigger than expected surge in imports. The relevant charts follow:

Crude Imports - I suspect there is something wrong with EIA's imports file for last week. Take a look the big jumps in imports from Mexico, Nigeria, Saudi Arabia and Venezuela shown here. This report is new with the recent redesign of the EIA Wednesday report and that just looks odd.

Crude Stocks

Gasoline Demand

Natural gas closed up $0.07 to close at $4.72 in end of contract inspired trading. The September contract takes over as the front month today. We should get the latest read on natural gas supply from the EIA later today.

  • Tropics Watch: Nothing on the near horizon.

Natural Gas Inventory Preview I'm looking for a 35 Bcf Injection

  • Imports were up 0.5 Bcfpgd from the prior week, but still pretty troughish.
  • Weather was the hottest of the season to date.
  • Last Week: 51 Bcf Injection
  • Last Year: 70 Bcf Injection
  • 5 Year Average: 54 Bcf Injection
  • 10 year Hi:  81 Bcf Injection
  • 10 year Low: 19 Bcf Injection

Street is at 32 BCF for tomorrow’s report.

Stuff  We Care About Today

Quick Looks: A bunch of brief comments on earnings

WLL Reports A Beat; Ups Guidance

The 2Q Numbers:

  • Production of 64.6 MBOEpd:
    • vs 59,865 BOEpd last quarter (up 8%)
    • up 17% YoY
    • and above the high end of the guidance range of 62.22 to 64.44 MBOEpd
    • June rate was 65,690 BOEpd
    • 81% of production came from oil
  • Revenue of $377 mm vs $355 expected
  • EPS of $1.31 vs $1.23 expected

Guidance:

  • 3Q of 6 to 6.2 MMBOE (or 66.67 to 68.89 MBOEpd)
  • 2010 Volume Guidance Increased:
    • From a range of 11 to 13% growth
    • To a range of 15 to 17% growth
  • Budget remained flat with prior guidance at $830 mm.

Highlights:

  • Louis and Clark Prospect Area:
    • 226,000 net acres
    • 3 wells awaiting completion (looking for timing color on the call but I would not hold my breath for an interim update much before the 3Q call)
    • plan on drilling 13 wells here this year
  • Sanish Field Area:
    • Reported one well at 4,144 BOEpd IP
    • Says they are drilling 10,000 foot horizontals in 20 days for $5 mm. That is just wow-cheap.
  • Niobrara:
    • Leased 39,000 net acres in the Niobrara in northeastern Colorado which should be news to everyone.
    • Already had leases on 32,000 net acres in Carbon County, Wyoming (Hatfield Prospect). Planning 2 vertical wells in second half.
  • Enhanced Oil Recovery (EOR) Projects continue to perform better than expected

 

Valuation: Still the cheapest name in the Bakken and estimates will be going up. Currently trading at 5.4x 2010 and 4.5x 2011 CFPS estimates (again, both of these numbers will be rising).

Nutshell: Another good quarter, unfortunate that they didn't have results from the Louis and Clarke wells but it sounds like they are increasingly confident they have latched onto a new core area. The Niobrara story could auger for a higher multiple with the name in the second half.

Conference Call: Today, 11am EST

LINE Expected To Report Before the Bell This Morning

  • Production of at least 240 MMCfepd (the mid point of guidance)
  • Revenue of  $241 mm expected
  • EPS of $0.35 expected

Nutshell: I won't be around for the call but would expect them to slightly boost production guidance which appeared overly conservative last quarter at 245-255 MMcfepd for 2010 and to also outline their thoughts on the excessive distribution coverage that should be building up later this year. If fully year distribution coverage is > 1.15x look for the stock to react positively today, all other things being equal. Conference Call: Today, 11am EST

WLT Reported Better Than Expected 2Q Numbers

The 2Q Numbers:

  • Production of 1.7 mm short tons, sales of 1.8 mm ST which was in the middle of guidance
  • Revenue of $410 mm vs $409 mm expected
  • Coking coal margin per ton of $95.53 was above the guided range of $85 to $90 due to better than expected pricing.
  • EPS of $2.16 vs $1.93 expected

Highlights:

  • "Coking coal posted record operating income during the quarter"
  • "Expect these positive trends to continue, leading to further improvement in revenue and operating income in the third quarter"
  • Second quarter met coke sales were done at $415.90 /ton (that's very strong), up from $327 in 1Q and $367 / ton a year ago.
  • Guidance:
    • 3Q: 1.8 to 2.0 mm tons coal
    • Margin per ton seen climbing to a range of $110 to $115
    • Full year production comes off a hair, from 8 mm tons to a range of 7.7 to 7.9 mm tons, due to a delay in moving a longwall mining op in the 4Q.

Nutshell: More volumes and better prices near term, slight bauble on production later in the year, should not be a problem for current estimates.  Besides, the name had come off with the other coals in the last couple of months and so was not exactly priced for perfection going into these numbers. Conference Call: Today, 9 am EST

SSN Reported Their June Quarter Last Night - you can see the report here.

