30
Sep

Friday Post – Catalyst List Update Part II Plus The Natural Gas Supply Slide Show

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Market Sentiment Watch: Quarter end today, anything goes in this YoYo market but the open is negative on flat Chinese PMI. Please find in today's post the Catalyst List Update, Part II, as well as the Natural Gas Supply Slide Show. Yesterday saw a record gas storage injection for this week of the year and data from the latest supply report indicate that a rollover in supply due to a falling gas rig count is not occurring just yet although their are two bright points that bulls can point too now (see the Natural Gas Slide show). For natural gas centric E&P names the news is at least a little better as higher production and falling unit costs work in their favor.  

Ecodata Watch:

  • Personal Income (F = 0%),
  • Consumer Spending (F = +0.1%),
  • We get Chicago PMI at 9:45 am EST
  • We get Consumer Sentiment at 9:55 am EST (F = 57.6, last read was 57.3)

In today's post:

  1. Holdings Watch - See Positions tab
  2. Commodity Watch
  3. Natural Gas Inventory Preview
  4. Natural Gas Supply Slide Show - Data Through July 2011
  5. Stuff  We Care About Today – Catalyst List Update Part II
  6. Odds & Ends



    Commodity Watch

    Crude oil inched up $0.93 to close at $82.14 yesterday in a fairly directionless trading session. This morning crude is trading off about the same as it was up yesterday with weak equity market futures.

    • OPEC Watch: Cartel members espoused confidence that prices are falling due to speculators and that the weakness will be short lived. The OPEC basket of crudes is at $104, down with Brent from recent highs and I would expect Saudi to join Kuwait in quietly trimming production levels soon. If OPEC crude falls below $100 look for the confident talk to transition to a clamor of calls for an emergency session and production curtailments.

    Natural gas closed off 5 cents at $3.75 after the EIA reported a record high injection for this week of the year. Gas remains range bound. This morning gas is trading flat.

    • NG Supply Watch: See the charts below but in a nutshell:
      • "Other States" production set another record. It now accounts for 18% of total US Lower 48 onshore and offshore production combined and I think my tax dollars should be going to breaking out at least PA production.
      • Louisiana actually looks to be rolling over. It's still at peak levels but with:
        • 1) the push for more liquids rich plays like the Eagle Ford coinciding
        • 2) with the end of the HBP acreage rush and
        • 3) a move to more conservative early well production with an eye towards EUR maximization and
        • 4) the exit by some of the players who have been big volume growth contributors
        • it appears that the state is set to begin declining this Fall (we'll know in a couple more months) and into next year.
      • Gulf of Mexico production continues to slide:
        • The push on the Deepwater is not yet back
        • The push on the Shelf is transitioning from gas to oil targets
        • Government based delays continue to plague efforts in both
      • In aggregate gas production falling in LA and the Gulf of Mexico was offset largely by the growth in the "Other States" volumes. Growth there is not likely to recede soon especially as much of that growth is from wet Marcellus areas where the economics are considerably better than dry gas plays that are just getting Henry Hub prices.

    Natural Gas Review


    .


    Natural Gas Supply Slide Show

    -


    Stuff  We Care About Today

    Catalyst List Update - Part II


    Other Stuff:

    CRZO Signs Utica JV

    • Very small deal, numbers look odd at $1,500 per acre for the acquisition of 15,000.
    • CRZO very much the junior partner here with a 10% interest while its partner in the Marcellus, Avista, contributes the lion's share of the capital.
    • Liquids rich part of the play.
    • CRZO becomes a Utica player (barely)

    Odds & Ends

    Analyst Watch:

    • SFY - Wunderlich starts at Buy

    98 Responses to “Friday Post – Catalyst List Update Part II Plus The Natural Gas Supply Slide Show”

    1. 1
      zman Says:

      Personal income -0.1%

      Personal spending +0.2%

    2. 2
      Zorgnak Says:

