01
Mar

Friday Morning – Welcome To March – Natural Gas Supply and Demand Slide Shows Plus KOG and NOG

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Market Sentiment Watch: Long post today with lots to convey so here goes. In today's post please find comments on two of the Bakken players' 4Q results along with the Natural Gas Supply (net imports plus production) and Demand slide shows as well as the weekly storage report review. Next week look for a 4Q wrap post, the Bakken Players update, an updated Wattenberg Players cheat sheet, and some updated Catalyst LIst items. If I don't speak with in the comments section, have a great weekend. 

Ecodata Watch: 

  • We get Personal Income at 8:30 am EST (F= -2.6% vs +2.6% in the prior month)
  • We get Consumer Spending at 8:30 am EST (F= +0.2% vs +0.2% last month)
  • We get Consumer Sentiment at 9:55 am EST (F = 76.4, last read was 76.3)
  • We get ISM at 10 am EST, (F = 52.5, last read was 53.1)
  • We get construction spending at 10 am EST (F = +0.7%, last read was +0.9%)
  • We get car sales over the course of the day (F = 15.2 mm, last read was 15.3 mm)

In Today’s Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Natural Gas Inventory Review
  4. Natural Gas Demand Slide Show
  5. Natural Gas Supply Slide Show
  6. Natural Gas Imports Slide Show
  7. Stuff We Care About Today - KOG, NOG
  8. Odds & Ends

Please click the link right below this to

Holdings Watch:

ZMT (Zman Medium Term portfolio):

  • Yesterday’s Trades: None

ZLT (Zman Long Term portfolio)

  • Yesterday’s Trades: 
    • HK - Added a trading position at average $7.26. I don't think the name is a screaming buy post 4Q call. I do think things are moving the right direction.  Well results in the Bakken and Woodbine are improving. Costs are coming down. Bakken plan will center on the meat of the play this year with most activity in the higher EUR/production FBIR part of the play. In the Woodbine, they've had solid early results and in their core acreage they will move more wells into the center of the sweet spot versus some of the early fringe area wells which should help and the company indicated there is more room here on the cost side. Utica well results are likely an April or May event. Tuscaloosa results (part of their new ventures and a small piece of the budget saw a dry hole stopped at the vertical but a second well is going to be completed and that could be somewhat catalytic for the name. Look for increasing news flow from here starting late Spring with Utica throughout the year.  Look for a backend loaded budget (funded via cash flow and liquidity) as they add rigs and start ramping up in the Utica where they plan to rapidly derisk the position.  In short, look for less acreage buys and more focus on the 3 cores this year  with the occasional bit of new ventures news
    • KOG – Added a trading position at just under $8.97 with results out after the close. They pre-announced volumes for the quarter and should have some interesting operation items out of three areas, two of which have not been strong ones for them yet but which represent significant components of their acreage.  
    • The Blotter is updated. 

Commodity Watch:

Crude oil retreated $0.73 to close at $92.05 yesterday weighed down by the miss on the GDP revision and fear of sequestration based profit taking. Overnight crude is trading flat but maybe volatile today around Chavez news.  

Natural gas gained $0.05 to close at $3.49 after EIA reported a slightly larger than expected withdrawal from storage. We are now below last year's trough storage levels and have a shot at breaking the 2 Tcf mark before we head into the injection season giving us a little better starting point this year than last and maybe considerably so if the weather continues to be favorable in March. The absolute storage level is less important than directionality of supply and demand and while we are not gas bulls we are more constructive (since early last year) than not and the last monthly data remains encouraging although we wouldn't get carried away with the December's good sized dip in production as the should season is generally a pretty sloppy time for gas prices and more bargains will present themselves then (although we have been nibbling over the last few weeks on some of the more really neglected gassy names).   Overnight gas is trading flat. 

  • Demand Watch:  Not a record for the month of December but above the middle of guidance and the Industrial segment did score a new record for the month. Electrical and space heating related demand were above the middle of the range for the month and at the middle of the range for the month respectively due to mild weather (December saw gas weighted customer HDDs of 758 vs a normal reading of 885.  See slide show below. 
  • Production Watch:  U.S. lower 48 marketed production fell 0.8 Bcfgpd from the prior month with all regions down including "other states". Our sense is some of the drops are going to be short lived due to localized cold weather in the Rockies that caused freeze ups and reduced end of quarter capex that saw some completions pushed into the new year to maintain budgets. We would note that Louisiana production continues to drop and we'd saw it's officially rolled over as lower rig counts and a drilled but not completed inventory that's been somewhat worked through finally catch up with several of the big producers in the Haynesville. LA state production, once the poster child of shale gas gone wild plays, is down a whopping 1.5 Bcfgpd over the last 12 months.  On a YoY basis, Lower 48 production is up 0.3 Bcfgpd.  See slide show below. 
  • Imports Watch:  Net Imports continue to hold at long term lows. 2012 net imports were 4.2 Bcfgpd, down from 1.3 Bcfgpd from the prior year which itself was a long term low. See graphs at bottom of natural gas sections.  

 

 

Natural Gas Storage Review:

.

 

Natural Gas Demand Slide Show

Natural Gas Supply Slide Show

.