  • Few if any surprises.
  • Nice to see production beginning to happen but we are still very early

    • Sequentially production was up 360%,
    • 99% of it being oil
    • But they are still tiny at the moment with on 256 BOEpd of production in the quarter. Baby steps but getting there.
  • Bakken well costs look in line with most peers, a little room for improvement. 
  • Bakken well completion timelines in line with prior comments
  • Next Bakken completion is two weeks away (the Gary 1-24H from the Catalyst List)
  • SSN planning a 3D survey of it's remaining Niobrara, expect 2 horizontal tests in 1Q11, largely carried.
  • Interesting to read through the Niobrara session and note that they are talking about EOG when they say a leading industry player and then note that the $10 mm deposit from their land buyer is due on August 6th and EOG reports August 5th. Probably just a coincidence. 
  • I have not paid much attention to their non-Bakken and non-Niobrara plays but they do have a Bone Springs target (in an existing producing wellbore) in New Mexico that will be fracced in September as well as a high risk/high reward Gulf Coast prospect that will spud in the Fall.
  • Their previously announced Gulf Coast well Davis Bintliff well is cleaning up and producing more than the IP.  Small working interest but it sets up other prospects.

Interesting Reading Watch:

86 Responses to “Thursday’s a Beach”

  1. 1
    zman Says:

    LINE 2Q strong. Above my thoughts on production

    Distribution coverage better than expected. Talk of future growth in the distribution.

  2. 2
    zman Says:

    From LINE. “Year to date, we have closed and/or announced approximately $1 billion in acquisitions,” said Mark E. Ellis, President and Chief Executive Officer. “We believe these acquisitions, along with continued exceptional results from the Granite Wash drilling program, create the strong potential for future growth in distributions.

  3. 3
    BirdsofpreyRcool Says:

    From 7:45 am this morning… an early look at what’s going on —

    Morning Levels:

    · SP500 futures are up 6 points.

    · Europe: DJ Euro Stoxx up 0.5%; FTSE up 0.7%; CAC, DAX, Spain all up ~40-60bp.

    · Europe trading – big morning of earnings – see below for recap; telecom big performer of the morning, trading up nearly 3% after earnings; energy, utilities, basic materials all up ~40-60bp; financials are flat. France Tel, Teleconica both v strong. On the downside, Arcelor falls another 2% (continued selling in steels); Santander off ~1.5% post earnings and prompting some profit taking in other financials. In London, some big movers post earnings – Reed +5.5%, Astrozeneca +5%, BAE +3.2%.

    · Asia: Japan dn 0.6%; China +0.5%; Hong Kong flat; India flat; Australia dn 0.1%

    · Sov CDS: pretty flat today in Greece, Spain, Portugal, etc. Only 1-3bp move in either direction.

    · Bank CDS – some more tightening in Europe (small 1-3bp tightening) – Lloyds, Barclays, HSBC, SocGen, Santander, BNP, BBVA all tighter. European bank CDS heading for a record monthly tightening in Jul according to Bloomberg.

    · Commodities: copper up another 1% and making new multi-month highs; crude and gold both up small this morning.

    · Treasuries – 2s flattish while 10s and 30s dip small.

    · FX – DXY off 0.6% and falls under 82 level; hitting lows since late Apr; Euro up 0.6% and breaks further above 1.30 (people now saying 1.35 next big level); yen up 0.5% vs. the dollar; pound up 0.26%.

  4. 4
    BirdsofpreyRcool Says:

    More early morning comments on policy —

    Washington

    · US credit outlook – Moody’s interview on DJ getting attention – Moody’s says US needs to articulate a credible plan to tackle its debt in order to keep its AAA rating; says EU’s debt crisis has peaked (DJ)

    · FT oped this morning – “Bernanke must end era of ultra-low rates” – http://www.ft.com/cms/s/0/2a19a706-9a7a-11df-87fd-00144feab49a.html?ftcamp=rss

    · Medical care consumption is falling – raising questions about whether consumers are cutting back on care as they are forced to pay for more of the expense; sluggish economy also playing a role; the drop in health care consumption one of the big trends of this earnings season (showing up most in the HMOs); per WLP’s CFO: “People just aren’t using health-care like they have,” – WSJ http://online.wsj.com/article/SB10001424052748703940904575395603432726626.html?mod=WSJ_hps_MIDDLETopStories

    · Basel capital rules – Dodd and Frank are planning to hold hearings on the status of the global Basel talks; “I am concerned the recent proposals out of Basel will result in weak and perhaps even nonbinding provisions that provide credit to banks for holding forms of capital that have little or no value in absorbing losses,” said Senator Ted Kaufman, Democrat of Delaware Bloomberg

    · California – the state declared a state of emergency over its finances on Wed; pressure is rising on lawmakers to complete a budget that needs to fill a $19B shortfall; tens of thousands of state employees will start taking three days off per month in Aug – Reuters

