Monday Morning

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Market Sentiment Watch: A big potential merger in biotech circles grabs attention of bored bankers/investors as the quietest of week of summer wraps up pre holiday trading. Once that excitement fades look for the market to look towards Friday with great trepidation as we get the August payrolls report which is not expected to be pretty and could still disappoint. In energy land, giant BP is probably going to get the BOP off the ocean floor and into the evidence room this week while minnow Samson has said they are good to go for a September 6th pay day in the Niobrara (see details in the Stuff section). Towards week's end, we have the second energy conference in as many weeks at Simmons so look for a bit more than usual news flow out of some of our more highly trafficked names. I'll have an updated Catalyst List out tomorrow.

Ecodata Watch:

  • Personal Income of 0.2% vs a forecast of 0.3%
  • Consumer Spending of 0.4% also vs a forecast of 0.3%
BP Spill Watch:
  • An insider source leaked the findings of a 200 page report by BP on the Macondo accident. In short, the source says the blowout occurred because BP engineers misinterpreted pressure data before replacing the heavy mud with sea water. BP found that RIG was also partially to blame in the accident. BP should release the report in the next 10 days. 
  • At present, BP should have the BOP removed and replaced this week and should be set to drill ahead on the relief well next week. 

The Week Ahead: Busy week.


  • Monday 8/30:  Natural gas supply report for the month of June (my forecast = essentially flat with the prior month),
  • Tuesday 8/31: Case-Shiller home prices, Chicago PMI (F = 57%), Consumer confidence (F = 50.0)
  • Wednesday 9/1:  EIA Oil Inventory Report, ADP employment, ISM (F = 53.5%), Construction spending (F = -0.6%), car sales (F = 11.5 mm sales ... the one bright spot of late),
  • Thursday 9/2: EIA Natural Storage Report, jobless claims (F = 470K), factory orders (F = 0.4%), Simmons Energy Conference
  • Friday 9/3: Payrolls (F = -105,000), Private Payrolls (F = +30,000), Unemployment rate (F = 9.6%, vs last read of 9.5%), ISM services (F = 53.2%)

In Today's Post:

  • Holdings Watch
  • Commodity  Watch
  • Stuff We Care About Today – SSN
  • Odds & Ends

Holdings Watch: ZCAT (Zman Catalyst portfolio):

  • $5,200
  • 100% Cash

ZIM (Zman Inefficient Markets portfolio)

  • $6,500
  • 16% Cash

Commodity  Watch:

Crude oil ended last week up 2% to close at $75.17. The 12 month crude strip is trading at $79.39  This morning crude is trading off $0.50, giving back some of Friday's surge. Look for crude to mark the S&P fairly closely this week.

  • Price Deck Watch: JP Morgan has cut its 3Q price target for oil from $77 to $75, expecting a move on $65 oil before the end of the quarter and the OPEC meeting in October.

Natural gas fell a whopping 11% last week to close at $3.65. The end of the summer heat (maybe) and no storms in the Gulf (so far anyway). The 12 month strip is now trading at $4.28 which makes hedging, for an overwhelming majority of producers, less than enticing. This morning the October contract takes over as the front month and is trading up 3 cents at $3.73.

  • Natural Gas Supply Watch: Looking for signs of a flattening today with the EIA's release of production data for June 2010. For reference, the following shows where we stood as of May 2010.

Quick and Dirty Charts for June 2010


  • Weather Watch: Heat not quite ready to go away.

    • Week before last: Cooling Degree Days of 84 which, yielded an injection of 40 Bcf.
    • Last Week: CDDs of 64, slightly below the forecast of 69, so looking for a bigger injection this week.
    • This Week's Forecast: 80 CDDs, well above normal and last year.

  • Tropics Watch: Atlantic getting very busy with 2 named storms and another on the way but at present prevailing winds and pressure systems are shunting these systems away from the Gulf and towards the East Coast / North Atlantic. 


  • Farmer's Almanac Watch: Kinder, Gentler Winter predicted. Their forecast differs on exactly where it will be warmer than last year from NOAA's and still says it will be a colder than normal winter, just not as cold as last year.

Stuff We Care About Today

SSN Says Goshen Sale A Go

  • Buyer says it will complete the sale
  • SSN believes the sale will be in the original range
  • That puts the back of the envelope NAV at $1.39 to $1.76 (low case vs high case for the sale)
  • This should provide the boost necessary to give the stock a leg up over its recent highs.
  • Bakken results will also provide near term minor catalysts

Odds & Ends

Analyst Watch:

  • NBL  - BMO hikes target from $78 to $85, ups rating to Outperform.