      S&P Futures Short Term Areas Of Interest 8:30am ..Notes to myself. S&P O/N session trading down to support and yesterday’s O/N lows at 1144. Expecting a break of this area leads to
      retest of 1126.75 minimum and lower. Expecting rallies below 1184 to be sold. Area between 1134 and 1180 remains subject to quick moves in either direction.
      Immediate support and resistance 1144 and 1162.25. 1158 remains the major magnet on the board but 1134 is the most accepted price in the current range. Yesterday was a
      tug of war between the two.
      With poor liquidity and high volatility I will only take trades when the market has to work hard to take out my risk stops. Good Luck

      1184 Acceptance, MCHVN
      1180.25 Resistance, CLVN,
      1172 Minor Resistance, CLVN
      1162.25 Support, CLVN, O/N High 1159.75
      1157.50 Major Acceptance, CHVN
      1144 Support, CLVN, O/N Low 1139
      1134 Acceptance, MCHVN
      1126.75 Support, CLVN
      1110.25 Support, CLVN
      1104.25 Support, CLVN, .

      VPOC=Session Volume Point of Control/Acceptance
      CLVN =Composite Low Volume Node/ Rejection CHVN= Composite High Volume Node/Acceptance and Congestion MCHVN= Most Recent Acceptance
      Big Picture
      http://www.charthub.com/images/2011/09/30/ES_Composite

    3. 3
      zman Says:

      Crude

      http://www.cx-portal.com/wti/oil_en.html

    4. 4
      elduque Says:

      Good morning Z- only supposed to show charts when crude is rising!!!!

    5. 5
      tomdavis12 Says:

      Z: Thanks for your work again last night. Always brings up questions for me. By the end of this year is everything in NGland HBP except Utica and is that another 3 year window?

    6. 6
      elduque Says:

      Credit markets under stress HYG down 1.2%

    7. 7
      zman Says:

      re 4 – LOL, and then I’d only present half the story, kind of like Herb and his ilk.

      Tom – there are other areas that are not, parts of the Marcellus, some Woodford (not much), some Fayetteville (not much but they will get there), some Wyoming deep stuff (people are working to lease now which to me is nutty). Utica is going to be held in PA by Marcellus effort. In Ohio they have time and they are after oil so they won’t not start due to low gas prices. The Haynesville and E. Tx Bossier didn’t get completely HBP’d either, some leases are quietly being allowed to expire. Leases that in 2007/08 costs > $10K/acre.

      Ugly open on the last day of the worst quarter since Q109. HAL in danger of having a $20 handle. And I’ve yet to see an estimate fall there.

    8. 8
      brodway Says:

      Great work on the catalyst names. Especially on mostly names i own. Really helpful on a week like this where the only glimmer of hope comes from the energy brain.

    9. 9
      tomdavis12 Says:

      Z: latest numbers I have seen on the HAL quarter is $.92 – $.94.

    10. 10
      brodway Says:

      OAS down over 5% on 88k shares traded. Just goes to show you what kind of thin trading is going on and buyers are on strike.

    11. 11
      zman Says:

      re 9 – yes, up a dime in the last 3 months

      the 2012 estimates are up from $3.91 to $4.56 …. so either the analysts are very wrong or its trading on 2012 PE < 7x.

    12. 12
      tomdavis12 Says:

      Z: So does $3.50 – $4.00 look feasible for NG from now til end of year?

    13. 13
      tomdavis12 Says:

      12 sorry forgot to put hurricane caveat

    14. 14
      zman Says:

      re 12 – we’re going to need some persistent cold for the $4 end of it I think. We’re 500 B’s off the all time high now. If we get boring October weather we could see my 3.7 to 3.75 Tcf number eclipsed and that would be a problem. Also, the white knight effect of Aubrey and others shutting in gas due to low prices has evaporated. So we’ll need some shut ins from the Gulf or some protracted early arctic air as there is just too much production still out there.

    15. 15
      elijahwc Says:

      FWIIW: Power rebates in Europe.

      http://www.bloomberg.com/news/2011-09-29/utilities-giving-away-power-as-wind-sun-flood-european-grid.html

    16. 16
      Robert Says:

      Z- been out of the pocket for the last couple of days. Do you review the Deutsche Bank presentation for XEC? 586 MMCFE/D 62% natural gas debt capacity 11% enterprise value 6.2B. I know you don’t follow if you would care to respond I would appreciate it.