Natural Gas Imports Slide Show

Stuff We Care About Today

KOG Reported Revenue Miss, Slight Earnings Beat on 4Q12 results on pre-announced volumes (which were lower than expected)


The 4Q12 Numbers:

  • "Sales" were pre-announced and are listed in the table above. To provide more color, including flared gas volumes, KOG's 4Q average production was 21,190 BOEpd (16% higher than sales). They like other Bakken players are working to get the gas tied to sales. What gas they did sell in the quarter, due to richness and location, went for $5.83 per Mcf,
  • The Street estimates still included some stale numbers ... some analysts either don't take their numbers down when given pre-announced volumes as a matter of policy or they didn't bother,
  • This led to the revenue miss and to be fair it is a miss but it should have been factored into the price last week
  • What is interesting is that if revenues are too high than so too should be bottom line and here, they came in inline on EBITDA. KOG actually saw better prices sequentially even as WTI fell sequentially and the result along with their highest volumes yet was to produce record EBITDA per BOE of $63.54. 

Guidance:

  • Not provided provided in this release, December guidance was for 2013 to average between 29 and 31,000 BOEpd. Unlikely they would dream of changing that on the call.  

Highlights:

  • No operations update as they had one the other day, look for color on a number of wells. 
  • EBITDA per BOE hit a new high on cost control and better sequential oil price realizations. 
  • Would like to hear about Grizzly area wells
  • Would like to hear about timing of the first company operated wells up at Wild Rose
  • Would like to hear about well cost thoughts in this year's budget 
  • Would like to hear what the current rate is and their thoughts on the shape of production growth for the year

Nutshell: Miss on the top line due to pre-announced miss on the volume line and still they tied where it counts (EBITDA) as margins expanded to a new record high for them and second best in the group this quarter so far (top marks went to OAS with EBITDA of $64.49 per BOE and then NOG - see next section). We continue to own KOG as core position with trading positions on top in the ZLT. 

NOG  Reported Solid 4Q12 EBITDA Line Results on pre-announced volumes; Guides For 25 to 33% growth


Guidance:

  • Volume Guidance for 2013 of 4.7 to 5.0 MMBOE
    • Equates to 25% to 33% YoY growth
    • or a range of 12,900 to 13,700 BOEpd
    • Street is at 13,200 BOEpd
  • Capex Guidance for 2013 of $420 to $440 mm vs $530 mm in 2012
    • $370 mm to $390 mm for drilling and completion - assumes 44 net wells ($8.4 to $8.8 mm apiece)
    • $20 mm for leasing (note their leasing costs have been coming down)

Highlights:

  • The did 48 net wells during last year, would like to hear the mix of long vs short laterals and how many were late quarter arrivals and what the average well will look like this year in terms of lateral length, and EUR expectation. 
  • Acreage now 179,131 net, increasingly HBP'd 
  • No well highlights in the pr but's really not their thing, and we may get some on the call,
  • Hedges:
    • About 68% hedged for 2013 with swaps and collar with an average price just over $90.
  • No deal needed this year on the equity side: "Northern expects cash flow from operations and its revolving credit facility to meet its capital expenditure needs for 2013. "
  • Liquidity was at $240 mm at year end ($350 mm facility with $124 mm drawn and $13 mm in cash). i expect this facility to be lifted later this year.     

Nutshell: The name remains cheap to the group, trading at 4.4x 2013 Street EBITDA which we'd note is based on Street production consensus that is below the mid point of NOG's new guidance. We do not pretend to know when the stock will wake up but see the name as cheap to its peers on just about every metric, from proved reserves in the ground to flowing barrels of production to the price of its acres on a production adjusted basis to forward multiples of TEV. NOG's EBITDA generation on an absolute basis remains strong and actually turned in a record this quarter as their hedges and better differentials helped them despite the hiccup in volumes. In fact, their EBITDA per BOE came in at $64.33 this quarter in line with OAS and touch above KOG. While we're not suggesting non-operated NOG should trade on par with metrics of its operated peers, the discounts seem stretched, especially at a time when play leaders like CLR and OAS are seeing renewed interest from the market for their shares as they work to hone their methods in the play and extend it (via deeper Benches of the TFS) while seeking (successfully) to better market their crude which is light and sweet and in high demand. NOG's crude is the same stuff and their acreage will likely see further stacked pay development as well as the operators. See the charts below. We continue to own NOG as a core and trading positions in the ZLT. 

Odds & Ends

Analyst Watch:

  • TBA in comments 

133 Responses to “Friday Morning – Welcome To March – Natural Gas Supply and Demand Slide Shows Plus KOG and NOG”

  1. 1
    brodway Says:

    Zman.
    was NOG's guidance for the year consistent with the the more positive growth you were expecting in your earlier posts? 

  2. 2
    brodway Says:

    Crude trading at 91 handle this morning, that's $6 off the highs reached earlier this month. 
    "Crude oil retreated $0.73 to close at $92.05 yesterday weighed down by the miss on the GDP revision and fear of sequestration based profit taking"
    Yesterday morning, Michael Darda of MKM partners addressed the smallish GDP gain as an anomaly as it did not correspond to the better payroll numbers. He had associated the uninspiring GDP growth number on drops in Federal expenditures in various sectors and not a lack of consumption of the private side. The belief is that this will correct itself next quarter when the gov't will return to its more wasteful ways.