    · Online gambling – Congress is considering legalizing and taxing online gambling in an effort to raise tax revenue; the House moved forward w/a measure on Wed although the issue is far from becoming law – NYT http://www.nytimes.com/2010/07/29/us/politics/29gamble.html?_r=1&hp

    · RealtyTrac – Midyear 2010 Metropolitan Foreclosure Market Report – “While we’re seeing early signs that foreclosure activity may have peaked in some of the hardest-hit markets, foreclosures continued to rise in three-quarters of the nation’s metropolitan areas in the first half of the year,” (RealtyTrac)

    · SP500 could break to highs of the year if it can burst up through cluster of resistance (200-day moving average of 1,114.12, its 100-day moving average of 1,128.34, its previous high of 1,131.23 reached June 21 and finally above a key Fibonacci resistance level of 1,140) – Bloomberg

    · Illinois likely to raise its income tax rate in Jan to help close its budget deficit – Bloomberg

    · CEO update from CNBC – Chief executives at a companies in industries ranging from hotels, to energy, to health care, to technology, and restaurants, have a wide-range views on where the economy is now and where it’s going. Some have started hiring, while others are holding off. But even those with a more pessimistic outlook seem to think the worst is over. CNBC http://www.cnbc.com//id/36495547

    · Beige Book – The recovery stalled in the Cleveland and Kansas City areas, while it was slowing in Atlanta and Chicago, according to the latest Beige Book. Throughout much of the first half of the year, the Fed’s collection of anecdotes had reported the economy generally expanding “modestly.” The more cautious tone in today’s report was largely related to manufacturing, where activity had “slowed or levelled off.” Given the sectoral source of slowing, it is not surprising to see the geographic hit from the softening felt most in the Midwest (Feroli)

    · Bill Gross/PIMCO’s latest (this was published Wed morning). Says falling population growth + aging of current population will only exacerbate the “New Normal” (deleveraging, reregulation, deglobalization). http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2010/Gross+Privates+Eye+August.htm

  5. 5
    BirdsofpreyRcool Says:

    And some commentary about what happened yesterday —

    Yesterday’s Trading

    · Market Update – despite still being in the thick of earnings season (European companies are just getting going while the biggest market cap company in the US, XOM, has yet to report), the last few days have been pretty quiet after 10am. Investors have largely moved on from Q2 earnings (i.e. after hearing INTC/AMD/LLTC, the BRCM report becomes less interesting) and w/the European bank stress tests out of the way, there aren’t a whole lot of catalysts until next week (the big events for next week will be the Jul eco releases – China’s PMIs hit over the weekend for manufacturing and the US ISM comes on Mon; on Fri we will get the Jul labor report from the US, where the St is forecasting 98K adds). The tape took a dip this afternoon, hurt first by the very strong 5yr auction (TSYs staged a big rally after the auction and stocks had hoped investors would be a bit less enamored w/riskless assets at this stage) and then by the Beige Book knocked stocks further (the tone of the Book was def. more cautious than the prior updates, although nothing that was too divergent from what we have been seeing in the eco numbers or hearing from Fed officials of late). The tape was demonstrating signs of fatigue for the last few sessions (Mon afternoon/Tues morning’s inability to break above 1120 signaled that buyers were becoming tired and reluctant to chase prices higher) and many were looking for excuses to take profits (which the Beige book today provided), esp. in those groups that had the biggest runs. Volumes on the desk actually slowed on the sell-off and there wasn’t a lot of large long-only participation (was mostly a lack of buying combined w/some quicker trader profit taking/shorting).

    · Some of the items that weighed on equities: 1) Beige Book: if there was a single catalyst that broke the market this afternoon, it was the Fed’s Beige book out this afternoon (although the report didn’t really reveal any “new” information); 2) very strong 5yr auction signaling investors still seeking riskfree assets; 3) the ICBC capital raise worrying investors that capital raising in China not out of the way; 4) neg. steel data points continue to accumulate w/MT overnight (following JFE, X, AKS, etc); steel prices turning were one of the initial drivers of this rally; 5) steep decline in housing stocks (the sp1500 housing index fell ~4% today as earnings from likes of MTH, MHO disappointed).

    · Equity sectors: Telecom was the top performing sector in the market, rallying 0.3% thanks to strength in S off earnings. Energy was off just slightly, outperforming on strength in XOM ahead of earnings tomorrow, a few E&Ps on a jump in natural gas, and strength in MEE off earnings. Industrials were off just over 0.25% as the MBA mortgage app number and MHO and MTH’s earnings led builders lower and earnings out of ROK, BA, and MTW weren’t enough to get investors excited. Staples were off just over 0.5%, outperforming as CVS’ earnings outweigh weakness in grocers and beverages. Utilities were slightly ahead of the tape, as strength in EQT and EXC offset weakness in CEG. Materials were off 0.6% thanks to strength in fertilizers and earnings out of packaging stocks, although steels continued to lag on poor 2H guidance. Discretionary was off around 0.75%, mostly in line with the tape as weakness on EK’s earnings more than offset strength in WYN’s earnings. Financials were off 0.95% and lagged on weakness in AFL’s earnings and some regional banks. Tech was off 0.95% on weakness in semis (SOX off 1.8%), particularly LSI (-4.6%). Healthcare was the worst space in the market, moving down 1.4% on weakness in services, managed care, medical devices, and biotechs.