124 Responses to “Monday Morning”

  1. 1
    bill Says:

    Natural Gas Supply Watch – robry has June at 60.22, july at 61.93, and August at 64.86

    For last week he has  + 48

  2. 2
    BirdsofpreyRcool Says:

    z — thank you for the SSN valuation tables.  Always good to see the underlying data.
    London is closed today (bank holiday).  And mrkts were green, until about 1 am this morning, when the BOJ held an extraordinary meeting to unveil new stimulus measures… that disappointed somewhat.  Oh well.  Woke up to Merger Monday (again)… and the eco data on income (less than expected) and spending (a tad more than expected) took the credit market out of the slightly-reddish zone and placed it back to flat.
    TED has comfortably settled into his +15 bps zone.  Unless that index drops to sub-10 (too low) or wider than 20 (a little concern creeping in), he's telling us that we are at "normal."  One could argue what "normal" looks like… but when TED speaks, I listen.
    Dead, dead, dead today.  HeadTrader about to go forage for donuts.
    Credit Markets now slightly back in the red again.  Ho-hum.

  3. 3
    BirdsofpreyRcool Says:

    Saw a nice summary of Who-Was-Interesting-at-Enercom… 'course, talkin' my book here.  But, based on the comments, maybe we'll see some upgrades in the MMR/EXXI complex.
    * We believe Gulfport (GPOR-$11.20, Buy), Miller Petroleum (MILL-$4.42, Buy), Energy XXI (EXXI-$20.25, Hold), GeoResources (GEOI-$14.72, Buy), and McMoRan Exploration (MMR-$13.93, Hold) had some of the most interesting stories at the conference. All of these E&P companies seem to have acreage that the market is not fully valuing and most companies seem to have cash flow that should continue to ramp as production climbs. Most of these names also appear to have near-term catalysts that should boost their stock prices in the coming weeks.

  4. 4
    BirdsofpreyRcool Says:

    U.S. Stock Futures Retreat as Personal Incomes Trail Forecast 2010-08-30 13:04:33.174 GMT
    By Kelly Bit
    Aug. 30 (Bloomberg) — U.S. stock futures fell, signaling benchmark indexes may extend three weeks of losses, after slower-than-forecast growth in personal incomes added to concern the economic rebound is slowing.
    Walt Disney Co., Berkshire Hathaway Inc. and Chevron Corp.
    dropped at least 0.4 percent to lead declines in the largest U.S. companies. Intel Corp. slipped 0.3 percent after agreeing to buy Infineon Technologies AG’s wireless unit for about $1.4 billion. Genzyme Corp. advanced 4.3 percent after France’s Sanofi-Aventis SA made an $18.5 billion cash offer for the U.S.
    biotechnology company.
    Futures on the Standard & Poor’s 500 Index expiring in September slipped 0.2 percent to 1,061.2 as of 9 a.m. in New York. Dow Jones Industrial Average futures fell 0.3 percent to 10,111, while Nasdaq-100 Index futures retreated 0.2 percent to 1,785.
    "We will continue to struggle with: Is the pace continuing to slow further or is that pace continuing to pick up?" said Timothy Ghriskey, chief investment officer at Solaris Asset Management in Bedford Hills, New York, which manages $2 billion.
    "Bigger news we’re seeing today is continued acceleration in M&A. It’s not reacting positively to it in the overall market, which is somewhat surprising. There is this overhang about macroeconomic issues."
    Incomes, Spending
    Index futures fluctuated earlier before heading decisively lower after government data showed personal incomes climbed 0.2 percent in July, less than projected, and the savings rate dropped. Personal spending rose 0.4 percent, the most since March, after little change the prior month, Commerce Department figures showed.
    U.S. stocks rose on Aug. 27 as Federal Reserve Chairman Ben S. Bernanke vowed to safeguard the economy and growth in gross domestic product slowed less than estimated. The S&P 500 still dropped 0.7 percent last week as a disappointing home sales bolstered concern the recovery is at risk. The gauge is 13 percent lower than its 2010 peak on April 23.
    "We don’t see much reason for consumers in the present environment — with little loan growth, still-high unemployment, uncertainty about pensions going forward — to really start consuming more," Adrian van Tiggelen, chief strategist at ING Investment Management in The Hague, told Mark Barton on Bloomberg Television’s "Countdown." "We are neutrally invested in equities, we think markets are fairly priced right now."
    Economy, Bernanke
    Investors will also get reports on manufacturing and payrolls later in the week to assess whether the economic rebound is faltering.
    Speaking at the Fed’s annual conference in Jackson Hole, Wyoming on Aug. 27, Bernanke said the central bank has the tools to prevent the U.S. economy from slipping back into a recession, while stopping short of indicating an immediate need for more stimulus.
    Analysts are turning more pessimistic even as they push up estimates for profit growth among S&P 500 companies to 36 percent, the highest since 1988. For the first time since at least 1997, fewer than 29 percent of ratings for stocks covered by brokerages worldwide are "buys," according to 159,919 recommendations compiled by Bloomberg.
    Genzyme jumped 4.3 percent to $70.55 after Sanofi offered to buy the company for $69 a share in cash, taking its bid public after the U.S. company refused to negotiate. Genzyme shares have gained 38 percent in New York trading this year.
    Intel slipped 0.3 percent to $18.31. The world’s largest chipmaker agreed to buy Infineon’s wireless unit, gaining a foothold in the mobile-phone business it has struggled to crack for more than a decade.
    The all-cash transaction is expected to close in the first quarter of 2011, Infineon, Europe’s second-largest semiconductor maker, said today.