    17. 17
      zman Says:

      Consumer sentiment at 59.4 vs 57.6 … so far, market no care.

    18. 18
      zman Says:

      Robert – will take a look.

    19. 19
      brodway Says:

      couldn’t help myself got a small bite of OAS at 22.44. early in the week there was a big buyer at 25.

    20. 20
      ratberto Says:

      Eli, Thank you for 15, fascinating.

    21. 21
      zman Says:

      re 19 – “small bites” are key at the moment.

    22. 22
      zman Says:

      Buffet on CNBC waving market pompoms

    23. 23
      tomdavis12 Says:

      Z: I see some of the high yield primary NG producers like KWK showing very poor relative strength. (you could also say what isn’t). I remember CHK in ’08. Thought I could figure when it was a good value in the $20’s down from $60. Aubrey’s margin calls were $17 – $18 & stock didn’t bottom until $8 – $9. As you can tell I am in the more cash than normal camp & I sure hope I am wrong.

    24. 24
      brodway Says:

      CRR seeing no sellers here.

    25. 25
      Zorgnak Says:

      S&P Futs..at 1144-46 resistance now…through here 1158 expected..fail here and back to 1134 and below…too much going on today though to have much faith in levels….just watching reactions as we go

    26. 26
      zman Says:

      On CNBC … Buffet – “I think its very, very unlikely we go back into a recession” … Give me P! Give me a U!, Give me M!, Give me P!

    27. 27
      Zorgnak Says:

      S&P Volume profile today is very blocky looking = no edge, conflicted trading….
      tug of war between 1134 and 1157.50 continues
      1157.50 Magnet
      1146 Resistance
      1136.75 VPOC
      1134 Range Acceptance/Magnet
      1125-27 Support
      http://www.charthub.com/images/2011/09/30/FT71_ES_Intraday_2

    28. 28
      zman Says:

      re 27 – more than half expecting a rally later today, green close. Now, my track record on those kind of comments has been less than useless of late but there you have it.

      Next week, part III of the Catalyst List and the first edition of the Oil Supply Summary (think NG supply piece today), but global and for oil.

    29. 29
      Zorgnak Says:

      #28…could be..1146 and 1134 are the areas that I’m watching. CRR looks bombed out…thought so yesterday but may be worth a short term trade if OIH types rally with a break of 1144 on the Futs to the upside..for a trade..on short covering.
      Lot’s of if’s there…

      http://www.charthub.com/images/2011/09/30/Stock_Composite

    30. 30
      brodway Says:

      Zorg.

      i too think there’s more emotion than rational thinking involved in current markets. unfortunately, until things stabilize and investors realize that the world is not coming to an end, we are going to have high volatility.

      the two factors that i believe are missing from bringing the markets to stability now is 1) lack of leadership 2) M&A pickup

    31. 31
      brodway Says:

      re: 27

      Zman. i think shorts cover today for end of month purposes. we may see some green on the screen for a while. not sure how long it lasts.

    32. 32
      brodway Says:

      Zorg. re: 29 CRR

      http://www.forbes.com/sites/energystockchannel/2011/09/29/crr-stock-crowded-with-sellers/?partner=yahootix

    33. 33
      brodway Says:

      CRR turned positive. lets see if CLB follows suit.

    34. 34
      zman Says:

      Fed’s Bullard says “Fed is never out of ammo”. Lot of people trying to talk this economy/market higher.

    35. 35
      choices Says:

      td Amer system down

    36. 36
      Zorgnak Says:

      Bakken…Heartening to see the cream try to rise in a very negative tape
      NOG BEXP KOG

    37. 37
      Zorgnak Says:

      OT any gold types have any insight on why gold is getting smacked down and miners(GDX) are green?

    38. 38
      1520sbroad Says:

      Ecosphere – ESPH- release yesterday cited a well that they worked on in the Eagle Ford with one of their new EF80 units. I think that is an NFX well in Dimmit County. Interesting because they haven’t worked on oil/liquids wells before – to my knowledge all previous work was on gas wells. should help broaden the appeal of their machine for frac water cleanup. Talking my book in a very small way but I do think they have an interesting piece of technology and have finally found a way to fund the construction of a fleet of machines. Q3 report from them should be interesting reading.