    · Technicals – from Krauss this morning: Short term Bulls maintain the agenda above 1098-1100 (we closed at 1106)

    · Best performing sp500 stocks: WYN, CBG, CHRW, WAT, FDO, JCI, CVS, SLM, FISV, RRC

    · Weakest: EK, IGT, CEPH, NYT, HSP, ATI, CEG, LSI, AVY

  6. 6
    BirdsofpreyRcool Says:

    U.S. Stock-Index Futures Extend Gains on Drop in Jobless Claims
    2010-07-29 12:33:25.346 GMT

    By Michael P. Regan
    July 29 (Bloomberg) — U.S. stock-index futures extended gains after the government reported a bigger-than-estimated drop in jobless claims.
    Futures on the Standard & Poor’s 500 Index expiring in September climbed 0.6 percent to 1,108.5 at 8:31 a.m. in New York. Dow Jones Industrial Average futures rose 50 points, or
    0.5 percent, to 10,498.
    Initial jobless claims dropped by 11,000 in the week ended July 24 from a revised 468,000, Labor Department figures showed today in Washington. The number of people receiving unemployment insurance rose, while those getting extended payments declined.
    The S&P 500 dropped 0.7 percent yesterday after orders for durable goods unexpectedly decreased and the Federal Reserve said economic growth slowed in some areas. The gauge has climbed 7.3 percent in July, headed for its best monthly advance in a year, as more than 80 percent of its companies that have reported so far posted second-quarter results that topped analysts’ estimates.

  7. 7
    BirdsofpreyRcool Says:

    Our little friend, TED, continues his glide into the Safety Zone… clocking in around +31.5 bps, taking his time to get back into the +25 bps and below All-Clear Level.

    IG index 2 bps tighter (after blowing out about 3 bps y’day) to +103 1/2 bps

    HY also acting perky, 11/32 pts higher (9 bps tighter)

    There is no more eco-news scheduled for today, a 5-yr US Treasury auction is planned, but lately auction results haven’t been the mrkt moving influence that they were in the recent past. Mr Market changes what he considers to be “important” on a frequent basis. Except for “jobs.” That is (and should be) the Number 1 focus.

  8. 8
    bill Says:

    New tanker stock– re nna

    http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MzkxMDcyfENoaWxkSUQ9Mzk0ODM1fFR5cGU9MQ==&t=1

    there is an arb opportunity in its warrants

    nnaws– early cashless conversion 4.25 to 1

  9. 9
    Nicky Says:

    Good morning. Well seeing hopefully an early bounce. Whether we make new highs here is open to debate but if we do resistance comes in at 1126. Support is at 1106.
    Even if we don’t the move up today gives me some hope that we can stay above that key 1089 level whilst a minor cycle plays out to the downside into next Monday/Tuesday.

  10. 10
    BirdsofpreyRcool Says:

    Nicky — your call for a low next Monday/Tues makes sense from a tactical perspective too. If the mrkt sells off, the first few days of the month, and if that sell-off acts to suck in some “value investors,” that could unlease active buying by mutual funds.

    Equity strategists are still calling for a higher SPX at the end of this year. If true, we are going to have to cross that divide at some point.

  11. 11
    BirdsofpreyRcool Says:

    bill — thanks for showing up. Keep it active, man!

  12. 12
    BirdsofpreyRcool Says:

    TPH likee-likee WLL earnings report too… what they say —

    WLL – upgraded to Buy on upcoming well catalysts, Lewis & Clark, cont’d production beat, improving type curves… future fire power w/ generating cash flow and $1B in liquidity to do a deal. New NAV up $2 to $101/sh. Expect stock up on free cash and oily growth.

  13. 13
    bill Says:

    for z benefit

    oil opens up 23 cents to 77.22
    ng opens up 9 to 4.80

    dow looks up 60 to 70

  14. 14
    bill Says:

    BOP 11 🙂 You too!!!

  15. 15
    apbd Says:

    This isn’t going to be a week of ” smily faces ” is it? lol
    apbd

  16. 16
    BirdsofpreyRcool Says:

    musing… EXXI — woulda, coulda, shoulda… 16.50 too cheap. Thought about taking a few shares out yesterday afternoon for a 1-night stand. Of course, now i’m sorry I didn’t.

  17. 17
    BirdsofpreyRcool Says:

    🙂 😉 8)

    nah…………….

  18. 18
    BirdsofpreyRcool Says:

    GST restating their 1Q earnings. OOPS… we forgot we had a few nat gas hedges… should have added $9.4mm to equity. Our Bad. So sorry.

