30
Nov

Wednesday Morning Post – Hello China – WIOWIO Part III + An Expanded Natural Gas Slide Show

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Market Sentiment Watch: YoYo Market Continues - China Edition. China's central bank reduced reserve requirements in an effort to boost its own economy ... and the crowd goes wild, with WTI shooting over $101 within 10 minutes of the news (both coal and oil should rally on the China news. Europe for its part, decided to delay action for another 10 days. Europe probably cuts rates next week though. We'll see if the market will continue to dodge/ignore relative positive data and now the thought of "global easing" in favor of European fears.  In the U.S. we've had a string of not too bad data, from retail sales to the slowly falling claims numbers and positive reads on the consumer as recently as last Friday's door busting numbers to yesterday's jumping confidence figures.  My sense is the market is still caught between floundering over Europe and the L-shaped recovery and that the bias will be to the upside with regard to the E&Ps and Service in the near and medium term. In energy land today we'll be listening to a number of presentations at the Jefferies Global Energy Conference. In today's post please find the last of the WIOWIO names and the Natural Gas Supply Slide Show.

Ecodata Watch:

  • ADP Employment - 207,000 jobs added (better than expected),
  • Productivity for 3Q11 revised lower from 3.1% to 2.3%,
  • We get Chicago PMI at 9:45 am EST (F = 58.4%),
  • We get pending home sales at 10 am EST
  • We get the Beige Book at 2 pm EST.

In Today’s Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Oil Inventory Preview
  4. Stuff We Care About Today – The Natural Gas Supply Slide Show, WIOWIO Part III
  5. Odds & Ends

Holdings Watch:

ZLT - C

  • SSN - Sold the second half of the SSN position out of the ESA accounts for $1.90,
  • TPLM Replaced it by doubling up the TPLM position for $5.25.  Not selling SSN out of the ZLT at this time but wanted to core up the ZLT C a bit and with SSN in a riskier stage of its plan at the moment it seemed prudent to make the switch.

Commodity Watch:

Crude oil closed up $1.58 at $99.79 yesterday, after temporarily breaching the century mark for the second time this month. The front month contract now looks like this. After the close, the API released a bearish looking (on the surface) report (see below). This morning crude is trading just over $101 on the news that China has decided to be proactive about their growth rate and the resulting dip in the dollar.


Natural gas gained $0.11 to close the day at $3.63 yesterday in weather-of-the-moment driven trading. This is noise given the supply picture. This morning gas is trading off five cents and I would expect further directionless to flat trading in coming weeks even as the weather cools.

  • Natural Gas Supply Vs Demand Watch: There is plenty more detail in the Supply Show (see below in the Stuff section) but for a interesting quick graphic take a look at the follow charts.

Early Read On Natural Gas Storage:

Street is looking for a 10 BCF INJECTION for tomorrow’s report.

  • Last Week: +9 Bcf
  • Last Year: -23 Bcf
  • 5 Year Average: -32 Bcf
  • 10 year Hi: +13 Bcf
  • 10 year Low: -100 Bcf

Oil Inventory Preview


API Watch: Somewhat bearish

  • Crude: UP 3.4 mm barrels
    • Cushing stocks fell 0.426 mm barrels
  • Gasoline: DOWN 0.2 mm barrels
  • Distillates: UP 1.5 mm barrels

Stuff We Care About Today

Natural Gas Supply Slide Show with data through the month of September 2011. Nothing here for gas bulls to get excited about as marketed production scores a new high.

A few brief and sad for bulls comments:

  • Louisiana – new high instead of the dip that I expected, still expecting a production rollover in the not too distant future, but for now this could be a focus on completing previously drilled wells that translates into more production for a time even as the rig falls in the post held by production world.
  • Texas – back to old highs (this actually is as expected as the EFS wells bring gas with them and the north and east plays (Wash and Combo) do too.
  • Gulf of Mexico production fell hard to a new recent low but that’s the impact of storm related production shut ins.
  • But “Other States” is the big problem, just vaulting higher now. All those “great” Marcellus wells are piling up … and we’ve got the Utica and the Upper Devonian after that.

.

Why I Own, What I Own - Part III

RRC - Gassy Mid Cap E&P With Utica Upside And Possibly A Bigger Liquids Wedge Down The Road

  • Management = consistency
  • Story remains focused on the Marcellus (and soon Utica) where they have a large position for a mid cap, but they have somewhat less talked about plays in the Mid-Continent (Woodford, Miss. Lime and St Louis Lime, and Wash plays), and West Texas (sounded excited on the 3Q conference call and are adding acreage to their Wolfcamp/Penn Shale play)
  • Low Cost Leader - second only to SWN in the ZLT on opex while still having 22% of volume come from liquids.
  • High production growth story - general grows in the teens to twenty percents sequentially.
  • Balance Sheet: Balanced with 43% debt to cap but a very large available line of credit.
  • Valuation is nearly always at a premium on this one as it is on most energy trader's top five next to be acquired lists.