  3. 3
    brodway Says:

    http://finance.yahoo.com/news/smaller-offshore-drillers-may-double-172800870.html
    Not a very detailed article, but thought the headline is quite intriguing. 

  4. 4
    zman Says:

    re 1 – yes. Was saying 35 to 40% six months ago, had reined that in to 25 to 35% in the last few months. I think they can do more, but depends on the character of the wells, the number of wells, the timing of wells, so pulled it back some. 

    re 2 – $91 – we've been saying for what, maybe 10 weeks now, that crude is ahead of itself and would like not sustain the run to the mid to upper $90s as production was too higher, Cushing was too bloated and demand was still too weak on gasoline and distillates for that to make a lot of sense.  Distillates still weak but about to improve and gasoline off the lows and exports to record highs now along with crimped imports auger for support soon.  

  5. 5
    zman Says:

    Analyst Watch:

    REXX – BMO ups target by $2 to $17, rating stays Outperform

    HK – Global Hunter cuts from Accumulate to Neutral. 

    CLR – Canaccord ups target by $8 to $108, stays Buy, Wunderlich ups by $5 to $80, stays Hold.

  6. 6
    Zorgnak Says:

     
    S&P Short Term Areas of Interest 3/1 8:35am AM  ES 1505. Notes/Thoughts
    Notes….Mkt unable to consolidate above the volume pivot at 1513 traded support at 1510.50 CLVN at the close yesterday after rejecting attempt at recent highs.  Key volume pivot/CHVN at 1496 and CLVN at 1492.25 below. Low volume area below 1492.25 to 1468. Last trip down reversed at minor CHVN at 1287 with excess to minor CLVN at 1282. Demand volume continues to erode on the daily and intra-day.  Weekly DeMark 9-13-9 exhaustion sell setup confirms today . Sector rotation becoming more defensive. $USD extending from consolidation after breakout with demand volume positive on all time frames. POMO supportive through the end of March. 
     
     
    Thoughts to myself…….. Head winds increasing. Continue to trim on strength. Hold hedge to break even.  Expecting short term market volatility with big bounces to continue. Watch 1513 and 1496 to frame the short term action.
    CLVN=Low Volume Rejection Zone – CHVN= High Volume Price Acceptance and Congestion Zone-VPOC=Daily Most Accepted Price
    Little market structure above
    1513.50 Minor CHVN/Short term volume pivot
    1510.50 Minor CLVN/Support
    1499       Minor CLCN/1500 psych level
    1496.25 CHVN/Volume Pivot/
    1492.25  CLVN/Resistance/Significant supply overhead/Low volume, Little support below
    1487       Minor CHVN
    1468.75   CLVN/Minor Support
    S&P Futures
    http://www.charthub.com/images/2013/03/01/Es_Composite_2.png
    $USD
    http://www.charthub.com/images/2013/03/01/DX_2.png
     

  7. 7
    john11 Says:

    XCO announces increase of qtly dividend to .05 from.04.  Interesting timing.

  8. 8
    zman Says:

    Good morning and thanks. 

    re 7 – yeah, odd, maybe bowing to a little activism., pretty token and as always I'll repeat that your average smid cap E&P has no business paying dividends instead of reinvesting $ in the ground …. but they're trying to please a certain crowd so it makes some sense. I'd rather see them get one of the "15 to 20" deals they have been talking about for a long time now done. 

  9. 9
    Zorgnak Says:

    Crude Oil Futs….breaking support levels again. DeMark exhaustion buy setup on daily yesterday ignored. Low volume area with little price/volume support between 90-93. Demand volume negative on daily and weekly time frames.
    http://www.charthub.com/images/2013/03/01/Crude_Composite.png

  10. 10
    Zorgnak Says:

    Good morning  to all..
    Nat Gas futures at acceptance  (3.46). Little recent supply overhead with 85% of recent volume below 3.55 value area high =rough break out/range expansion point. Currently working off intra-day extension with demand volume positive on the daily and improving on the weekly…..
    http://www.charthub.com/images/2013/03/01/NG_Composite.png

  11. 11
    skimo Says:

    re NOG- Does the 6 well per 1280 acre spacing include straws down to all benches or is there more upside?

  12. 12
    elduque Says:

    BDI up a little again to 776
     
    Brent/WTI narrowing 19.2
     
    TYX at 3.05

  13. 13
    zman Says:

    re 11 – that's an assumption of middle Bakken and the first TFS bench only. 

  14. 14
    zman Says:

    Today's post is open to the public in honor of the sequestration.  Feel free to send the link out to friends, family, enemies, etc. 

    http://zmansenergybrain.com/2013/03/01/friday-morning-welcome-to-march-natural-gas-supply-and-demand-slide-shows-plus-kog-and-nog/

  15. 15
    zman Says:

    NOG CC at 10 am EST

    KOG CC at 11 am EST

  16. 16
    zman Says:

    Aubrey Watch: SEC investigation underway. 