    (How do you miss $9.4mm of gains, on a $200mm mrkt cap company? “Glitchy accounting software”?? yikes.)

  19. 19
    john11 Says:

    QEP strong start.
    TPH comments this morning…
    QEP Q2 follow-up ($30.91 – B) – Top gassy pick and 700 bps outperformance over last two days just beginning as QEP should continue to impress on operations. Deep pockets provide lots of opportunity and stock too cheap to ignore (trading at 43% discount to our $54/sh NAV).

  20. 20
    BirdsofpreyRcool Says:

    z — your OAS pick in the Bakken Horse Race continues to do well… up at $17.45 this morning.

  21. 21
    Nicky Says:

    The negative cycle is actually in line with the cardinal climax which hits in the next few days and many astrologers think could be very bearish.

  22. 22
    elijahwc Says:

    CHKM: Chesapeake Midstream now trading. Pretty nice reception @ $22.35

  23. 23
    BirdsofpreyRcool Says:

    According to HeadTrader, yday there was no reason to be down… today there is no reason to be up.

    Conclusion = This is a mrkt, currently flying without reason. Could honestly do anything.

  24. 24
    crysball Says:

    WLT CC just finished.
    Besides postive #’s and forward outlook by Mgmt……….every analyst (at least 8 on the Q &A) were making the right clucking sounds after their questions were answered…would expect to see some upgrades follow.

  25. 25
    BirdsofpreyRcool Says:

    crysball — thank you!

    (“right clucking sounds”… you crack me up)

  26. 26
    Popeye Says:

    “According to an article on the New York Times, a historical cross-over has occurred because of the declining costs of solar vs. the increasing costs of nuclear energy: solar, hardly the cheapest of renewable technologies, is now cheaper than nuclear, at around 16 cents per kilowatt hour. Furthermore, the NY Times reports that financial markets will not finance the construction of nuclear power plants unless the risk of default (which is historically as high as 50 percent for the nuclear industry) is externalized to someone else through federal loan guarantees or ratepayer funding. The bottom line seems to be that nuclear is simply not competitive, and the push from the US government to subsidize it seems to be forcing the wrong choice on the market.”

  27. 27
    rseidman Says:

    VTZ: If you’re on the site, could you tell me where you think gold will go,
    near term? You’ve been pretty good predicting overall. Why is gold going down with the dollar? Doesn’t make sense to me

  28. 28
    zman Says:

    Crys – thanks much. Cell kept dropping. Quarter looked good, tempered by the slight reduced guide on volumes.

    Hopefully I can listen to WLL

    Did not see change to forward guidance at LINE, did I miss that?

    Thanks for the updates Bill/ all

  29. 29
    Nicky Says:

    need to hold around this level on the spx if we are going to see higher highs. at the moment its a 62% pullback so could be a wave ii.

  30. 30
    1520sbroad Says:

    +28 bcf for nat gas

  31. 31
    1520sbroad Says:

    Storage now 3.1% less than year ago

    Storage 8.9% more than 5yr average

  32. 32
    BirdsofpreyRcool Says:

    +28 Bs is a bullish number… seeing nat gas rallying a bit

  33. 33
    VTZ Says:

    RE 27 and Nicky from the other day – I believe that gold is being forced down in the last big accumulation before the last big wave in this portion of the bull rally. I still however think that after a somewhat large pullback we could see multiples of the current price.

    In the short term, I recommended to those who did not own a position before the rise to 1200+ to purchase at ~1180, ~1130-1140 (although I would now recommend more like 1145) and 1080-1090 ish.

    I don’t believe that gold will trade down to 1080(or the 1045 India buy price) although it’s not outside the realm of possibility.

    As for me, my gold position is large enough that I would not be adding until the lowest level I mentioned above and it would be as a trade. I would not recommend trying to trade your position as in the short term, gold could regain 1180 and some more positive momentum if it manages to make a close there by the end of the week. In the short term however I think another test of 1156 and 1145 is most likely.

    There are wave counters like Nicky who have a bullish count that says the 1265 peak was 3 up and 4 down will be this next low (whether that be 1145 or 1080), then 5 up projects much higher to 1500+. I don’t normally subscribe to wave counting although I mention it because it fits in with some of my technical expectations.

    I believe the next big wave up will begin once the Fed is expected to pump more liquidity into the system once the “recovery” starts to show more negative signs. There have been increasing signals recently. I would expect some sort of liquidity pump or new program discussion to start in the next few months (and if not in the next few, immediately after the elections).

  34. 34
    1520sbroad Says:

    -1 bcf in west region
    -5 bcf in producing
    +34 in East

    gassy stocks at the beach with Z

  35. 35
    bill Says:

    http://ir.eia.gov/ngs/ngs.html

    ng in the east at 5 yr avg’s

    withdrawals in 2 of the 3 regions this week

  36. 36
    VTZ Says:

    RE why gold isn’t trading against the dollar, probably because the blackboxes have been programmed to cause a bit of confusion… call me a pessimist.