WLL - Cheap Oily Mid Cap E&P With Williston Focus, And Other Up and Coming Plays

  • Management - Highly experienced, fairly conservative
  • Strong position in the Williston with core in the Sanish area (one of the best of the cores within the Williston Basin), with several areas in what used to be called Rough Rider, and moving west into Three Forks Sanish country. They also have a couple of enhanced oil recovery (EOR) plays which churn out reliable cash flow and then some new emerging plays including the Niobrara (so far not so good) and the Wolfcamp down in the Permian in Pecos county where early results look like, well, early results but they do have a good sized position and have plenty of horizontal experience so I give them better than your average small cap players chance of getting it to work.
  • Street lost interest in the name earlier this year as some results in their new emerging core area in the Williston, Lewis and Clark, appeared to be mixed and they cut their production guidance after the poor weather of the first half.
  • Costs: not bad, especially considering the added expense of the EOR plays.
  • The name is very cheap trading at 4x 2012 CFPS (vs an admittedly faster growing Bakken peer group that trades close to 7x 2012 numbers), and despite production volumes that are on the mend and despite being 83% oil by volume, something that should serve them well in the coming years.  Furthermore, the name trades at only $22 per proved BOE, far below the other Bakken names, even the non-pure plays like CLR which trades above $31.
ROSE - Emerging Liquids Growth Story
  • Management came from Burlington and Conoco, lots of depth in Limbacher,
  • Story is Eagle Ford front burner development and Southern Alberta Basin backburned exploration
  • Eagle Ford position
    • is 65,000 net acres in Webb, La Salle, Dimmit, and Gonzales counties Texas, mostly in the oil window and condensate window of the play.
    • Seeing strong results outside of the core area, likely to see more with passing quarters as they accelerate the program.
  • SAB - no well results to date worth speaking of ... it's still a science project though and the company was very pleased with the initial read on the vertical cores taken in the play. The verticals however barely flowed. Time will tell if this is the next big thing for them or not and I would to know in 2012.
  • The revenue mix has completed shifted from majority gas to majority over the last year. In 3Q10 revenues were 33% liquids; by 3Q 11 that had changed to 67% liquids.
  • They liquids are not purely oil but are condensate rich with their average price per BOE coming in the $42 to $46 range over the last three quarters.
  • Growth in 2012 set at 44% preliminary and they have a habit of walking guidance higher as the year progresses so look for them to increase the liquids profile as 2012 unfolds at a quicker pace than current guidance would suggest.
  • The balance sheet is fine with net debt to cap at just under 20%
SSN - Bakken, Niobrara Minnow
  • Management appears to be technically competent and deal savvy,
  • Small company with no debt and a good sized but slowly shrinking cash hoard focused on the Bakken in North Dakota as a non-operator and in eastern Montana but on the western edge of the known play with 20,000 acres to start, possibly growing to 90,000 acres should they see positive results in the early wells (now drilling)
  • The stock has traded on Bakken news in ND but the acreage is small with limited remaining running room.  They are applying for four infill wells to be drilled in 2012 and their final well in the original 6 well short lateral program will be completed in December 2011.
  • Last year they sold some Niobrara acreage to CHK to remake the balance sheet
  • Now they are in the "put up or shut up" phase on three projects:
    • Wyoming (Goshen County) - Conventional targets - first well had mechanical issues but will be completed in an uphole bailout zone. Not sure when well #2 spuds, guessing early next year.
    • Wyoming - (Goshen County) - Niobrara - first well just fracced and has not yet flowed hydrocarbons, they are going to put it on pump and we should know more before year end.   This well was 100% carried by HAL and SSN will want to study the well intensely before deciding to go ahead with well #2 on their own dime.
    • Montana - (Roosevelt County) - Two Bakken wells in progress on the western fringe of recent drilling activity.
  • I'll be updating the back of the envelope NAV as more news emerges regarding their Goshen wells in the next couple of weeks.


Odds & Ends

Analyst Watch:

  • RIG - upgraded to Hold at Tudor
  • SWN cut to Equal Weight at Barclays
  • RRC price target upped $4 to $52 at Barclays
  • GDP - Rodman starts at Outperform

162 Responses to “Wednesday Morning Post – Hello China – WIOWIO Part III + An Expanded Natural Gas Slide Show”

  1. 1
    Zorgnak Says:

    S&P Futures Short Term Areas Of Interest ..11/30 8:53am ..S&P Futs @ 1130.50.. Notes To Myself. Volume building in O/N session below 1237.50 CHVN. Watch this level for clues to continuation of the morning rip. Expecting 1230 will be an inflection point. Have to see where the market opens to see in which way it will apply.
    1203 is now key support for bullish case.
    Crude above 100 now with a year long volume base below. Congrats to all ZLTers.

    CLVN= Potential Rejecton Area – CHVN = Acceptance/Congestion

    Glossary of Terms http://www.futurestrader71.com/?page_id=1280

    1262 Major CHVN
    1241.50 CLVN
    1237.50 CHVN..If market can rally above this level I can see additional gains to 1262
    1230 CLVN
    1203 CLVN,
    1195 Minor CLVN, NVPOC

    http://www.charthub.com/images/2011/11/30/ES_Composite_2

  2. 2
    zman Says:

    Crude stepping up:

    Pretty easy to see the moment the China news hit:

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

  3. 3
    zman Says:

    Futures absolutely on fire now:

    http://www.bloomberg.com/markets/stocks/futures/

  4. 4
    zman Says:

    KOG at $9

  5. 5
    zman Says:

    The other news of the morning:
    http://www.bloomberg.com/news/2011-11-30/fed-five-central-banks-lower-interest-rate-on-dollar-swaps.html

  6. 6
    zman Says:

    Zorg – will get those comments back to you today.

  7. 7
    zman Says:

    Will be active at the open.

  8. 8
    zman Says:

    ZMT

    In a nutshell, bigger positions as a percentage of the whole, somewhat shorter time frames with less than 6 months, maybe catalyst driven but also could just be a market dislocation play (like an EPL if it gets much cheaper but likely with some thought of a macro reason for adding at the time or in front of earnings). Anyway, less “buy and hold” than the ZLT.

  9. 9
    Justin Says:

    Z-

    Interesting morning. Great charts and commentary.

    Will SDCJF make the WIOWIO?

  10. 10
    zman Says:

    ZTRADE – ZMT – TPLM

    TPLM – Added 1,000 shares for average of $5.41. The name retreated sharply over the holiday week as the Bakken pure play leadership rallied to new highs. Earnings are December 15 and I expect them to announce a reiteration of their 1,000 + BOEpd exit rate for the year. It’s not yet a cash flow play but we are getting to that point where people are going to start to eye their new operated program which should tie in the first 6 wells by late Spring 2012. Given the rally in KOG and the good acreage they are drilling as they drill those first operated wells combined with their no debt, cash rich balance sheet, I expect a contraction of the current sharp acreage discount the name current suffers.

  11. 11
    zman Says:

    re 9 – yes, got pressed for time as I went off on a tangent project with the supply / demand stuff last night.

  12. 12
    Zorgnak Says:

    S&P Futs….the 1230 area is near resistance and key gauge for any further initiative buying…1226.50 is near support for any responsive selling to this pop

  13. 13
    zman Says:

    Coals should rally sharply on the China news, group has been much abused. BTU coming up off lows tentatively now, remains my favorite growth coal name targeting China.

  14. 14
    Justin Says:

    No worries – supply/demand pretty darned important.