  17. 17
    zman Says:

    Knee jerk watch:

    BCEI of $2 (6%) on the open. 

  18. 18
    brodway Says:

    HK starting to look interesting again at 6 7/8.

  19. 19
    Zorgnak Says:

    Noting PVA green

  20. 20
    Zorgnak Says:

    Relative volume at the open not that heavy…27 of 82 with higher than the 5 day average for time of day..only 4 green beans   GMXR OEDV PVA MMR

  21. 21
    tomdavis12 Says:

    Z: Thanks for all your work over this earnings period. Well done. You posted the KOG & NOG early last night. Nice. I know I can not do what you get done every day. 

  22. 22
    skibbi9 Says:

    SD with a mixed bag (beat on earnings), getting crushed again.

  23. 23
    zman Says:

    re 18 – the downgrade from GHS's Mike Kelly  – he didn't like the Woodbine comments even though as they said, fringe of the isopach first, then core (now), The exchange was at the end of the call and a little terse:

     

    Mike Kelly – Global Hunter Securities

    Thanks. Good morning. Was hoping you could give us a range for what the 2013 leasing budget should look like.

    Floyd Wilson

    A range of what?

    Mike Kelly – Global Hunter Securities

    The CapEx for the leasing budget in 2013.

    Floyd Wilson

    Yeah. We haven’t published that, and we’re not going to. We’ll report the exact numbers each quarter as we go. We don’t have any huge leasing ambitions. We’re not running any half a million-acre land plays right now.

    Mike Kelly – Global Hunter Securities

    Okay. Thanks. And then on the Woodbine correct me if I’m wrong here, not looking at something that’s really apples-to-apples. But the 388 BOE per day, 30-day rate, does look to be under what you set out for the first month expectations as part of that 562,000-type curve. And I just wanted to hear comments on that. Maybe it has to do with drilling some wells more on the fringe of your acre positions or if I’m just off on that.

    Floyd Wilson

    I think that the 388 is the mathematical average across all the wells and the producers, and the type curve is what we expect to achieve on average in Leon County, that particular type curve. So yeah, there’s a little bit of a disconnect there. You would expect that the average across the – all the wells to – the IP rate, if we’re correct, would increase over time. If we just slivered out the wells in the heart of the field in Leon County the IP rates are 1,000 barrels a day.

    Mike Kelly – Global Hunter Securities

    Okay. Maybe just how much acreage do you think you have kind of core Leon County?

    Floyd Wilson

    It’s a lot. I forget how many. We’re planning on – we don’t really – and we haven’t really given out our exact acreage distribution anywhere, but we’ve got a lot of drilling up there for the next several years. We’re still leasing here and there. So we’re a little reticent to say exactly where we own.

    Mike Kelly – Global Hunter Securities

    All right. Understood. Thanks.

  24. 24
    zman Says:

    re 21 – hey, do what you love, love what you do, right/ Thanks much. '

    Amused by lack of comments on the gas numbers. The "supply" situation is not nearly as dire as bears paint it. I'm not an uber bull, but a constructive, 2 steps forward 1.1 steps back kind of guy on pricing. 

  25. 25
    zman Says:

    Headline on NOG shows beat on earnings, miss on revenues. Wrong. You don't count the unrealized mark to market of derivatives in the revenue total. Sheesh. Getting on the call now. 

  26. 26
    zman Says:

    Note to NOG, 20th century, or 21st either way …. dial in only:

     

    FOURTH QUARTER AND FULL-YEAR 2012 EARNINGS RELEASE TELECONFERENCE CALL

    In conjunction with Northern's release of its financial and operating results, investors, analysts and other interested parties are invited to listen to a conference call with management on Friday, March 1, 2013 at 9:00 a.m. Central Standard Time.  Details for the conference call are as follows:

    Dial-In Number:  (888) 481-2845 (US/Canada) and (719) 457-2635 (International)  
    Conference ID:  1154820 – Northern Oil and Gas, Inc. Fourth Quarter and Full-Year 2012 Earnings Call   
    Replay Dial-In Number:  (888) 203-1112 (US/Canada) and (719) 457-0820 (International)   
    Replay Access Code:  1154820 – Replay will be available through March 15, 2013  

  27. 27
    brodway Says:

    re: 25
    that's not the first time this happened this week. would not be surprised to see NOG in the green today when hings get sorted out

  28. 28
    Zorgnak Says:

    CRZO   back to breakout point
    http://www.charthub.com/images/2013/03/01/Stock_Weekly_3.png

  29. 29
    zman Says:

    re 27 – hear ya, every earnings season briefing.com, motley fool, and wall street cheat sheet tell you just what you need to know …. incorrectly. 

  30. 30
    skimo Says:

    anybody else on the NOG call getting hold music?

  31. 31
    skimo Says:

    nevermind

  32. 32
    zman Says:

    Waiting on call to start … 

    NOG guidance midpoint for 2013 above Street on production. 

    Trades at 66% of OAS on a proved basis, half of KOG on same

  33. 33
    zman Says:

    BCEI flat on the day

  34. 34
    nrgyman Says:

    BCEI:  volatile.  Nice to see it come back.  EOG volatile for a big cap.
     