    39. 39
      brodway Says:

      had to take another bite at MHR at 3.42

      its seems as if they are selling it by the pound now.

    40. 40
      zman Says:

      re 36 – roger that, they’re getting ignored. NOG = basing.

    41. 41
      zman Says:

      Next week’s energy conference: Johnson Rice, second to last conference before we get Service name 3Q reports around Oct 20. Expecting the SLB/HAL show to be very rah rah.

    42. 42
      Zorgnak Says:

      NOG…NOG just loves 20…Poster child for trader acceptance,price magnet

      http://www.charthub.com/images/2011/09/30/Stock_Composite_2

    43. 43
      DrLink Says:

      I also joined you on more MHR 3.42

    44. 44
      zman Says:

      GMXR – next week, or week after = Wock well news, their first operated Three Forks (or Williston Basin period for that matter) test. Would think it pops a bit on good news there and on anticipation of the next one.

    45. 45
      zman Says:

      Bits of green noise on my screen. Reading some oily stuff, shout if you want something.

    46. 46
      john11 Says:

      MHR touched flash crash lows going back to May 2010.

    47. 47
      bill Says:

      Z or anyone else have you done a sum of the parts on MHR?

      Whats the efs acreage worth?

      TIA

    48. 48
      elijahwc Says:

      TD: Just bought a little more SDRL off the bogus research out of RBC this am. We are starting to get the “comparative value crud” from scared analysts influenced the price action.

    49. 49
      Dillon Says:

      MHR – Gary has said at conferences that for the right price they may be looking to sell the EFS…I dont think they are going to get some of the highest prices we’ve seen. I think those come from (mostly) NOC’s or company’s wanting large chunks of acreage. They could be a smaller part of a larger buy by a big operator and get a decent price….depending on Gary’s ability to sell someone haha. Just my opinion…others encouraged.

    50. 50
      tomdavis12 Says:

      Eli: I was able to weather storms in ’08 by staying with high cash flow names and at least add to favored names at lower prices. If the market were more stabile I could be heavier into growth ideas with covered calls but the volatility makes that more dangerous. I’m staying with SDRL until I see a fundamental problem.

    51. 51
      bill Says:

      dillion – appreciate the color– is there aceage worth 10 k an acre?

    52. 52
      elduque Says:

      Gold miners are having a great day.

    53. 53
      Dillon Says:

      re 49 – Ron Ormand said at the conf the other day that they are considering monetization options to help the stock realize its true value. Did not say what assets though. I think the EFS would make the most sense since the highest prices come from there given their asset choices and it is the smallest of their 3 legged stool.

    54. 54
      zman Says:

      re 47 – yes, the simple answer is a lot more than its current TEV. TEV probably about $650 mm right now.

      On reserves of 31 MMBOE x $15 = $465 mm
      +
      EFS and Marcellus (and Utica, Huron, U. Dev)
      = easily the difference between reserves and TEV.

      EFS alone should be $12 to $15K per acre, on 25K acres that alone on say $10K.acre is $250mm … add the reserve value and you have $715mm. Before you consider Marcellus.

      or go with the exit rate of 10,000 boepd, maybe 60% liquids by then … $100K per BOE would be $1B. Can’t get it right now but $65K doesn’t seem justified

    55. 55
      tomdavis12 Says:

      S&P down 12.8% for the quarter. Yikes! Good thing we have the Zmeister.

    56. 56
      Dillon Says:

      Bill – I could see them getting that…maybe higher. I just don’t see them getting the 25k/acre like Marathon paid unless Gary can really pull a rabbit outta the hat. Just my opinion.

    57. 57
      bill Says:

      54/56 thanks very much–just bot more

      The ceo wants to burn the shorts so bad I think it’s his # 1 operating goal

    58. 58
      Dillon Says:

      MHR – also gotta remember, only about 18k is in Gonzales county with around 4k in northern fayette/lee county and 3k in atascosa county with a couple dogs of wells drilled on it. Probably not gonna get that nice of a price on those portions.