  15. 15
    Zorgnak Says:

    #6..alrighty…

  16. 16
    zman Says:

    PMI came in high, 62.6 vs 58.4 expected, 7 month high. I continue to see more subtly stronger than expected US data.

  17. 17
    DaveH Says:

    Re: 13 TCK +8.37% also benefiting

  18. 18
    zman Says:

    Pending home sales surge to up 10.4% in October.

  19. 19
    zman Says:

    re 17 – hear ya, thanks.

  20. 20
    zman Says:

    This is the Rep I had lunch with, he turned down his pension when he was elected, I think this is a good idea.

    http://thehill.com/homenews/house/196105-lawmakers-propose-end-to-congressional-pensions?tmpl=component&print=1&layout=default&page

  21. 21
    zman Says:

    GDP liking the Rodman upgrade, I plan to be bigger in the name by the time 4Q earnings roll around.

  22. 22
    zman Says:

    Oil inventories in 20 minutes, expecting a small dip in Cushing.

  23. 23
    1520sbroad Says:

    what did barclays say about SWN in their move from over to equal weight? Anything other than SWN is gas heavy and gas prices are low?

  24. 24
    zman Says:

    REXX back off the silly low from last week, back to $16, on way to new highs closer to year end.

  25. 25
    zman Says:

    re 23 – just saw a headline but yes, that would be my guess. They also cut their target by $3 to $42. I would not think they “know” anything re the Brown Dense.

  26. 26
    zman Says:

    Talk about a rip your face off rally, DJIA up 380, SPX up 38, all indexes up 3%. Volumes look pretty OK to me in the group, KOG may be starting to flag a bit, big volume this time of day as it comes off $9. Probably due a rest. Time for OAS and the rest to move.

  27. 27
    zman Says:

    MMR – back above its 200 day as per musings the other day, expecting a strong rally into the end of the year production test at DJ1 there as well as at EXXI (smaller rally but still strong).

  28. 28
    Zorgnak Says:

    S&P Futs..expecting retest of 1230 area to hold…1237 magnet for the day..then 1248.75 above as extended target

  29. 29
    Zorgnak Says:

    1241.50 minor resistance a further area of interest..

  30. 30
    Zorgnak Says:

    Crude has what’s called a double distribution day so far…a test to 100.50 most likely but expect it to hold…101.50 now short term acceptance

  31. 31
    tomdavis12 Says:

    Z: Just got off SDRL CC. Missed the first 1/2 hour. Results roughly in-line & they raised the dividend .01/sh. Feels like chasing the stock here. There are issues discussed about John Fredriksen’s empire with FRO-Frontline & SRI-Ship Finance Int’l. There will be 1.2B in financing needed next year to pay for some newbuilds. Probably 1/2 in a conv bond. If you own the stock no worries, be careful with adds. They are now the #1 offshore driller in market cap with the RIG problems.

  32. 32
    Zorgnak Says:

    Crude

    http://www.charthub.com/images/2011/11/30/Crude

  33. 33
    zman Says:

    Tom – thanks, need to do some work there. I listened to ATW the other day and came away thinking that the story continues to improve as I watched stock come off hard.

  34. 34
    zman Says:

    re 32 – I’d like to see crude back in the $90s and flattish for a bit, but it seems to want to rally on any decent news. Hmmm. At least it is not punishing the US consumer via higher gasoline prices, they continue to drop.

  35. 35
    zman Says:

    EIA Oil Inventory Review

    Crude : UP 3.9 mm bbs
    Gasoline up 0.2 mm
    Distillates UP 5.5 mm barrels

  36. 36
    Zorgnak Says:

    XLE Resistance at 72.50
    http://www.charthub.com/images/2011/11/30/SPY_Composite

  37. 37
    choices Says:

    NOV-TomD-saw your response yesterday-thanks-I was out most of yesterday.

  38. 38
    tomdavis12 Says:

    33: In the economic cycle, the wind is at the backs of the offshore guys. The growth is not stronger than the BB’s. If you get the EPA giving us a frac job up there, then you may have to adjust.

  39. 39
    zman Says:

    More EIA

    Utilization off slightly
    Imports up from 8.3 in the prior week to 9.1 mm bopd this week,

    Both help explain some of the bump in crude stocks.

    Demand:
    Gasoline: up slight to 8.77 mmbpd still weak for this time of year but the best level in several weeks. Probably holiday driving related though.

    Distillates: Big drop in demand, from 4 to 3.2 mm bpd. End of first stocking season for heating oil.

  40. 40
    tomdavis12 Says:

    Choices: NOV – Cramer mentioned as one of his choices last night.

  41. 41
    zman Says:

    More EIA

    Stocks at Cushing fell sharply, from 32 mm barrels in the prior week, to 31.3 mm last week.

  42. 42
    zman Says:

    re 38 – I don’t see it happening but I hear ya.

  43. 43
    ram Says:

    Re34 I’d like to see SSN reverse course. Sort of an anchor right now. Is their real estate on the verge of being discounted?

  44. 44
    zman Says:

    EIA Nutshell:

    Big headline numbers, imports driving the crude number, that’s usually a one week reversal, maybe two given how high prices are now.

    Gasoline demand ticked up but that’s probably transitory.

    Distillate demand fell like a rock, that’s probably a bit of a squirrely number, EIA may have had it a bit too strong the last few weeks and could be playing catchup.

    Stocks were up but were essentially holding their breath for these numbers. I don’t think crude falls out of bed on these as the day is about China, the dollar, Europe, the dollar, etc. But I do think we should be in the $90s, not the $100s and that our names do very well indeed above $80 and that they are definitely not discounting the higher CFPS (and lower multiples that brings at present).

    Off to a funeral, back in awhile.

  45. 45
    Zorgnak Says:

    Re#34 Crude value area continues to shift slowly upwards. Major acceptance for 2011 is 96.75 with a low volume area at 95 that is being increasingly seen as unfairly low.
    Long term (4 year) acceptance is at 92.08.

    Long Term Crude Profile

    http://www.charthub.com/images/2011/11/30/ScottSignals_2

  46. 46
    choices Says:

    #31-SDRL-TomD-more financing makes me a tad uneasy-do you foresee any probs raising cash, covering interest (assuming credit mkt does not fall off the edge)-cash flow seems very healthy-

    Thanks (when you get a chance-no hurry).