    I don’t really have a good answer for you there other than the amount of QE has tapered off in recent months and the euro issues were gold positive so now that the euro is rising against the dollar, some of those positions are unwinding.

    On an unrelated note, the HUI is at somewhat attractive levels as compared to the commodity price and once the bull market is back on, we should be able to break longer term resistance.

  37. 37
    Nicky Says:

    VTZ – many thanks for #33. Interestingly I have 1144 as (I think) the 200 dma which may see a test. Also, and correct me if I am wrong, isn’t July – October usually a weaker time for gold? And yes also agree with your 1180 level which is the top of this down channel we are in.

  38. 38
    rseidman Says:

    VTZ: Thanks

  39. 39
    VTZ Says:

    RE 37 – Yeah ~1145 is for sure going to be the strongest candidate for a reversal.

    It’s been common for people the make “the summer is weak for gold” argument although I’ve seen substantial conflicting data both ways depending on what time period you elect to analyze. I don’t particularly agree with it, although it’s become almost as ingrained as “sell in may, go away”.

    Everybody should keep in mind that the Fed recently made extra efforts to compel us to believe that they had all sorts of means of QE at their disposal and not to worry, because they are ready to act. If there is any question of whether more QE is required, Helicopter Ben will surely overdue it.

  40. 40
    choices Says:

    Thanks, BOP, Nicky for holding the fort-all information is welcomed as I think this is a very tricky point in the market with a lot of questions pertaining to the “recovery,” which is not happening, at least in the job market and the housing mkt.

    Z-have a good time, try to relax and step away-for you to put together late at night a long post such as today, trying to pack up two interns, and helping the wife to pack for vacation, is beyond the call-Thanks!

  41. 41
    VTZ Says:

    One last one, then I’ll give Z his blog back (sorry):

    I find it interesting that there is as much churn between 1175 and 1145 as there has been already, it’s somewhat in no man’s land in terms of resistance and technicals, so to me it’s showing the willingness of dip buyers. This also inclines me to believe that 1145 will be the point of reversal.

  42. 42
    bill Says:

    As you know the 5 yr avg is 2005-2009. Next year as 2005 drops off and 2010 goes into the 5 yr avg, the 5yr avg for this date increase to 2,800 bcf cutting the current overage to 5 yr in half.

    Holding injections to last year numbers gives us and ending position at 3731. Many are predicting 4,000 bcf this year.

    Hot weather is helping

  43. 43
    cargocult Says:

    BOP- for my benefit could you put the credit market info in metaphorical terms like before?

  44. 44
    cargocult Says:

    Popeye- nuclear power has never been able to stand on its own, and hasn’t. And when you factor in the deferred costs of storing and protecting nuclear waste until the second coming then the numbers fall apart. It is just a very expensive way to boil water. But those cooling towers and containment domes look cool.

  45. 45
    crysball Says:

    Z, am fascinated by your comments on ‘ORPHAN WELLS’ this AM, specifically:
    ” By the way, that other well that’s leaking in the Gulf, the one in shallow waters that was hit by a tug, has now yielded a sheen of 6 square miles. The well is an “orphaned” well (neither producing nor plugged and abandoned often due to the insolvency of the responsible party). There are thought to be over 340,000 orphaned wells in the United States, many of which are decades old. Look for Congress to add new provisions to the Blow Out Preventer Act of 2010 for orphaned wells in the near future”…………and the opportunity it creates for the little guys like LEI and ‘Stripper Well operators.

    Do you know how:
    ~are thes Orphans on Expired leases, and thus the landowner (or sea bottom owner in the case of offshore wells) has the liability if anything goaes wrong………like occured this week in the GOM?
    ~Does the Texas RRC have a list of orphaned wells in Texas ?
    ~Who are the experts in ‘ORPHAN WELLS’

    It would seem the ‘boys in Wash. DC will want to TAX* somebody for the potential contingent liability which exists…….and this would create wonderful opportunities for those like LEI and stripper well operators who can convert ‘LEMONS into LEMONADE’.

    Above is merely IMHO……and would galdly do the legwork (and report back to the board) if you can point me in the right direction.

    *i.e politicians will see this as a new rallying cry and a way to punish the oil patch and write it into the Blowout Prevention Act.

  46. 46
    Nicky Says:

    okay wave ii is off the table as we have taken out yesterdays lows. Now looking at the possibility of a wave iv double zig zag and we are in A down of an ABC.

  47. 47
    BirdsofpreyRcool Says:

    cargo –just for you.

    To summarize: Dog is healthy… tail is deeply skeptical.

    However, dog is looking over its shoulder at The Master. Wondering if it’s OK to “act normal.” Master keeps telling the dog to “go ahead, eat, live your life, have fun. But if you make ONE mistake, I am going to drag your sorry flea-bitten butt to the pound. Because I know, at heart, you are a bad dog. And I am the Perfect Master. (Even though I randomly hit you with a club on the head, now and again… it’s because I think you are basically evil).”