    59. 59
      zman Says:

      Offtopic thirty, grabbing lunch

    60. 60
      bill Says:

      atpg bonds

      http://www.bloomberg.com/news/2011-09-29/atp-1-5-billion-of-debt-falls-to-yield-23-4-trace-data-show.html?cmpid=yhoo

      someone said they had a 68 handle, dont know if true

    61. 61
      bill Says:

      atpg common is all over the place…chaos

    62. 62
      bill Says:

      from 7 and change to 8.85 then back to 8.25

    63. 63
      Zorgnak Says:

      S&P Futs..still trapped within the 1134-1146-ish box
      http://www.charthub.com/images/2011/09/30/FT71_ES_Intraday_4

    64. 64
      elijahwc Says:

      ATPG & ATPGP follow-on:

      http://www.bloomberg.com/news/2011-09-29/atp-says-new-gulf-of-mexico-oil-wells-to-stave-off-default.html

      Not good when you have to respond

    65. 65
      john11 Says:

      ECRI (Lakshman Acuthan)out with a gloomy forecast,
      Early last week, ECRI notified clients that the U.S. economy is indeed tipping into a new recession. And there’s nothing that policy makers can do to head it off.

      ECRI’s recession call isn’t based on just one or two leading indexes, but on dozens of specialized leading indexes, including the U.S. Long Leading Index, which was the first to turn down – before the Arab Spring and Japanese earthquake – to be followed by downturns in the Weekly Leading Index and other shorter-leading indexes. In fact, the most reliable forward-looking indicators are now collectively behaving as they did on the cusp of full-blown recessions, not “soft landings.”

      link to whole story;
      http://www.businesscycle.com/reports_indexes/reportsummarydetails/1091

    66. 66
      Zorgnak Says:

      OT The economy is so bad that Exxon-Mobil laid off 25 Congressmen
      J Fahmy

    67. 67
      elduque Says:

      For anybody still sitting with TRGL. I sold mine this morning and used the proceeds to go into MHR.

    68. 68
      elijahwc Says:

      It not a disaster everywhere. This is a Carl Ichan company in NE Arkansas:

      “JONESBORO – American Railcar is hiring hundreds of new workers to meet demand for new freight cars.

      The company told The Jonesboro Sun on Thursday it has hired 700 new workers at its plants in Paragould, Marmaduke and Kennett, Mo., and plans to hire as many as 700 more.

      The factory in Marmaduke plans to add 250 workers by the end of the year.

      American Railcar Vice president Jack Pipkin says the orders aren’t just replacements for worn out freight cars. Pipkin says there is growing demand for railcars for bulk shipment. He says a large part of the new demand is spurred by natural gas drilling in the region.

      Pipkin says energy companies need railcars for hauling sand that’s used in the drilling process.

    69. 69
      zman Says:

      re 65 – yeah, saw that interview, its the lead story over on yahoo finance. Ought to put that guy and Warren in a ring.

    70. 70
      zman Says:

      Crude all over the map today.

      http://www.cx-portal.com/wti/oil_en.html

    71. 71
      Zorgnak Says:

      Z, do you have any thoughts on PETD that you’d car to share?

    72. 72
      tomdavis12 Says:

      Z: I just made this up so everyone is allowed to laugh at this idea. The best performing stock on the NYSE in ’08? Yea I know we did not bottom til 3/09. XOM. If you need to be in the sector, XOM just might again be the safe haven. Therefore, only when it starts to underperform the sector will there be a signal of increased risk interest. Kind of the negative BAC canary in coal mine. You are now free to laugh.

    73. 73
      zman Says:

      re 71 – not up to date there. I like management (in general), and I like their assets (hey, they even have a Utica wedge). Will work it up soon as it’s been awhile.

    74. 74
      zman Says:

      Becoming more common on the west side:

      http://news.yahoo.com/pirates-attack-rob-ship-off-west-african-coast-093845541.html

    75. 75
      Zorgnak Says:

      #73..getting the samll cap hammer put them

    76. 76
      zman Says:

      re 75 – that’s probably the debt, the 75% (or so) gassiness, and yeah, they’re an E&P sub $1B TEV company.