  47. 47
    zman Says:

    Re 43 – yes, I wrote that if they come with a dry hole at Defender the stock would likely get marked down to $1.50. The jury is still out on the well and in reviewing their Nov 29 management presentation to the board last night I noted they really didn’t pass judgement on it but had lots of photos of the big frac job. Time will tell and not much time I would think.

  48. 48
    ram Says:

    I don’t feel that stock holders of SSN would feel positive about giving directors stock options based on recent stock dive.

  49. 49
    tomdavis12 Says:

    Choices: You can hold your SDRL, but remember I am a woosie compared to Z. If you write April 40 calls onto your position you can add 4.5% annual return on to the 9% yield. (Yield = woosie in my book)

  50. 50
    john11 Says:

    NFX at Jeffries now…lGDP later
    here is NFX link;
    http://wsw.com/webcast/jeff64/nfx/

  51. 51
    john11 Says:

    thats GDP later

  52. 52
    ram Says:

    Zman, did you ever track down the commentary that affected SSN yesterday?

  53. 53
    DrLink Says:

    SSN
    just hit $1.47

  54. 54
    tomdavis12 Says:

    46 was asked on the CC. The company’s simple answer was No. You can go over CC on yahoo. My long term concern will start with lower oil or world wide slower growth. These guys are also looking at ways to max out shareholders values by JV’s, MLP’s spinoffs. Aubrey of Norway. hopefully with ethics.

  55. 55
    Zorgnak Says:

    High Volume ZLT stocks

  56. 56
    Zorgnak Says:

    MHR SWN SSN EPL

  57. 57
    choices Says:

    #54-mgmt definitely seems focused on s/h value-Aubrey focused on one s/h=himself.

  58. 58
    choices Says:

    a tad OT but noted this cmt this AM-FWIW-emphasis on “hooker’s job.”

    “We want a virgin to do a hooker’s job.”
    — AZ state Sen. Lori Klein, on politics

  59. 59
    Popeye Says:

    So much for hurricane season.

  60. 60
    Paul in Kansas City Says:

    zorg thanks for the COSWF chart yesterday. The Sinopec acquisition would place a $19billion value on the company; but that is an (almost) worthless observation on my and the media’s part. I think $30 is more realistic based on $2 billion remaining capex through 2014 and oil coming down to $80.

  61. 61
    BirdsofpreyRcool Says:

    MHR — the Troll may be sticking his nose out from under the bridge.

    Spoke to a HF friend this morning… comment was “maybe the world ISN’T coming to an end after all.” I pointed out that I sent him XACS#2’s comments the other day that said — essentially — the same thing.

    Nice if we can get back to some sort of “normal” that feels a little more like, well, normal. That might be too much to wish for right now… but any movement in that direction is much appreciated by the mrkt. Jobs number on Friday will be a bigger deal than usual, imho.

  62. 62
    Zorgnak Says:

    #60..Paul thanks for the insights…looking at 26 as likely 1st upside target if crude stays above 95. 28 appears to be first significant supply level…volume patterns look good for more upside after this pop today…watching for now, until I can gauge the reaction after the first pullback from here…
    http://www.charthub.com/images/2011/11/30/SPY_Composite_2

  63. 63
    BirdsofpreyRcool Says:

    File under: Love It!

    message from CDS trader at major NYC bank trading desk…
    ====================================

    Trader: Too many people saying that the coordinated action was due to something “terrible.” The Forbes article making the rounds suggests it was a large European bank that was having liquidity issues and was in trouble. Once again, all of this is true, but look at the results. This is not a one off 15-20 pt S&P rally. This can last days and fading this does not make any sense to me. Also, the fact that I have received the Forbes story from every possible source now should tell us how bearish we all are.

    ================================
    Just had to post his personal thoughts and comment… they say a lot.

  64. 64
    BirdsofpreyRcool Says:

    XACS#1’s comments
    ===================

    Credit is now trading in line with equities. The CDX IG17 Index is trading nearly 9bps tighter today even though US bank credit curves indicate the possibility of a credit crisis remains high….repeat…. US bank credit curves indicate the possibility of a “credit crisis” remains high not that the chances of a recession remain high….but that another credit crisis is about to be unleashed. LOIS is also giving out flashing red cautionary signals. The CDS spreads of benchmark US corporations are almost all trading wider than they were in December 2009. In December 2009, it was common knowledge that dismal holiday sales growth, RMBS concerns, and the expiration of cash for clunkers and other factors were going to lead the US into a double dip recession. It did not happen – however – and credit was still improving. The domestic US economy is now much healthier with Auto and Aircraft manufacturing, Agricultural, and Energy industries performing well. Its hard to have a recession when these industries are performing strongly, especially when consumer and commercial credit losses continue to decrease. Homebuilding and the Financial sectors continue to suffer, but they do not seem to be holding back US economic growth as much as they did in 2010. Nevertheless, the credit markets overall and bank CDS curves in particular are signaling the market’s impeding doom. Although we expect improving underlying credit fundamentals will lead to a rally in credit spreads and equities, the warning signs provided by inverted bank CDS curves and European political ineptitude also leads us to believe that the current equity market range trade will reassert itself soon…despite inproving fundamentals. If improving credit fundamentals cause US bank CDS credit curves to begin to steepen we would expect equity markets to surge toward our year end S&P 500 forecast of 1360.

  65. 65
    BirdsofpreyRcool Says:

    “LOIS” is better known to us here as “TED”

  66. 66
    zman Says:

    NFX – mentioning again that it looks like it is forming a bottom. Deep value E&P guys, not retail, but funds, will be buying in here.

    OII – breaking out, today.

    REXX rebound continues, new highs by year end by my way of thinking, soon after year end they get more processing capacity on line, along for big sequentially quarterly growth ramp in the first half and then you get first OH Utica operated well news.

    HAL – funny how $100 oil seems to be the rally point for the big cap Service names.

    TPLM – inching up

    SSN bounced off the lows. Let me be clear. The Defender well does not in and of itself yet condemn their acreage for Niobrara acreage, we don’t yet know what it says about the acreage, just that spot, probably know a lot more in a week or two. This well was 100% on HAL’s dime.