  5. 5
    zman Says:

    Re 1 – I don't know where he gets that giant summer build in supply, historically we've never had that kind of sequential build. There isn't spare pipeline capacity in the plays that could drive growth of that magnitude to accomplish that.

    Agree with the dead, dead, dead comment, futures were up big last night, now down as the fear of economic data outweighs BOJ easing, Ben post party euphoria, and merger Monday highlights on the biotech and tech fronts.

    Thanks for mentioning 3, would be nice to see. I may go listen to a few from the conference I didn't have time for last week, like KEG.

  6. 6
    zman Says:

    I see TPH highlighting NBL this morning for Niobrara and Israeli natural gas. BMO raised it this morning this well as NBL and partners think their project off Israel is bigger than anticipated. I continue to warm to the story.

  7. 7
    john11 Says:

    Interesting summary of issues regarding ATPG.  Short interest up to 21 mil, close to 50% of float.

  8. 8
    zman Says:

    My response to an email saying no analysts want to go on record recommending or reiterating names at this time, that they are worried about a double dip:

    It is a spineless market. Not without reason. The people I respect are concerned about the impact of a slump or double dip on the group.. The people who I think of as Polyannas say flatly no double dip and then start talking about definitions of a recession. This latter crowd will be the ones that latter become despondent and eventually sell at the bottom.

  9. 9
    zman Says:

    Thanks much John, planning on being an owner there soon.

  10. 10
    tomdavis12 Says:

    Z: CSFB put out report today re Bakken. They spent time mostly with BEXP. Conclusions: 1. A drilling frenzy is driving up costs and pressuring returns. 2. A technology push is lifting recoverable resources. 3. The basin feels ripe for more consolidation (M&A) given competative pressures and the large industry appetite for domestic oil. Their best name in Bakken is WLL. They also like BEXP.

  11. 11
    zman Says:

    In 8 I'm not saying I think we double dip. I don't know. I think we have plenty of issues to worry about in the energy space from a slowing or perhaps retreating domestic economy to a slowing Asian economy to an administration that is hostile to conventional energy extraction. Actually, that last one is at least a good thing for prices. At the same time, natural gas prices are going to inspire some merger activity in the near future, you can almost feel it in the air and at least one comment from LINE last week indicated they are leaning towards gas, not oil deals. Anyway, I know VTZ likes it when I share what I'm thinking, even if he doesn't always agree with it.

  12. 12
    zman Says:

    Thanks much for sharing Tom – did they quantify the boost to costs because from what I gleaned from last week's presentations they are up but not by truly significant $ levels? 

  13. 13
    zman Says:

    Front and Center Watch:

    Mulling MMR's ability to catch another rally this week

    SSN – back to a full position now, thinking it moves higher this week and into the actual news next Tuesday. Given that the range is open to debate it could either be a "sell the news" event (low case) or an extension of this move (high case).

    NBL – watching it run

    EOG – mulling an add to current position.

    Noting that the opening volumes are weak and expecting that to continue as the week progresses.

    Watching for the Natural Gas Supply Data to hit.  NG up a dime after last week's trouncing, I would think flattish or down numbers give you a pretty good sized rally. I think JB had some good comments on UNG over the weekend.

  14. 14
    bill Says:

    robry may was 60.17 so he is flatish month to month and he must include gom

  15. 15
    bill Says:

    id love mmr to fall 50 cents..pxp is cheap any way you look at it

  16. 16
    zman Says:

    Bill – hear ya on MMR, just not while I'm putting about in it, thanks, lol.

    SSN – very muted response in the early trading to last night's news.

  17. 17
    bill Says:

    when does the eia data hit

  18. 18
    zman Says:

    Bill – anytime today.

  19. 19
    zman Says:

    XNG (AMEX gas stock index) coming off a triple bottom, Friday and today.

  20. 20
    elduque Says:

    Good morning all. Back on the little island in the middle of the Pacific.

    RE SD- at these levels and all the merger activity. Isn't it at a level that one of the bigger boys would want it. Especially when there seems to be ample funds.

    On the bigger picture, unlike when the market crashed in 08, there is merger activity. Makes it harder to be short.

  21. 21
    BirdsofpreyRcool Says:

    E21 just not showing the shorts any mercy.  The stock isn't all that liquid… and everyone who wanted to bail, did, over the last 3 months.  Large institutional holders (for the most part) actually ADDED after the Macondo sell-off.  So, they aren't giving the shorts any liquidy doors to slip through either. 
    Trees don't grow to the sky.  At some point, expect we will see a pull-back on the E21 hockeystick formation (always happens).  However, not before the patient longs extract MaxPain from the pesky shorts, it seems.