    Refiners moving up.  Makes sense.

  35. 35
    Baylor Says:

    OT – BOP – what's the latest on CIGX? Have you continued accumulating with the latest drop off?

  36. 36
    tomdavis12 Says:

    NOG Does he always read his press release like this? That is something he could change.

  37. 37
    zman Says:

    NOG 4Q12 Notes

    – Well spuds all time high in December, we had a chart of this mid Feb

    – EBITDA outgrew production (volumes up 95%)

    – noting previously discussed weather, lower net well adds in 4Q leading to the sequential decline (hiccup)

    – LOE up on the year due to high number of new wells relative to the base.   thinking they hint to $8ish LOE/BOE for this year, definitely not the 4Q12 level

    – G&A up in 2012 on severance for president and some staffing … it settled back in 4Q vs 3Q

    – explaining the lumpy capex of 2012 relating to higher number of wells in backlog from 2011

    I expect them to say AFEs are now more closely being tracked by the reality of well costs. 

  38. 38
    zman Says:

    re 36 – hear ya, normally I don't like that at all but it was the CFO and he was highlighting a few good points and since its clear not all the analysts here bother to read the pr I'm ok with it. 

    New guy speaking now on 2013 opportunities …

  39. 39
    Zorgnak Says:

    GMXR !

  40. 40
    zman Says:

    NGO 4Q12 notes 2

    – sees CWC falling to $8.1 mm by year end

    – sees 44 net wells this year (its in the table above)

    – noting Slawson drilling in the Windsor, with 3 rigs  …. those have been really good wells for them over time. Those are the wells we did the comparative studies on in 2010 with short laterals there doing nearly as well in year 1 as Brigham's long lateral wells in Rough Rider

    We do not plan to use new equity to fund growth

    Valuation

    We are cheap to our peers

    Our value is = our proved only PV10

    Noting the EOG non operated sale (which I'd note NOG had some leases in) would value them at 50% above current levels based on the rumored pricing of that deal.

    Hey, nice job new guy 

    Q&A starting …

  41. 41
    zman Says:

    NOG Q&A

    Q) With shares near PV10 value can you talk about how you created 

    A)  488 MBOE average EUR – this is Ryder Scott data 

    Q) MLP structure questions

    'A) We announced shelving of the MLP last August until our production profile matures. 

    Q) What's up with the drilling program 

    A) This year Slawson and EOG have returned wells to the higher productivity drilling country of southern Mountrial Country  …. very key point. 

  42. 42
    brodway Says:

    "We are cheap to our peers"
    Let the street figure that out on their own. Just keep pumping that oil

  43. 43
    brodway Says:

    SWN in the green. Since the Goldman recommendation, the stock really has found a footing.

  44. 44
    zman Says:

    NOG Q&A

     – Noting they were in the Tarpon wells noted by WLL earlier this week – 

      Q) What's Tarpon inventory like?

       A) most of acreage is northern McKenzie / and southern Willaims – saying they have quite a bit of inventory there, not just with WLL but also COP, CLR. 

     – Big Sky – Richland County – talked about the dirlling of the upper shale there with Slawson .. they have not talked about this much

    Q) on Big Sky

      – Slawson and NOG have drilled 20 gross wells in their area

     – this is southwest of Elm Coullee

     – NOG controls 20,000 net acres

     – different than elsewhere, the m Bakken is pinched out here, so they are going after the upper Bakken,

    – short lateral, 20 stages, sliding sleeves, under  $5 mm CWC and 350 to 400 MBOE – those are really nice economics.

    We had noted these wells off the Montana database a few months back as looking pretty good … I was told they were not going to talk about this

    – Slawson just did a dual lateral here for $8 mm (so double the EUR is the idea for less than 2x the cost,)

    Analyst tone is very good so far … 

  45. 45
    Zorgnak Says:

    S&P futs..closed gap..testing 1513 volume pivot..
    http://www.charthub.com/images/2013/03/01/ES_IntraDay.png

  46. 46
    brodway Says:

    Dow now reversed almost all of its losses. Volatile indeed

  47. 47
    zman Says:

    ZTRADE – ZLT – NOG Trading

    NOG – Added a trading position at $13.65 during the 4Q12 conference call. Please see today's post and note stream in the comments section. They guided to a mid point that is above the current Street view on volumes and the quality of wells seems to be improving over 2012 and well costs are coming in more consistently close to estimates (AFE). 

     

  48. 48
    skimo Says:

    NOG call sure seems to be generating positive  interest.

  49. 49
    Stewart Says:

    NOG is interesting..when insiders start buying a bottom could be in

  50. 50
    zman Says:

    NOG Q&A Notes

    Q) non consent?

    A) In 2012 they went non-consent on 29 gross, 1.9 net wells that were going to AFE at $11 mm with overruns at 10 to 15%

    Saying it was in all counties with a number operators

    Saying AFEs are much more closely to tied to reality … saying there are not really any overruns now. 

    My though is it was a good idea to shoot across the bow of the operators that NOG's dollars are not blind dollars.  

  51. 51
    zman Says:

    re 48 – yep, more interest, better tone that on several calls

    re 49 – I've conveyed that. 