  67. 67
    zman Says:

    ROSE – breaking higher, also big growth, see the WIOWIO for comments there. This is a breakout above the mid month levels, next challenge is July levels in the $56 range.

  68. 68
    zman Says:

    Got 3 emails while I was that all basically say the EPA is denying any effort on its part to ban fracking.

  69. 69
    Zorgnak Says:

    RE NFX…Haven’t looked at that one in a while…Volume trends look very positive in Weekly Daily and Intra day time frames..bot some

  70. 70
    elijahwc Says:

    D Gartman on CNBC talking about a new “risk-on risk-off” ETN.

    Pure BullS..t. And another myth with NOOOOOOOOO way to create the underlying.

    Mark Cuban on the US Markets “toys for the hackers”.

  71. 71
    RMD Says:

    GLBL has a good review of fracing issues, concludes co’s with undrilled leases would be exposed to any legislative mischief while conventional drilling, (boring), co and the GOM would be unaffected and benefit from any surge in energy prices.

  72. 72
    zman Says:

    re 70 – I was typing that I completely think that’s just about stupid when I went ahead and read your second sentence. Couldn’t agree more with him.

    My Cuban trust level is not up to the distance I can throw him. Last I heard he was 100% cash, not that I care.

    re 71 – Is that global hunter? So their recommendation is to buy offshore and by the BRY’s of the world?

  73. 73
    elijahwc Says:

    #70

    Now I really want to barf. Just found out these products are the “Fisher-Gartman Risk ETNs”

    And true to form both the risk on ONN and the risk off OFF are green.

    Way to track hucksters

  74. 74
    elijahwc Says:

    #72 my second line was my opinion of Dennis Gartman

  75. 75
    zman Says:

    re 74 – Ohhhh, well then I completely agree with you and my original thoughts for him are back to that’s completely stupid.

  76. 76
    elijahwc Says:

    ty

  77. 77
    Paul in Kansas City Says:

    Re 62: Zorg; thank you for your efforts here. I am assuming the right vertical axis is volume; but is this OTC volume or Toronto Exchange volume? And for our purposes does it even matter? Your insights much appreciated!

  78. 78
    Paul in Kansas City Says:

    also regarding COSWF; Kurt Wulff at McDep and associates has a good NPV model available for free download. Since Syncrude is basically a giant strip mine I believe we can place high reliability on proved plus probable reserves. If we have the multi year deflation scenario; credit dries up for drilling etc. the supply aspect of this entity is unaffected and lower oil; while unpleasant for security holders short term; would not place a solvency risk in my opinion on shareholders.

  79. 79
    zman Says:

    John, thanks for 50, listening to the replay on NFX now.

  80. 80
    Zorgnak Says:

    #77 Paul..Correct on the volume at price on the right hand edge…it’s
    OTC…let me see if I can pull up the CDN volume data on it.

  81. 81
    RMD Says:

    73 that ETF could be an excellent shorting vehicle.

  82. 82
    Paul in Kansas City Says:

    thx Zorg

  83. 83
    zman Says:

    NFX Notes

    Asset sales running ahead of schedule by about 2x vs where they thought, helps with the 2012 budget.

    Bakken – will carry 16 wells into year end (drilled but not complete) vs 13 previously assumed due to better drilling time performance.

    2011 Bakkens: > 3,000 BOEpd, 30 day average of just under 1,350 BOEpd.

    “Setting the record straight” as he puts it, we never said we didn’t like our acreage in the Basin, we just didn’t like the completion costs.

    When they complete that slug of wells early next year look for new highs on their Basin production, that’s when they exceed 10,000 boepd for the first time, probably by a lot.

    Uinta

    Making the good point that the new acreage is not BLM land, but falls under State permitting regulations.

    They had been running up against a permitting capacity of 350 or so wells per year. The new land adds 150+ well permits per year easily.

  84. 84
    zman Says:

    re 81 – better than DUG?

  85. 85
    Zorgnak Says:

    #78 Market data from the TSX shows essentially the same picture..charts are in $CDN..Short term acceptance is above at around 23..longer term (1year) is 26.72. Price is stretched out of value in both time frames..volume patterns are beginning to improve..any above 23.36 could be a rapid one if and when it gets there

    Short term
    http://www.charthub.com/images/2011/11/30/Stock_Composite_2

    Longer Term 1 year and 4 Months

    http://www.charthub.com/images/2011/11/30/ScottSignals_4

  86. 86
    Zorgnak Says:

    should have read “any move above 23.36”

  87. 87
    zman Says:

    NFX Notes

    Uinta

    – Soon NFX will be moving north into the Uteland Butte acreage, from where it borders their existing Monument Butte area.

    – they drilled the first wells on the border area in the new acreage … this is normally pressured as the Uteland is shallower here.

    – as they press north further into the new acreage, look for higher IPs walking up.

    – they are drilling wells at a rate of 5 to 6 wells per month per rig. This gets you a combined IP of 450 boepd

    – and then there is the deeper Wasatch play, where they can get 1,000 boepd IP out of 2 wells (verticals, not yet talking about the horizontal potential).

  88. 88
    zman Says:

    Zorg – Re NFX – this is more interest in a Q&A session than I’ve heard from a sales force at a conference in some time, clearly people have been doing their homework.

  89. 89
    zman Says:

    Feels like the group is up but asleep again, wouldn’t say no one is chasing as there looks like more volume to me, but very quiet.

  90. 90
    zman Says:

    BTU up 11%, on the next red day, and hopefully on a fill of this gap, I’ll be looking at adding a second piece of this one.

  91. 91
    Zorgnak Says:

    #88 Thanks..

    S&P Asleep now but in E&P land we have another big volume day..74 of 78 above average volume for time of day

  92. 92
    Zorgnak Says:

    All green cept one…..

  93. 93
    zman Says:

    re 91 – a helpful rally for those that worry about month end too.

  94. 94
    zman Says:

    WLL is a steal at $101 oil.
    EPL more than a steal
    EXXI too

  95. 95
    zman Says:

    Can’t tell that GDP webcast from Jefco, perusing the new presentation now.