  22. 22
    zman Says:

    Eld – both good points. I'm thinking SD is poised to move higher, just needs a little help from gas. Could be a quick trade back towards $5 or a takeout at $6+. Even with the hair on the story, at a higher price deck they have a strong asset base.

    Bill – realized after your comment about including the GOM that I cut off the last chart above, which shows the total Lower 48 U.S. production graph, it has now been added to the post.

  23. 23
    bill Says:

    oxy just spent 1 b to built a plant to process SD co2 rich ng. They use the co2 to inject in their oil fields. The problem is, ng prices are not high enough to incentivize sd to drill for ng. They have shifted to oilier assets.

    Sd equity is 1.6 b at 4 price, probably 3.0 b in debt so tev 4.6 b

  24. 24
    zman Says:

    Hear ya BOP, September should afford the opportunity at Black Beard East for one of those "we're still drilling ahead but look at all the sand we've seen so far" press releases.

    Adding ATPG to my near term market watch. Huge short interest there and the potential according to the head of the MMS or Bummer or whatever they are calling it now to see some classes of rigs allowed to drill before the moratorium officially ends. If I had to put a finger on one player that would be allowed to go back and play it would be them.

  25. 25
    bill Says:

    you may want to add this link..a blog that follows shipping. They have current data and analysts comments as they become available

  26. 26
    BirdsofpreyRcool Says:

    z — listening to ATPG enercom presentation now.  Like the fact that their new bonds and bank do not have "maintenance covenants."  Vote of confidence from the lenders.
    Bonds may be cheap too.  Looks like they have registered the 11 7/8 due 5/15.  Traded on Friday at 82.5 for a 17.50% yield.  Not too shabby…. thinking….

  27. 27
    zman Says:

    OK thanks Bill. Market roiled by something now but looks pretty directionless with light trading.

    You can click here to see if the EIA has updated the gas supply report throughout the day:


  28. 28
    bill Says:

    atpg banker deal was done before Macado

  29. 29
    zman Says:

    BOP – yeah, it is a good listen.


  30. 30
    zman Says:

    BOP – wait til you get to the part where ATPG comments on China spending THEIR surplus on creating jobs and how this means they will get one of their production platforms sooner than expected because of it.

  31. 31
    BirdsofpreyRcool Says:

    bill — #28… yeah. And ATPG’s high yield bond deal was done just a coupla days before Macondo. Proving, yet again, that timing is everything!

  32. 32
    BirdsofpreyRcool Says:

    z — yep. We here in the US are busy shoveling cash out the door for long-term unemployment and delinquent mortgage holders. While it does tug at the heart-strings, it does absolutely nothing to get our economy back on track.

    China does a lot of things right. Helps when you look at things on a 100-yr planning cycle (or even a 10-yr cycle… which is more than 2 presidential terms, so who cares… sheesh)

  33. 33
    tomdavis12 Says:

    Z 12 No did not quantify costs. Just their normal inflammatory comments to make a point.

  34. 34
    zman Says:

    Tom – thanks, that figures. Hyperbole goes a long way in a market like this, a lot further than actual numbers.

  35. 35
    BirdsofpreyRcool Says:

    musing… read that the Energy Sector has underperformed the overall S&P on a YTD basis. Tells me, 4th quarter could be good. Energy usually gets “noticed” during the 4th quarter… and we have some making up to do. Just sayin….

  36. 36
    choices Says:

    #26-thanks for the heads up, BOP, on the bonds-cannot get a bid/ask on IB today-

  37. 37
    zman Says:

    NG up 3.8% meaningless dead cat bounce before the data release.

    You can also watch this site which often updates more quickly than the one listed above


  38. 38
    BirdsofpreyRcool Says:

    choices — let me know if you see a mrkt on those bonds. You have to buy them in 2k increments… but, i’m liking what i’m hearing about bumps in near-term cash flow at ATPG on the enercom replay.

    z (or anywone) — any comments on the quality of ATPG management??

  39. 39
    andy Says:

    bop – choices u have cusip # on bonds?

  40. 40
    bill Says:

    balt ceo on cnbc now

  41. 41
    DrLink Says:

    For what its worth dept.I blew out of my HK and added the resulting funds to my current ATPG holdings (combination of stock and Jan 12 leaps) Feel there is more of a catalyst for % movement for my $…plus all this warm winter talk scares me.

  42. 42
    choices Says:

    andy-I have 00208JAC2 from IB

  43. 43
    VTZ Says:

    Z – I did appreciate 8 and 11. I also like the smaller format of NG state-by-state supply graphs.

  44. 44
    zman Says:

    BOP – I met them once, many years ago, not sure if same guys, will check. They brindled at the bottom feeder comment one of our guys made (it wasn’t meant as a slight) and he was later axed. Anyway, they seem competent. That link John provided made some good points on the near term there, worth reading.

  45. 45
    zman Says:

    MMR suddenly shot out of a cannon, guessing we exhausted the first wave of profit takers, improves my day markedly without the aid of herbal remedies, lol.