  52. 52
    crysball Says:

    OPEC  Output  Up;
    http://www.reuters.com/article/2013/03/01/opec-oil-survey-idUSL6N0BT9L620130301?feedType=RSS&feedName=rbssEnergyNews&rpc=43

  53. 53
    zman Says:

    re 52 – thanks. That was communicated to the market last week  Iraq is not listening to anyone. Saudi had cut the equivalent of the Bakken production from global supply since November. I think they are trying to find balance … they noted they'd be up also in March due to higher demand from China .

  54. 54
    zman Says:

    NOG call over, much better tone

    KOG call in 7 minutes. 

  55. 55
    nrgyman Says:

    HFC, MPC nearing breakouts after consolidating.  PBF and CLMT already in breakout mode.  CVI also.

  56. 56
    zman Says:

    KOG call starting, notes in a bit …

  57. 57
    tomdavis12 Says:

    NOG – I am not at all impressed with Reger. There were many softball questions that he could: 1. Show more enthusiasium 2. Throw out more data on their successes. 3. Show some confidence that they are now ready to kick some butt and execute better this year. He always seemed to stop himself just as he was about to tell the analysts what they wanted to hear. Tom (new guy) seemed to be excellent at doing everything that Reger came up short with in my mind. If he is in charge of interfacing with the Fidos and other big money people, I feel better. He knows how to say what they want. Don't know why shorts would would want to stay short going forward except for macro issues or because they have always been able to make money with this stock. 

  58. 58
    brodway Says:

    Nrgyman.
    can you comment on the EVEP move down of 10%. thanks.

  59. 59
    brodway Says:

    "Don't know why shorts would would want to stay short going forward except for macro issues or because they have always been able to make money with this stock. "

    Tom even the shortest of the shorts are now saying their oil target of $65 was probably too low and have upped their 2013 target to $80. NOG is a ticking bomb and will explode in the shorts faces sooner or later. For now, i buy every time i find an extra nickle here and there.
    Would be fun if Saudis started to inflict some pain on Iran through harsh negotiations.

  60. 60
    Zorgnak Says:

    XLE at resistance
    http://www.charthub.com/images/2013/03/01/Stock_Weekly_3_2.png

  61. 61
    zman Says:

    KOG 4Q12 Notes

    – We reported in line 4Q numbers 

    – Well costs $9.7 to $10.2 mm (1/3 drilling, 2/3 completion) and see 5% cost reduction this year

    – 80% of our acreage is in over pressured, deeper part of basin and so remain 100% ceramic 

    – Noting that stimulation of new wells has been communicating with older wellbores, procedure is now shutting in more nearby wells during frac jobs, so that delays production a little but also you are getting a bit of flush production from the older wells when they come back on as the get a little energy form the new well (fresh fracturing). 

    – days to drill falling 

    – still using 2 full frac crews, will go to 1 to 2 sometime this year

    – 14 net wells completed year to date. 

    Pilot Programs

    Polar – drilling 6 wells in the M Bakken and 6 wells in the TFS on the same unit (mid year completion here)

    Smokey – same – Pilot will be completed after Polar

    We see communication during fraccing but not sustained interference after on wells they have drilled this close before … idea is to have it on a bigger unit to study and evaluate further downspacing. 

    Don't look for information soon on these, maybe towards year end

    – 85% of wells hooked t gas gathering

    – 50% of oil moving via gathering, goes to 80%later this year – important for cost and for reliability, recall the late 2011 rains

    LOE to remain close to $6 per BOE going forward …nice … doesn't see it going much lower as mature wells will need more workovers ,,,

    Expecting an increase in borrowing base this Spring 

    Nothing on Grizzly so far …

    Going to Q&A now …

     

  62. 62
    tomdavis12 Says:

    58  Brodway – I hear you and agree with you. I probably was expecting the shorts to have much more difficulty before now. I am also able to take my hat off to them because they have made money over the last 2 years and have kicked sand in the face of the longs. I believe your take will pan out. I have just listened to enough CC's like Floyd where he knows how to kick some butt. Tell Reger to take CC lessons.  

  63. 63
    nrgyman Says:

    RE 58:  I sold EVEP Wed after it failed to move past the 50 dma and was concerned about the market response to earnings.  Today was the Q4 report and CC.  Stock getting flushed, even though they are finally providing more info about what they are doing.  Market disappointment on the no-sale yet.  Utica news has been positive in general recently and EVEP has a big position there.  They think they will sell 100,000 acres this year for an attractive price.  They have a 2% ORRI on 880,000 Utica acres of that they claim will generate $50 million per year to them.  Midstream ownership in the developing Utica will bring more cash flow.  Both of these will take time, along with future sales of remaining Utica parcels above the 100,000 acres to be sold this year.  They still plan/hope to get a tax-free, debt-free exchange (non-producing Utica land for producing assets elsewhere).  
     
    My take is the market is over-reacting and weak hands are bolting on the lack of a sale announcement.  Just bought back in under $51.  Might add more, depending on the tape.  