  96. 96
    zman Says:

    Phil Weise of Argus on CNBC talking up HAL. Says the only part of the global growth situation his companies are worried about is Europe.

  97. 97
    1520sbroad Says:

    SWN minutae – was reviewing their Q3 conference call and saw note that they will move rig off of their Brown Dense well in Arkansas to Claiborne Parish Louisiana for 2nd Brown Dense test. I was digging around SONRIS and found the permitted well for them in Claiborne Parish – Serial # is 243882, API # is 17027224820000. Doesn’t look like they have started drilling there yet to me? I am a SONRIS novice so I may not be looking in the right spot for up to date info. I have seen no info on the Arkansas side of the state line well yet.

  98. 98
    1520sbroad Says:

    SWN typically gives a budget/capex update in early to mid December perhaps that is the date to look for more info on the Brown Dense.

  99. 99
    Pangloss Says:

    Anybody hearing anything out of SGY at conferences? I’ve gotten some comments that they are TD at Lighthouse Bayou but are deciding to drill more. Were supposed to have announcement at beginning of month and hearing they will be silent until at least end of December. Doesnt sound good to me but trying to get some other feedback.

  100. 100
    zman Says:

    re 98 – I think they will be slow to talk about it but that we could see something in December or it may be as late as the 4Q call.

  101. 101
    zman Says:

    re 99 – have not heard anything, but would not at all be surprised to hear they deepened the well, doesn’t say anything bad to me, depends on where they are in it, what bugs they are seeing, if the section was a target zone at TD, etc. Lafitte and all the ones before it were re permitted lower by the MMR/EXXI guys. Did they webcast at Jefco, if so, will listen.

  102. 102
    Zorgnak Says:

    S&P Futs….Support at 1230…Bills don’t want to see it get much below there

  103. 103
    zman Says:

    Notes from the new GDP presentation

    Slide showing another big bump in Revenue per BOE (suggesting they are comfortable with oil growth as % of volumes from 3Q11
    s levels based on recent EFS and Buda well liquids contributions.

    Nothing new in terms of well news in the presentation.

    re the Tuscaloosa Marine Shale yet, they do show an ECA IP of 373 BOEpd in their slides but the other two ECA wells are still shown as permitted.

  104. 104
    zman Says:

    re 102 – I’d rather see it pull back and then head higher over days and weeks instead of these all or none type days. Everybody says “I don’t want to chase it here” but the fact of the matter is, most stocks were higher two weeks ago, with lower oil prices and no news in between … but it still feels to the Cramers of the world that we are chasing and so you get a lot of people thinking they missed a move … a move of what … the day? Sheesh.

  105. 105
    Paul in Kansas City Says:

    thank you zorg. for the most part all of our stocks in ZMAN land sure trade togther; i love this blog for its focus on business fundamentals and the technical trader insights are a very useful lense to evaluate the market; but the all or nothing moves in these stocks (and really the entire market; pick any sector) makes it seem the effort required to understand the companies a waste of time. Very discouraging sometimes

  106. 106
    zman Says:

    SGY – it is webcast, will go listen

  107. 107
    milepost_43 Says:

    Refiner shorts??…just got on site today so don’t know if discussed…gas in ATL about to hit $3 with CO @ $100ish…time to short refiners again??…MPC especially looks to be rolling over from 50dmav and others…thanks..

  108. 108
    zman Says:

    Paul – Its not a waste of time. I buy what I know. I don’t buy charts (and I got my start in the business reading them). I was thinking of all or none more in the sense that people get discouraged and don’t add to positions that are bargains (but look up today … it would be better if everyone set their change column on their screen to trailing 30 days).

  109. 109
    zman Says:

    MP – talked about it the other day, here are a couple of links:

    yesterday comment
    http://zmansenergybrain.com/2011/11/29/tuesday-morning-wiowio-part-ii/#comment-165748

    and here is the crack spread discussion from a post last week:
    http://zmansenergybrain.com/2011/11/21/monday-morning-and-all-quarters-are-seeing-red/

  110. 110
    Paul in Kansas City Says:

    just to clarify I am in agreement; i’m not even frustrated; just resigned to what the market gives; understanding companies is a long term edge that matters! Dealing with clients there is a major fear (remnants of Lehman). The idea of being solvent companies at lower prices no one wants to do; and I have been consistent on buying weakness and rebalncing on strength; this blog is an INCREDIBLE time saver for this sector.

  111. 111
    Paul in Kansas City Says:

    buying not being

  112. 112
    zman Says:

    Beige Book –

    http://www.marketwatch.com/story/economy-taking-baby-steps-forward-beige-book-2011-11-30?link=MW_story_latest_news

  113. 113
    Zorgnak Says:

    #105 The correlation is pretty tight alright but it seems that what I do seems to work better on the stuff that Z has a handle on. Finding the level that the market finds unfair by finding where traders accept and reject price seems to work with having a fundamental underpinning with the same view..

  114. 114
    nrgyman Says:

    RE 105: Agreed about the markets. Macro issues dominate trading decisions. One day, when it looks hopeful, it is ‘risk-on’, ‘buy beta’, ‘buy global growth’, or whatever term captures the rush to own equities when things are looking up. Traders then buy the ‘baskets’ of stocks that meet this criteria, usually through industry ETFs which do not discriminate well between individual stocks. So that type of trading is in vogue now. This site gives us the names of those stocks that one can hold through the selloffs and add more because of the dynamic growth profile they own. They will get their day in the sun eventually–it is virtually inevitable absent a global collapse.

  115. 115
    zman Says:

    re 110 – ah, ok, you had ME frustrated, for a split second, lol.

  116. 116
    tomdavis12 Says:

    Eli: If you want the fact sheets on the 2 Gartman ETN’s, I will forward to Z.

  117. 117
    john11 Says:

    I’d certainly be interested in seeing that fact sheet also. Thanks Tom.