    Master doesn’t realize the mixed signals he is giving. Master doesn’t realize that HE could actually makes mistakes HIMSELF. So, dog is healthy… but afraid to do what dogs do.

    In this situation — understandably– the dog doesn’t feel like wagging his tail.

  48. 48
    BirdsofpreyRcool Says:

    But dogs (unlike Masters) are basically good-hearted and optimistic. There are a few bad dogs out there, but most just want to do what dogs do. So, eventually the dogs will be unable to suppress the urge to run around the Dog Park, bark, have fun, eat, and wag their tail… regardless of what The Master is doing.

    A dog just gotta be a dog. Can’t suppress the natural urges forever.

  49. 49
    crysball Says:

    bill,
    Question regarding working gasiin storage:
    ~Are imports (whether via pipeline or LNG) going into the working gas in storage #’s?
    ~and the same applies to exports are they being deducted?
    ~waht is the definition of ‘WORKING GAS IN STORAGE’ ?

    It would seem to me that imports and exports would need to be included, do the ‘production’ numbers includ imports and exports.

  50. 50
    cargocult Says:

    Can we figure out a way to monetize your very instructive and unique credit market explanations? Perhaps an illustrated daily widget with dog and friends. Can we call the dog Teddy? Maybe the Master we call Bernie?

  51. 51
    bill Says:

    49 i dont know

    The NG stocks are getting no love

    Hk near a 52 week low

    sd more of the same

    I just dont know what catalyst will get these moving.

    Seem like capitulation

  52. 52
    BirdsofpreyRcool Says:

    cargo — you are cute. thank you.

    I like “Teddy” for the dog (very appropriate). Not sure “Bernie” is the name I would pick for the Master (who is really an amalgamation of People In Govt — big surprise, i know).

  53. 53
    bill Says:

    thinking about 49.. i think the storage is the storage, therefore it has NG from any and all sources.

    The change for the week represent the diff between supply and demand so the 28 means there was 28 injected into the supply. Normally, for this week , its 55 to 60, so less is being injected, which means demand is up..due to the hot weather

  54. 54
    BirdsofpreyRcool Says:

    gotta run out for an hour or so… looks like we are in for our usual Noon Swoon.

  55. 55
    zman Says:

    Imports & exports are taken into account via the change in storage. They are not reflected in the production #s I talk about once a month. Those #s are due out again later today by the way. Production is at about 62 Bcfgpd now, Canada sends down 8 to 11 Bcfgpd depending on the season and LNG adds anywhere from half a B a day to 3.

  56. 56
    Nicky Says:

    Reluctantly going to put the more bearish count out there in the event that 1089 is taken out. We are likely looking at a move back to 1052 – 1070.

  57. 57
    crysball Says:

    re: ‘ORPHAN WELLS’
    Texas RRC has a listing of orpan wells by region/ by county……for example there are 24 ‘ORPHAN WELLS’ without a P-5 currently in Gonzalez County, TX, all of which have been on the list for over 150 months……….does this mean they are all on expired leases?

    http://www.rrc.state.tx.us/compliance/orphanwells/Gonzales.pdf

  58. 58
    cargocult Says:

    Bill- The Navios analysis(if correct) bodes well for FRO, NAT, and SFL as well, not to mention drybulk shipping iron ore from Australia. We got the met coal covered with WLT. One rub, if too many Chinese lose their shirts in the real estate bubble then they won’t be able to afford cars.

    Owning NM seems to be a proxy for all of Angeliki Frangou’s activities, do you concur?

  59. 59
    cargocult Says:

    Ok, call the master BG.

  60. 60
    RMD Says:

    GS (on 7/28)discussed Z’s observation about mkt will not like co.s which increase capx, esp. in excess of cash flow: ECA, COG, RRC, and thinks CHK, SWN,BBG & UPL are likely to offend. Likes DVN and NFX.

  61. 61
    bill Says:

    hmmm

    http://finance.yahoo.com/echarts?s=UNG+Interactive#chart2:symbol=ung;range=1d;compare=sd;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

  62. 62
    bill Says:

    58> Owning NM seems to be a proxy for all of Angeliki Frangou’s activities, do you concur?

    yes

    But, nibble at it. it looks like its heading back down in its trading range

  63. 63
    bill Says:

    3 month chart ng up 10 %

    http://finance.yahoo.com/echarts?s=UNG+Interactive#chart4:symbol=ung;range=3m;compare=sd;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

    sd down 20 % hk down 25 %

    I guess being up 10 % from a crap level isnt enough

  64. 64
    RMD Says:

    LINE conf. call culls: distribution growth after see 1.2-1.3X coverage visible for a “consistent time”; maintaince capx spikes up after acq.s (’10) and from ’10’s growth capx in ’11; excess cash flow from GW will go to acq.s to balance organic growth with mature assets (this was the logic for the E. TX acq of 900bbl/d); growth capx headed higher, ~$255-250 in ’10; both GWash wells choked back now, 1st well doing 10m/d equivalent now and 1BCFE over 70 days, 2nd (Black well) 38m/d, going from 10 to 12 frac stages, GWash and Wolfberry are organic growth plays; Okla GW could double locations, expecting high pressures (like Black well) due to few nearby vertical penetrations, acrage far west of Colony GW and they think it looks like their TX acres; both GW wells in upper GW (carr and Britt?) and expect lots from lower formations; not migrating to hybrid model; waiting in Mich. to let others do science project work.