  64. 64
    BirdsofpreyRcool Says:

    OT:  CIGX… Baylor, I've been dollar-cost-averaging and continuing to buy CIGX every month.  See my post from y'day (or was it the day before?) for current thoughts.  The stuff works. And it works well and without side affects.  Just comes down to whether management can turn it into a double or a home run. 
     
    Management's the weak link here.  But they are not weak-across-the-board.  Investor communications are in the 99th percentile of "bad."  But that's the worst issue as I think a lot of the strategic and legal moves behind Anatabloc have been brilliant.  Hoping the communications issue will be ameliorated somewhat if they hold a 4Q12 conf call in March.  Jonnie said he would.  But the company's lawyers have a stranglehold on public disclosure.  So we will have to wait and see.

  65. 65
    zman Says:

    re 62 – interesting, not that it matters, but I see the style thing quite differently.   Also, I would not use the phrases "ticking time bomb" and "explodes" as I really don't see that kind of action from a name like NOG. 

    Notes on the KOG Q&A ongoing …

  66. 66
    Zorgnak Says:

    Obama in 2 min
    http://www.bloomberg.com/tv/

  67. 67
    Zorgnak Says:

    another site  for POTUS comments
    http://www.zerohedge.com/news/2013-03-01/obama-admit-defeat-or-apportion-blame-live-webcast

  68. 68
    zman Says:

    re 66 – doesn't he know I'm in the middle of CC? Really he should be on the Bakken calls if he wants to take credit for the production ramp ๐Ÿ˜‰ 

  69. 69
    Zorgnak Says:

    I'd give him all the credit if it made it go up

  70. 70
    Zorgnak Says:

    NOG  HOD  2x average volume

  71. 71
    zman Says:

    re 69 – that's rich

  72. 72
    tomdavis12 Says:

    65 – I just see Floyd as over the line the other way compared to Reger. I have been in breakout sessions with Floyd where he out right challenged analysts. I think Reger has a story he can be proud of. Was just hoping he could express in a slightly more enthusiastic manner.

  73. 73
    zman Says:

    re 72 – I hear ya.   I think the section on Big Sky in the NOG presentation was quite good. I think they have to be careful as a non-operator about being too rah rah. I think the valuation stuff should all be in a table presented to shareholders in the press release. All of the metrics. With bar graphs. Kind of like in the post. 

    And I know Reger gets a bad rap but I appreciate the lack of exasperation from him vs what I get from tone of some CEO's at this very moment. The "I despite you for your question tone from some CEO's or the I'm so smart but I'm not explaining it to you tone of others" 

    I hear Reger dodge one question, early on in the presentation but it wasn't a really big deal in my view. 

    I thought he did a good job of running through the non-consent vs AFE overrun thing really well … I think he could have said the words "don't take my capex for granted" but that's a style thing and I think the Street is getting that message. Capex over run vs production growth was the issue for 2012 so maybe the Street warms a bit here. 

  74. 74
    zman Says:

    KOG Q&A

    Q) Can you explain the Pilot

    A) 6 wells in the middle Bakken (about 800' apart ) and 6 wells in the 1st and 2nd Three Forks benches (also 800' apart and 50' apart vertically).   They are not convinced that the 1st and 2nd bench are in communication or not. So this pilot will test that. 

    Q) Differentials

    A) Used $10 off WTI in the past, now using $7 to $7.50

    Q) PUDs ?

    A) Truthfully we all think our PUDs are light, think Netherland Sewell is being conservative by giving them 1 PUD to 1 PDP location. Trying to move them up the learning curve. Basically saying their reserves are conservative. 

    Q) Any bottlenecks in the basin, weather issues

    A) We're at 9 rigs now, seeing a lot more services available, more experience services, service costs still coming off with increased competition up there, weather not causing a problem.  Easy to get new rigs if you want them.   Weather is nicer in the Basin than it is in Denver, not wet. 

    Q) How much oil going via rail and where does it go this year

    A) 80% of KOG oil production is moving by rail. 

    Q) what kind of bump on the older wells 

    A) saying its not meaningful, not to think about it basically 

    Q) how's the program tracking

    A) pretty much on target, please with the 14 net well count … rain could cause problems in the Spring as always. 

    ….

     

     

  75. 75
    zman Says:

    KOG Q&A

    Q) how much selling of produced gas

    A) 65%, its not a function of unconnected wells but more one of processing … sounds like plant processing catching up. 

    Call ending

    If he said Grizzly or was asked I missed it. 

    Didn't hear a current rate 

    Production profile was stated as back end loaded on the call but I'd add they actually have the quarterly growth which I eyeballed for one of the charts above and its not a flat spot in 1H13 … was a little surprised to hear the analyst make the comment.  Backend loaded can mean a lot of things.

    Anyway, call over, kind of "meh" reaction from most analysts on the call.  Numbers probably skew to back half but CFPs and EBITDA likely not changing much, maybe a slight uptick on the LOE comments. 

  76. 76
    elduque Says:

    BOP- I have added to EXXI this morning. Do you have any pearls of wisdom re the stock. Also is DJ dead in the water, so to speak. 