  118. 118
    john11 Says:

    Actually found a good link that has details of the Fisher-Gartman ETN.
    http://www.ibb.ubs.com/mc/etracs_US/hybrid/fgr-on.shtml

  119. 119
    Paul in Kansas City Says:

    lol

  120. 120
    zman Says:

    Ha, take a look at slide 29

    http://www.samsonoilandgas.com.au/IRM/Company/ShowPage.aspx/PDFs/1417-77282311/2011AGMPresentation

  121. 121
    Paul in Kansas City Says:

    RE: 114; my thinking with regard to the canadian energy companies in particular; we are seeing the effect of the currency trade; it sucks down the cash market prices. Plus I would rather short these companies versus crude; and the spot prices tell me that is what has been ahppening. I just don’t have access (nor the experience) to verify; i just have a theory that happens to fit the facts.

  122. 122
    zman Says:

    Lots of gaps in our charts now. EOG, NOG … pretty much most of them.

  123. 123
    Zorgnak Says:

    #122 not surprising..most of my index charts look as those they’re filled with bad data from all the gaps

  124. 124
    Zorgnak Says:

    “As though”

  125. 125
    zman Says:

    Non-operated Bakkens playing catch up to KOG now which is essentially resting today … they have quite a ways to go to get close to catching its move of the last few weeks.

  126. 126
    zman Says:

    re 123 – next chance for bad data … won’t have to wait long, claims tomorrow and then the big payrolls number Friday, which, after ADP, may see some upward play to forecasts today and tomorrow.

  127. 127
    crysball Says:

    Z,
    Are you considering adding to the current NFX position in any of the Z accounts, prior to the Institutions waking up?

  128. 128
    Justin Says:

    Does it begin to make sense to compare KOG cash flow and NAV metrics to non-Bakken players?

  129. 129
    tomdavis12 Says:

    118 John11 Thanks, I have the factsheets on the link you provided. Much easier than sending to Z.

  130. 130
    nrgyman Says:

    Small fry MHR and TPLM still ticking to HOD

  131. 131
    ram Says:

    Re 94 Is SSN a steal at $101 oil?

  132. 132
    Zorgnak Says:

    S&P Futs…through 1241.50 resistance extended target at 1248.75… a stretch

  133. 133
    nrgyman Says:

    The mad dash to get into the market is still raging.

  134. 134
    zman Says:

    Apologies for the delay, stray intern issue.

    re 127 – Yes. The institutions are already there with long held positions, my sense is that when they see the slide begin to halt, they add, then retails comes in when the chart looks more uppity.

    re 128 – yes, on CF or EBITDA in 2012, it certainly does. On that basis they are not really expensive, especially not give the growth rate. Same goes for OAS, now trading at just under 7x which is a bit above a historic like range of 5 to 7 or 4 to 6 depending on who ask for a good growth E&P but again, expecting triple digit growth next year.

    re 130 – MHR being small fry only in stock prices, much, much bigger than TPLM on a TEV and BOEpd basis.

    re 131 – I think it is not expensive. I don’t have enough data to make a guesstimate on what their Niobrara acreage is worth, am in the process of working up a range. I call things “steal” if they are obviously cheap and not because the stock price is down a bunch.

  135. 135
    tomdavis12 Says:

    JB The other day you put EXXI with a print over $30 as a buy & NOG over $24. Does the gappy nature of today’s trading ever effect your P&F analysis? Voted.

  136. 136
    zman Says:

    GDP and BTU most green on my screen of the day.

    – BTU is an easy “it’s China stupid” buy.

    – GDP must have presented well at Jefferies. The presentation is good but not highly altered from the last one.

  137. 137
    zman Says:

    Emailed in SSN question

    Any reason to hold it all now other than its cheap on a chart as it has been in years.

    Answer
    1) Sigh
    2) Check your chart again, still big up on this year there. For me, yes, the data is inconclusive, one well is not the whole company and they have 3 others in progress at the moment in two other plays.

  138. 138
    nrgyman Says:

    S&P 500 unch for November. What a market ride this fall.

  139. 139
    zman Says:

    Zorg – more on the ZMT

    The ZLT would just about never take profits on the order of 5 to 10% in a day. I say just about because maybe you buy something, the market over reacts and you say “this won’t last, not on this pos pr” and so you sell, knowing that in a day or two, it will fall and you can repeat the process.

    The ZMT is still a work in progress but 5 to 10% in a day is not what its about either. 10 to 20% in a week though, well, that’s a different matter.

    So let me know where you see overhead resistance on TPLM when you get a change and we’ll figure out a good way to work together on this kind of stuff.

    Beerthirty, have a good one, take a screen shot of your screen as we don’t see a lot of 51 point up days on the S&P.

  140. 140
    zman Says:

    Tune in early tomorrow, may have something interesting. Well, more interesting that usual.

  141. 141
    Zorgnak Says:

    #139….I’ll take a look.

  142. 142
    BirdsofpreyRcool Says:

    Closing words from XACS#1
    =========================

    In Today’s trading, the CDX HY17 Index rallied $2 or nearly 2.25%. The S&P500 Index rallied 4.07%. These were huge days… Neither of these markets could even compare to the investment grade corporate market. The proxy for US investment grade credit strength, the CDX IG17 Index saw its spread fall by 10bps, or 7.17% today. This type of move tighter should be considered “impossible” for a broad based investment grade corporate index. However, as we have said numerous time over the past summer, fixed income investors always seem to take it on the chin when they decide they can “fight the fed” over the longterm…and today is one of those days in which the FED Fighters got struck hard. Based on recent credit spread trading, we believe that the CDX IG17 Index is more likely to reach its recent tights of 113.5bps than its recent wides of 151bps. However, we do not expect IG17 Index to rally all the way through its recent tights without a steepening / normalizing of US bank credit curves. The negative implications of inverted bank credit curves, in our opinion, limits the current equity market rally to its August high…. even if the CDX IG17 Index rallied to 113.5bps. In our opinion, bank credit profiles need to improve for the equity market rally to become sustainable.

    =====================================
    So, watch TED. Want to see that inter-bank risk measurement start to fall back from over +50 bps. Need to get back to under +30 bps at the very least.

  143. 143
    Paul in Kansas City Says:

    BOP; so very helpful. Thanks!