  65. 65
    cargocult Says:

    I’m in NM long term. Only thing that saved me was buying additional shares back in February 09.

  66. 66
    scoop006 Says:

    ANY NEWS ON BBG? UP 5+%

  67. 67
    crysball Says:

    Orphan Wellls in Texas
    9,112 Orphan wells in TX as of May 2007:
    http://moneyinoil.com/what.html

    This was near the end of the Texas RRC Orphan well reduction program, and down from 14,447 in 2004.

  68. 68
    1520sbroad Says:

    http://www.eia.gov/oil_gas/natural_gas/data_publications/eia914/eia914.html

    914 table link – gross withdrawals down 1.5%

    Direct quote from release — “May gross production for the Lower 48 States remained about constant despite production decreases in the Federal Offshore Gulf of Mexico (GOM) and Wyoming. The 3.4 percent drop in the GOM was mostly due to pipeline repairs and the 2.1 percent drop in Wyoming was caused by the shut down of a furnace for repairs. Nearly offsetting these decreases were new wells in Other States and Louisiana. “

  69. 69
    1520sbroad Says:

    Z – I would be curious to hear your read on the 914 data (as I alwyas am…)

  70. 70
    occam Says:

    OXY looks interesting here. The quarter “miss” doesn’t seem consequential. I think of the company as an E&P because the other parts don’t matter much. Lots of growth ahead.

  71. 71
    Geno Says:

    POTUS job stimulas at work

    http://www.chron.com/disp/story.mpl/business/deepwaterhorizon/7129281.html

  72. 72
    BirdsofpreyRcool Says:

    back… out longer than i thought. When I left, mrkt was green. Now red-to-flat. What a random walk…

  73. 73
    RMD Says:

    Simmons also observes mkt unealy about RRC overspending and won’t pay for 25 yr. drilling inventory which has little PV.

  74. 74
    BirdsofpreyRcool Says:

    cargo — BG works for me.

    So, Teddy and BG go out for a walk….

  75. 75
    BirdsofpreyRcool Says:

    Nicky — what does today’s closing level imply for tomorrow?

  76. 76
    BirdsofpreyRcool Says:

    Credit markets closed nicely in the green. Stocks… not so much.

  77. 77
    jiveyjr Says:

    I gotta say, that my sick mind got a good number of laughs today over what the “cardinal climax” Nicky referred to might be….

    googled it and it wasn’t as funny….goodnight everyone

  78. 78
    BirdsofpreyRcool Says:

    yikes.

    http://seekingalpha.com/instablog/234091-hewitt-heiserman/61457-rare-cardinal-climax-planetary-alignment-this-summer-puts-stocks-at-risk-says-veteran-sky-watcher

  79. 79
    jiveyjr Says:

    i’ll stick with the credit spreads, it saved my bohiney ahead of the Lehman debacle….thx for commenting on them daily

  80. 80
    ram Says:

    Double yikes. Apparently everything needs to be sold and do the tripple short etf’s.

  81. 81
    Jerome Blank Says:

    $NYMO, McClellan now at 39.88, the over bought condition continues to erode…

  82. 82
    PackMan Says:

    #10 BOP … Equity Strategists ALWAYS call for a higher market into the end of the year, or anytime ahead ! LOL !

    This Cardinal Climax stuff is a riot to read about. No offense Nicky.

  83. 83
    PackMan Says:

    #26 NYT on solar vs. nuclear.

    Not that the NYT has an agenda or anything, right ?

  84. 84
    BirdsofpreyRcool Says:

    PackMan — heard a commercial for the NYT this morning on CNBC. One of the “satisfied customers” said that they subscribed to the NY Times because “they have the best reporters by far, no argument.”

    Ha! Whenever anyone says “no argument,” that always gets my hackles up (not that I know exactly what a “hackle” is)… I mean, what they are really saying is “don’t disagree with me, I know better.” That is just SO NY Times.

    Disclosure — i get the Sunday edition of the NYT, just to read what they have to say.

  85. 85
    PackMan Says:

    BOP, the environmentally unfriendly Sunday NY Times ?

    I gave up that habit along time ago.

    Their sportswriters are pretty good and the business section is also pretty good; but after that …

    I just can’t stand the politics of the thing and the agendas they push. Like 5 pages of sound and fury on the Wikileaks thingy that says and reveals pretty much nothing.

  86. 86
    skimo Says:

    hackles: Hairs along the back of an animal that rise when it is angry or alarmed.

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