    V – Thanks, those charts are the quick take, I will include along with the probably too tall detailed slide show tomorrow when I have new numbers to show. On the economy, I’m not nearly smart enough to figure it out but I converse with a lot of folks about it and read as much as I can stand to to give it a go.

  46. 46
    BirdsofpreyRcool Says:

    ATPG potential bond buyers (myself included)… DRATS. Foiled again. Those bonds are 144a (still not registered). There are some registered euro-$ bonds, but a lot of firms can’t do that for individuals. So, can’t buy in US domestic accounts, it seems. Double-drat!!!

  47. 47
    BirdsofpreyRcool Says:

    z — thanks for the ATPG mngmt comments. I’ve never met them…..

  48. 48
    zman Says:

    DRL – agreed on catalyst and on winter weather. Even if later winter is bitter, if we start off all balmy like in November and December gas will get crushed by extended injections and smallish early season withdrawals. At which point you’ll be in a room crowded with oil focused buyers. I think the offshores largely catch a break due to the timing of the moratorium coming off as well. But your pure play gassy names will suffer, especially names like SWN who just got their L48 production models out of line with EIA and waited too long to hedge. And added to their budgets and will now, very soon, be cutting them and their growth rates for 2011.

  49. 49
    bill Says:

    The atpg ceo cracks me up. His boyhood/adult hero is Paul Harvey, radio show legend who would tell a story on the radio and end with “Now you know the rest of the story”

    He emulates his style when he gives speeches. Last week he lectured what oil is and how its used in the economy at ENERCOM

    They tell you everything you want to know but hard numbers like, what production will be, cash flow, how much vendor payments have been deferred, how many ORRIS have they sold, etc

    The CFO sounds friendly, articulate.. not defensive, reminds me off the wll ceo.

    The main issue I see is liquidity and will oil start flowing before they run out of cash.

    I think they tapped all their credit lines and cash is lower than Accounts Payable.

    Assuming the Govt allows them to operate in the gom and oil starts flowing, the story gets better.

    they are trying to monetize a production platform and that would help (liquidity) in the short term

  50. 50
    zman Says:

    MMR – last 15 minutes looked like a fund adding or adding to a position.

  51. 51
    choices Says:

    Tried to buy as test case some ATPG bonds on IB and was advised that it is for institutional buyers only.

  52. 52
    zman Says:

    This will likely be a near term natural gas demand depressant:


  53. 53
    BirdsofpreyRcool Says:

    bill — great summary. Any feeling for if/when they can sell the platform (ATP Titan). Sounds like that would get them over the near-term liquidity hump…

  54. 54
    bill Says:

    pxp making a mini move

  55. 55
    BirdsofpreyRcool Says:

    choices — thank you for reporting back. There are some registered euro-dollar bonds… but, guess we mere mortals in the U.S. can’t touch those. Thank you, SEC, for protecting us from ourselves. Looks like the U.S. tranche will NOT be registered… so, will have to cross them off the buy-list.

  56. 56
    bill Says:

    The were within weeks (4 months ago) BP disaster stopped the process.

    The cfo still thinks he can get it done. I dont have a feeling on it but think lifting the moratorium might help.

  57. 57
    BirdsofpreyRcool Says:

    ATPG bonds. Crap, crap, crap. They are Senior secured bonds too. Nice juicy antelope… just not grazing in MY backyard. Sheesh.

  58. 58
    choices Says:

    FWIW on truck tonnage.


    I recently drove down to Salt Lake City and there were A LOT of trucks on the Interstate-appeared to a fair amount of goods/industrial equip but a very small sample.

  59. 59
    tomdavis12 Says:

    BOP: Nice call today about upgrade to MMR/EXXI complex.

  60. 60
    zman Says:

    Re listening to back portion of ATPG presentation to get timing details for Catalyst List.

    Choices – I took a trip to Memphis over the weekend and saw a lot of trucks as well, more than in quite some time. A check of the landstar site showed a big jump in trucks rolling as well. So far, it just isn’t showing up in the distillate demand figures, but that could also be a function of lower exports masking domestic production.

  61. 61
    john11 Says:

    Further to 59, I see an alert that Moness Crespi started MMR with a buy, no tgt noted. Don’t know them.

  62. 62
    BirdsofpreyRcool Says:

    Got feedback on quality of ATPG mngmt. hmmmmmmmmm….

    On the other hand, sounds like the Titan monetization could be 2 wks (or less) away. Talkin’ GE Capital as financing agent… just mumbles coming through the bullrushes. So, no cuffs upside the head if i’m wrong…

  63. 63
    zman Says:

    re 61, me either but thanks all the same. Looks like a non energy specific jack of all trades bucket shop.

  64. 64
    bill Says:


    In the Q2 earnings release the said production would be 5 to 6 m BOE 2nd half of year.

    Int expebse is 64 m per qtr 128 m next 6 months which means int exp is $20 to $25 per boe

    Rev is $ 50 boe ng/oil mix so half of the revenue is going to cover just interest expense. All other cost is 60 boe so they will lose money this year

    Last year people speculated that they could do a billion in rev this year. They will be lucky to do half this amount

  65. 65
    zman Says:

    NBL – walking away from me. Not done looking yet but likely to take a nibble in the options on the next market dip….should be plenty of opportunity for that this week.