  144. 144
    Zorgnak Says:

    #142
    “The negative implications of inverted bank credit curves, in our opinion, limits the current equity market rally to its August high…”
    Puts the high in around the 1262 Acceptance area at or below 1270 or so…
    That corresponds with 72.50-73 on the XLE
    S&P Futs
    http://www.charthub.com/images/2011/11/30/ES_Composite_3

    XLE
    http://www.charthub.com/images/2011/11/30/SPY_Composite_3

  145. 145
    choices Says:

    #118-thanks, John-imho, the following is key:

    ” — The Risk On ETNs are senior unsecured debt obligations
    of the issuer, UBS, and are not, either directly or indirectly, an obligation of
    or guaranteed by any third party.”

    I agree w/someone earlier (I think RMD) who said it would be a great short-I’m not willing to bet on credit mkts in these times-as with all ETN’s, it is debt and not ETF ownership.

  146. 146
    choices Says:

    Chinese to reverse engineer fracking technology:

    http://oilprice.com/Energy/Natural-Gas/China-to-Embrace-Fracking-In-an-Effort-to-Ramp-up-Energy-Production.html

    (sorry about advert)

  147. 147
    Zorgnak Says:

    TPLM …Closed right on the CLVN resistance at 5.75 today. My first upside target is at 6.05. I expect the next CLVN at 6.38 to offer resistance and if broken well defined support with the majority of recent volume under the price at that time. Each of the horizontal zones above the current price are low volume areas that could be used as partial profit taking areas while taking the context of the market and stock specific action into consideration at the time. Free to do anything but at least have pre-determined areas to do business..
    Areas of interest above are 6.38,6.75,7.23,7.83
    Average True Range of the stock is currently .42 Profits obviously come and go quickly with this one.
    Additionally 4.63 is support now. I’d add back the partial profit I took today if the stock were to fall back to this level again.
    I hope this isn’t too complex but I find I do better if I have some structure besides just the seat of my pants or a gut feeling.
    http://www.charthub.com/images/2011/11/30/ScottSignals_7

  148. 148
    zman Says:

    CHK – in case you missed it, Aubrey said big acreage spending will end in 2012 … everybody collective say “suuuuurrreeee”. But then, ask yourself why it is that you want him to stop.

    TPLM – hey, thanks much Zorg.

  149. 149
    choices Says:

    Very bullish commentary from Guild-for info:

    http://www.mynewsletterbuilder.com/email/newsletter/1411134337

  150. 150
    zman Says:

    re 149 – thanks for posting that, good find, they seem a little short term focused for me as evidenced by the trade list at the end but generally I agree with their comments. If you want a good trip down memory land watch “Too Big To Fail”, think its on HBO this month. Pretty good rundown of late 2008, plus the guy who plays Ben Bernanke is a dead ringer for his bearded mug.

  151. 151
    PackMan Says:

    BOP – 142

    A bit confused by XACS conclusions. In earlier post did he not suggets Dec rally to 1360 “target” ? And

    In 142 suggest August highs at best which if Memory serves ( and it may not be serving ) would be something like 1290.

    in any event, after today I have decided not to be in the prediction business for now as we coud easily be @ 1150 or 1350 by Friday the way this market trades.

    As much as a big rally is welcome for my / our long positions, I share the frustration of others here who are Fed up (no pun intended) with the all or nothing whipsaws that in many instances are divorced from fundamentals, ehich is what I believe Paul was getting at earlier.

    good luck to all.

    zorg, 1230 by Friday would work for me if you could arrange that ! Lol

  152. 152
    brodway Says:

    Zman.

    my fear is if TPLM ever takes off, you may retire with all those shares you have accumulated and forget us little guys for good. LOL

    file that 13D yet?

  153. 153
    PackMan Says:

    TPLM – I have been following a different path, that is trading the swings (sold out today, possibly to my eternal regret if it doesnt give me another buy oppty) and also selling the $5 puts.

    But it is Z’s insightful work that makes these profit opportunities possible !

  154. 154
    Zorgnak Says:

    #151….sure pack…want fries with that?

  155. 155
    Zorgnak Says:

    Goldman Forecast for Crude
    “Brent forecast of $120/bbl and WTI of $112.50/bbl for 2012 and introducing a 2013 forecast of $130/bbl for Brent and $126.00/bbl for WTI “

  156. 156
    zman Says:

    Too kind, thanks.

  157. 157
    brodway Says:

    re: 104 “I don’t want to chase it here” but the fact of the matter is, most stocks were higher two weeks ago, with lower oil prices and no news in between ”

    this is unfortunately true, for the most part. i agree that a pullback may prove a buying opportunity.

  158. 158
    Jerome Blank Says:

    #135 tom, thanks much for the vote…gaps generally don’t impact traditional P&F analysis, you can get odd “high pole” conditions with too much gap oriented price extension, an example is KOG, which broke out three boxes above its previous high with little or no pullback, very strong, a healthy 3 or 4 box reversal at some piont is most likely another buying opportunity…for a time KOG and TPLM were the only one of the favorite names on buy signals in X’s

    SSN is getting close to P&F tredline support, and is at the bottom of its weekly channel line support zone, the spinning top candle close on the daily is encouraging from a technical perspective today, perhaps the worst is over…

  159. 159
    crysball Says:

    SSN The Defender and Thermodynamics

    Take it for what its worth post from the Yahoo SSN borad:

    “The earth crust gets cold in winter and pressure is decreased, therefore, the hole must be made deeper to get normal flow. Ssn is working on this issue now.
    Worked for 5 years at Aramco Saudi Arabia where at night it gets real cold inside the well and the pressure goes down when an additional pumping assembly is turned on to get pressure back to its desired rate.”

  160. 160
    zman Says:

    re 159 – that’s not going to work for me. The well was landed where they wanted for the vertical. Cold vs warm weather not at all a factor on flow rate from a zone at any depth.

  161. 161
    West Says:

    FST ….Now that they have severed their Canadian company LPR, I would look for FST to be taken out soon. Current stock price does not include much value for their 118,000 Eagleford acres which is the very early stages of development. The Hogshooter (Missourian Wash)part of the Granite Wash play is a definite game changer with their first well cuming 83,000 boe in the first month of production with 70% of that oil, not condensate. The Granite Wash mutliple stacked pays holds the potentional to be a huge reserve mutliplier in the near future.In the 3rd quarter they went over 50% of income was from liquids revenues.

  162. 162
    cleaning process Says:

    cleaning process

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