    77. 77
      zman Says:

      PETD – nice metric on the old % Rev Gro / % Pro Gro at 3.4x. Hmmm. Just no love for the small caps, especially the gassy ones at the moment. That metric tells you they are outgrowing revenues vs growth and yet they are growing well … this tells you either prices have gone up (not really) or they are increasing a more valuable piece of their production (liquids in this case). Simple metric I eyeball when things like that happen and it seems the market is just chucking the names.

    78. 78
      zman Says:

      Bakkens mostly behaving on a red end of quarter day. OAS weak again which is odd … probably just the chart is of concern to some weak hands sellers.

    79. 79
      zman Says:

      RRC Friday move? Hmmm. Way boring out here. Perfect time for a little M&A speculation.

    80. 80
      brodway Says:

      i’m also suprised that OAS is getting beat up as bad as it is. earlier this week it traded up to over 25 on pretty hefty volume. it seems like there is a liquidation is taking place. would love to own some more, but every time i stick my nose out it gets chopped off.

    81. 81
      Zorgnak Says:

      #77..thanks..I’ll keep it on the radar

    82. 82
      choices Says:

      FWIW-I do not think the word “carnage” does the quarter justice:
      I looked at a couple of names’ performance over the last 30 days and for Q3 from July highs-results were bloody as might be expected:

      CRR, beta 0.7, 8/31 to sep low=-33.4%, from jul hi-sep low=-41%;
      FTK, beta 2.1, -36.7%, -58.2%
      HAL, beta 1.5, -28.6%, -44.7%;
      OIH, -19.4%, -33.3%
      last three stks w/results in order as CRR.

      -Hard to believe CRR beta is 0.7;
      -some stks trading lower today but difference is minor.

      As they say, have a nice day-jeez.

    83. 83
      Jerome Blank Says:

      MHR…not to jinx it, but the micro term, 5 min structure looks like MHR is trying to form a rounded “fry pan” bottom, going to add a bit here….

    84. 84
      zman Says:

      Thanks for stopping by JB, not quite to scoop chart levels yet for me, not levels as much as time. I added more earlier this month, probably 25% higher. Sheesh. Small bites.

    85. 85
      nrgyman Says:

      For those into TA, WLL is now at the 61.8% Fibonacci retracement level of the advance from the bottom in 2009 to the top this year.

    86. 86
      elduque Says:

      EXXI big block trade taking it down to 20.78.

    87. 87
      zman Says:

      Eld – yeah, seeing that here and there today. Big cap E&Ps continue to lead lower.

    88. 88
      Zorgnak Says:

      GMXR feeling perky

    89. 89
      brodway Says:

      NRGYMAN re: 86

      I believe the point you make is very important from a technical perspective. A few days ago i was perusing a site where i came across similar opinion from a techinical type. The 61% retracement as a key support area for equities.

    90. 90
      brodway Says:

      low volume on GMXR today. maybe the sellers have finally left the building.

    91. 91
      zman Says:

      GMXR – obviously not alone in my thinking there.

      Otherwise, sort of figures for the end of the quarter. I wasn’t planning on selling today anyway and I don’t own anything with a fuse on it like options. This will pass. The weather is nice outside and I’m going to find a hammock. Try to have a good weekend.

      Cervezathirty.

    92. 92
      brodway Says:

      Brilliant!!

    93. 93
      Zorgnak Says:

      S&P Futs
      In #2 this morning I wrote that we’d likely see 1126.75 if we broke 1144..we’re there now…more important though is if the market rejects 1134 acceptance as too high then the recent lows will will likely get tested next early next week.

    94. 94
      Zorgnak Says:

      scratch out one of those pesky nexts

    95. 95
      Zorgnak Says:

      Coal Dust…
      ACI nice little warning here Friday AH 2011 EPS 1.00-1.40 vs $2.00 consensus

    96. 96
      brodway Says:

      WLT may get hit by the ACI news.

      WLT, is down close to 60% off the highs this year. At some point it has got to be a great buy.

    97. 97
      zman Says:

      The initial part of the wrap post is posted.

    98. 98
      global address listing Says:

      global address listing…

      […]Zman’s Energy Brain ~ oil, gas, stocks, etc… » Blog Archive » Friday Post – Catalyst List Update Part II Plus The Natural Gas Supply Slide Show[…]…

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