  66. 66
    bill Says:

    62 sounds about right

    i think monetization alone will make the stock pop

  67. 67
    bill Says:

    what was the feedback on mgt?

  68. 68
    bill Says:

    The last deal they monetized with GE guaranteed a monthly payment to GE if volumes werent met

  69. 69
    zman Says:

    Bill – thanks, did you listen to the latest presentation. He’s looking for big jumps from current production of 23,000 boepd at 6/30 to 30 to 40,000 BOEpd by year end, much of that coming from Telemark well that comes on soon. That range is big enough to sail a Capesize through. Target for 2011 exit is 45 – 55,000 boepd, again huge range but at least the bottom end is strong enough growth and oily to get EBITDA up significantly. Still digging.

  70. 70
    zman Says:

    NBL breaking up through it’s 200 day today and just out of a 3 month base.

  71. 71
    BirdsofpreyRcool Says:

    GE is never my preferred financing partner. They will rip your lungs out, if you miss. Almost as bad as the Cerberus guys. But, thinking of ATPG as a weekend fling, cuz it’s not marriage material.

  72. 72
    BirdsofpreyRcool Says:

    EGY — my darling little old Gabonese workhorse. 🙂

  73. 73
    zman Says:

    re 71 = Ha!

  74. 74
    BirdsofpreyRcool Says:

    bill — #67 …. not sure how to answer that in a public forum. But suffice it to say that if you see insiders sell, pay attention.

    Lately they have been very tight-lipped. Heard Johnson Rice dropped them b/c couldn’t get any info outta the company. That can be “good”… but that is not the usual outcome.

    Still… next 3 months could be very good to ATPG. Just head for the hills, if you see any insider selling.

  75. 75
    zman Says:

    Listening to the NBL analyst day on June 3, so I’ll be quiet for a bit. Shout if you need something.

  76. 76
    Jerome Blank Says:

    #70 NBL, also at P&F long term trendline resistance at $70, breaks a new P&F buy signal at $71…added to charts. daily shows multiple tests of this topside resitance area, which has been tracking the 200 day SMA…


  77. 77
    zman Says:

    Thanks and voted. MMR is holding the middle of your resistance range from last Thursday.

  78. 78
    elduque Says:

    I believe the figures are out. Your analysis please.

  79. 79
    Jerome Blank Says:

    RE: #77, Zman, thank you much for the vote…I posted an MMR 30 min, the macro mkt currently looks a bit weak at the moment but MMR is holding up well


  80. 80
    BirdsofpreyRcool Says:

    ATPG — vendor-financed development capex… don’t see that very often. Try… like, never. I’ve never seen that in an E&P before. These guys have their back against the cash flow wall… but, sounds like counterparties are still playing ball.

    Yes. Monetizing the Titan will be the defibrillizing jolt these guys need. Like, Now.

  81. 81
    1520sbroad Says:

    In my secondary monday morning read thru of Barrons I saw that the short interest in HK has come off significantly since july 30. Delta was about 6 million shares that were short on 7/30 no longer short as of mid august.

  82. 82
    zman Says:

    914 data (gross withdrawals) are out, still waiting on the marketed production data which can be a bit different.

    But looking at the 914 data.

    Gulf off nearly 5%,
    Texas off,
    Wyoming off again (and I’d add finally as it rallied longer than I thought possible)
    “other states” up slightly
    LA = ditto
    Culminates in Lower 48 production being down 1.2% on gross withdrawals basis. That’s fairly positive. Will be more constructive when I have the marketed production data set in hand.

  83. 83
    BirdsofpreyRcool Says:

    ATPG — i heard someone describe it as “greed.” Guess management thinks they have a (couple of) Production Tiger(s) by the tail… and don’t want to let go. Doing everything but mortgaging the office coffee pot, it seems, in order to hold onto the upside here. If they can pull this off, the ride promises to be a wild one… for sure.

  84. 84
    apbd Says:

    Off subject.
    CigRX site offers free sample through an 800 number. $ 3.95 shipping. Salesperson was decent. Said they are busy. Tried to sell a carton (20 packs)
    for 39.95 with free shipping. Said it worked for him. I’m a non-smoker but I’m looking for other benefits although I can’t remember what they are. lol

  85. 85
    BirdsofpreyRcool Says:

    ATPG — that earlier comment about it being positive that there are no “maintenance covenants” in their new bank line. Well… BFD. It’s a 1st lien SECURED line, 80% of their US assets are pledged against the $100mm line. So, banks should be well-covered, under most any scenario. Hence, no need for the covenants… they just get to grab the whole enchilada, if ATPG screws up. Way to try to spin it, tho, Mr. Paul Bulmahn. Oh… and did I mention that ATPG’s 1st lien bank debt has an 11% coupon? Yikes. Wonder what GE will charge them against the Titan… 12.5% maybe?

    Yep. This mngmt teams is going balls to the walls here. Timing will be everything. (But isn’t that usually the case? ESPECIALLY with the highly-leveraged kids.)

  86. 86
    BirdsofpreyRcool Says:

    apbd — thanks for the color commentary!! Hearing that it “works” on about 2/3rds of smokers who try it. That’s bettern Chantix. And you get minty-fresh breath to boot. (Can’t recall what the other benefits are right now… hmmmmmmmmmmmmmmmmm)

  87. 87
    tomdavis12 Says:

    Z: Love your 10,000 ft view of things like VTZ. Haven’t asked about any ugly dance cards. If this market continues to be difficult to invest from the long side are their any names that should have the most difficulty in a lower NG envoirnment. PS I sold some HK and added to BEXP and EOG today (better option premiums). It is now safe to get up and move about the cabin with the purchase of HK.

  88. 88
    ram Says:

    I just swapped HK for ATPG. I sort of feel a little naked, but I think I’ll get over it.

  89. 89
    zman Says:

    Tom – Let me do that for the morning post. Off the cuff I have SWN in my sites but it is beat down and cheap for it.

  90. 90
    RMD Says:

    With the 12 month strip at $4.28 and most gassy co.s lightly hedged in ’11, cash flow will be down BIG cet. par. in ’11. My sense is it screws up the acq. model of MLPs even though they are currently hedged for ’11 and beyond, if acq. prices have not fallen enough to make $4.28 hedging at attractive, ie, if acq pricing is lagging the commodity on the downside. Just musing..

  91. 91
    zman Says:

    RMD – LINE mentioned that last week, which explains the more organic look at growth. They also said they are liking gas a little more now than oil and I’d bet they wait out the best pricing possible.

    I’ll have the gassy names with hedges tomorrow for Tom. Some of them do have pretty good hedges for next year.

  92. 92
    bill Says:

    atpg has 547 m in other iou’s

    Net profits interests
    $ 278,398 $ 180,818

    Dollar-denominated overriding royalty interests
    100,629 14,941

    Gomez pipeline obligation
    74,252 75,152

    Vendor deferrals – Gulf of Mexico
    13,196 7,490

    Vendor deferrals – North Sea
    78,724 17,053

    2,582 2,582

    547,781 298,036

  93. 93
    BirdsofpreyRcool Says:

    bill — nothing about the office coffee pot… yet. 😉

  94. 94
    bill Says:

    lol, you are right anything thats not nailed down

    I noticed all their options are underwater

  95. 95
    choices Says:

    This commentary on ATPG is excellent from BOP, bill, John11, Z. This is what makes this site invaluable. Thanks again Z for an excellent board.

    It is invaluable in trying to appraise the risk vs reward with the operative word “risk.”

  96. 96
    zman Says:

    Thank you very much Choices.

  97. 97
    zman Says:

    From Marketwatch ~

    Congress should act quickly to pass a jobs bill as “too many” Americans are continuing to look for work, President Barack Obama said Monday. “Holding this bill hostage is directly detrimental to our economic growth,” Obama said at the White House about the bill, which expands credit to businesses and cuts certain taxes. Obama added that his economic team is looking at measures including extending middle-class tax cuts and redoubling investments in clean energy as ways of spurring growth and hiring.

    Does “jobs bill” mean extend unemployment benefits or is there more to it?

  98. 98
    BirdsofpreyRcool Says:

    z — i think it’s characterized as the “small business lending” bill. But there are a number of earmark/attachements to the bill to make it very unappetizing to the Republicans. But it does allow Obama to point at the Reps and say that “they don’t care about small business.”

    This stuff’ll make ya puke, if you care to read beyond just the sound bites and headlines.

  99. 99
    BirdsofpreyRcool Says:

    oops… not that YOU DON’T read beyond the headlines. Didn’t mean THAT at all!

  100. 100
    choices Says:

    #97,98-One can see the fine hand of Summers and Rahmbo at work here.

  101. 101
    BirdsofpreyRcool Says:

    Just plotted nat gas prices on EOG. Pretty much ‘splains 85% of the move in the stock. However, since nat gas is bouncing today (and EOG is headed the other way), does that mean that the EOG sell-off is now officially “overdone”?

  102. 102
    zman Says:

    Market looking pretty weak here, no confidence in the confidence numbers or PMI or Case-Shiller at the moment.

  103. 103
    zman Says:

    NG monthly out, comments in a few…

  104. 104
    bill Says:

    this is an unknown risk for all in the gom



    >Why, with all due respect, can’t this moratorium be lifted today?” asked Charlotte Randolph


    >”It is not yet ripe to be lifted,” Mr. Bromwich replied

    >Scott Angelle, who has participated in talks with Mr. Bromwich’s agency, said the government was effectively shutting down shallow-water drilling.

    >One idea being floated by Mr. Bromwich’s agency would require shallow-water-drilling companies to have the hardware available to capture four times the amount of oil that could escape in a worst-case spill, Mr. Angelle said

    >Mr. Angelle said such a requirement would be “the kiss of death” for companies.

    >Mr. Bromwich, 56 years old, is a lawyer, not an oil-industry veteran..Mr. Bromwich said the bureau he now runs had been too deferential to oil companies in the past, and said he planned to institute rules to change that.

    >my comment ..Nice!! This is like a mafia shake down– pay to play or we bust your balls

    Obviously the administration is anti business and that attitude does not instill confidence in the economy and means more job losses budget deficits and a freaking mess, but its not his fault.

    We have come a long way from the President that said The business of America is business.


    Now you know the rest of the story

    That is all..good day

  105. 105
    BirdsofpreyRcool Says:

    Case-Shiller = As long as we have govt programs targeted at keeping people in homes they can no longer afford, we can’t find a market clearing price for housing. We are just prolonging the pain and wasting productive people’s confiscated monies (taxes) on unproductive outcomes. This program has already been shown not to work… and yet… more money is being shoved that way.

  106. 106
    BirdsofpreyRcool Says:

    “not yet ripe”….? That statement is SO RIPE, it stinks to high heaven.

  107. 107
    zman Says:

    NG Supply – marketed production which is what really care about

    On a volumes per day basis (Bcfgpd)

    March: 60.787
    April: 60.910
    May: 61.048
    June: 60.309

    Should put a bit of a floor under gas here for the next several weeks given the fall we’ve had.

    Comments on a per state/region basis are the same as listed in #82. Full slide show in the Tuesday post. Will add another quick view to today’s post momentarily.

  108. 108
    BirdsofpreyRcool Says:

    There is a well-documented life cycle to a business. It goes like this… 1) founded by an entrepreneur/idea person (CEO)… 2) perfected by engineering CEO, 3) financially-maximized by an accountant CEO… and the death-knell for a business? 4) a CEO who came up thru IR or Legal.

    You don’t believe me. Just peruse the history of some of our finest companies, that have come… and gone.

    So… where do we stand in this cycle, on a National Basis???

  109. 109
    zman Says:

    Jefferies is having their drybulk conference next week, see EGLE presenting.

  110. 110
    bill Says:

    trico filed for b/k

    Trico Marine Services

  111. 111
    zman Says:

    re 110. Thank you Mr. President.

  112. 112
    bill Says:

    Tricos ceo was…you guessed it a lawyer

    Mr. Varma joined Trico in May 2005 as Trico’s General Counsel, Corporate Secretary and Director of Corporate Governance,

    lol bop 108

  113. 113
    zman Says:

    Two surveys on small biz show conditions worsening:


  114. 114
    BirdsofpreyRcool Says:

    bill — #112… sadly, that business life cycle is usually correct.   Forgot one phase, tho… between engineer and accountant is a marketing guy.  So, 5 stages… but ending wih the lawyer.

  115. 115
    zman Says:

    EXXI taking its rest day today instead of Friday. Or more likely, one seller spoiled the rally on the day. Not bothersome in the least, this is just that kind of week in that kind of market. SSN all but ignoring news that should put them in their strongest cash position in recent history.  

  116. 116
    zman Says:

    The quick and dirty charts for June 2010 production data have been added to this post.

  117. 117
    BirdsofpreyRcool Says:

    Have a feeling that this is an "anything can happen week"…. topped off by a dismal Jobs Report on Friday. 
    But credit is not falling off a cliff.  So, I still say, pick your points and wait in the weeds.  When your antelope of choice wanders too close to your price target, pounce.  Investor sentiment may be turned around a bit, going into the end of this year.  NOT predicting "too the moon, Alice."  But higher than here.

  118. 118
    zman Says:

    I think so as well on sentiment. My thought is we trade lower on no data days (none of those this week) and down into big news like Payrolls, so if they hit in line or better you get a rally. Wonder where Goldman is on August private payrolls?

  119. 119
    zman Says:

    GDP looks poised for a short covering rally, it put on an impressive show before and after its Enercom presentation last week and is up again today.

  120. 120
    zman Says:

    NBL gain more than cut in half of the day … good, will have something on them in the next few days.

    GST below $3 now, will have something to say there soon as well.

  121. 121
    zman Says:


  122. 122
    Jerome Blank Says:

    NBL, interesting closing candle, "doji cross" at the 200 day SMA… short term technically bearish, still on a P&F sell signal at the P&F trendline,  could not print the $71 buy signal… might fill that gap at $67.36…

  123. 123
    RMD Says:

    GDP has 40,000 net acres near CHK.  "Rumor  price" is $14,000/ac. in CHK JV with intn'l co. Same math is $560mm vs GDP's EV ~$750mm.

  124. 124
    tomdavis12 Says:

    Z: Heard NBL was up also because an Israeli news report said the company's project in the Mediterranean may contain 4.2 billion barrels of oil. Rumor re KWK was that second largest shareholder, SPO Advisory was holding discussions with management. 

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