  77. 77
    zman Says:

    re 76 – Re DJ – they are designing a big frac and getting ready to do it in 3Q. Until then no news from Davy Jones 1. DJ 2 will be after DJ1. They are learning things from the Lineham Creek onshore well they want to use in fraccing DJ1  … I am a little fuzzy on that part.  Anyway not dead but delayed next step until Summer.  Thought by many a lot closer to the program to me is that they should T&A that well and move onto the wider casing of DJ2.  So far, Mr Moffett has not to my knowledge said that's in the plans and DJ1 will still be first production from UD in their eyes. 

  78. 78
    brodway Says:

    re: 65
    Zman.
    i'm using those terms because of a few factors. first the market cap is only $800m and the float is not that large. second, the short position will require at least 12 days to cover. the potential for an explosive move higher is there, not suggesting it will happen.

  79. 79
    tomdavis12 Says:

    SDRL: Best part of CC is the dropdown story for SDLP is starting. April '13 a tender barge T15 is expecting a 5 year contract with CVX. This could be put into SDLP and make their dividend story a regular increasing one. The reason for SDLP. SDRL will have a vehicle to provide an additional source of funds with a lower cost of capital. Are they interested in doing things like LINE did with LNCO. I think not but will investigate.     

  80. 80
    zman Says:

    re 78 – you know I was kidding. Connotation of both phrases generally seen a negative.  Petra is cheering that the last CC of the official 4Q12 season just ended so there may be some giddyness there.  

  81. 81
    brodway Says:

    NFX seems to be bottoming out and finding footing at this level.

  82. 82
    zman Says:

    Gassy names inching up COG, SWN, RRC, seeing some selective greening

  83. 83
    elduque Says:

    Thanks Z. I appreciate the answer. Just though it would be delighted to hear BOP express herself. 

  84. 84
    DaveH Says:

    OT: BOP, 2012 was the first year that I owned RSO.   I am gathering up my tax filing info.   Do you know if my RSO will create a K-1 or anything else than the dividend income section on my broker's 1099?   If it is a K-1 it is not a problem but I just want to know whether to look for it or not.

  85. 85
    zman Says:

    re 83 – no problem and agreed, but I'm a control freak at times. 

    4 Blackhawks circling my office.1) that's really loud and 2) odd, in that  figured they'd furloughed by now, for crying out loud.

    Here's to hoping guys like Italyinvestor are not in Afghanistan and affected by the DC antics.  

  86. 86
    zman Says:

    Offtopicthirty, grabbing a quick run, back in a bit. 

  87. 87
    RMD Says:

    EXXI gave a relative strength sell signal (Dorsey Wright).
    MY impression is that a lot of the upstream MLPs missed this quarter.
    Heard Limbacher may go to CHK.

  88. 88
    brodway Says:

    Zorg, do you see HK CLVN suggesting a bottoming in here?

  89. 89
    brodway Says:

    EOG may be set up for a long trade to my novice eye ๐Ÿ˜‰

  90. 90
    Zorgnak Says:

    S&P testing 1519.  A break can run higher to recent highs. XLE broke resistance.  Whippy stuff

  91. 91
    Zorgnak Says:

    #88…RE HK…No, I don't. Currently stopped at prior acceptance area. It can reverse here but demand volume is negative now in all time frames now. Next defined CLVN at 6.69
    http://www.charthub.com/images/2013/03/01/Stock_Weekly_2.png

  92. 92
    Zorgnak Says:

    XLE closed gap and reversed below resistance at 77.78….S&P rejected 1519..so far…very whippy…
    http://www.charthub.com/images/2013/03/01/Stock_Weekly_2_2.png

  93. 93
    brodway Says:

    re:91
    that's helpful. will wait a bit before taking on any more.

  94. 94
    brodway Says:

    NOG breaking aboe 14 on over 1 million shares trade. That's the largest share trade i can recall at mid point of the day.

  95. 95
    501xx Says:

    PGH – one board member mentioned it yesterday.  Spiking higher today.

  96. 96
    brodway Says:

    Offtopic. AAPL made new 52 week low today

  97. 97
    elduque Says:

    GDP- rising smartly. Somebody must have figured from HK's comments that the wells can be drilled economically.

  98. 98
    zman Says:

    Re 87 – re Libacher, more scrutiny, more pay, I dunno, maybe. Said on the call he had not taken a job yet but was pretty oblique on his future plans. 

  99. 99
    crysball Says:

    BOP,
    Any  further thought  on  the High  Yield  Bond    of  the seismic  company  you mentionded earlier  in  the  week?…….is  it  available  to  mere  mortals?
    Your  very  happy  PVA  bond  holder,  & RSO   holder.

  100. 100
    elduque Says:

    Has anybody published a list of the speakers at Raymond James Conf. 

  101. 101
    BirdsofpreyRcool Says:

    OT:  RSO — you have to go to their website to see the breakdown between cap gains and return of capital.  I tried calling the CFO last year, but he didn't return my call.  That said, it should be easy to find on the website (I haven't looked yet this year). They don't send anything out (like an MLP does).
     
    crys — GGS 10.5% due 5/17 are trading around 76.5 for a ytw of 18.9%.  They are registered bonds, which means they are available to us mere mortals.  However….
    Problem with a geophysical company that keeps a seismic library is like owning a large, high-end grocery store where your margins are razor thin and your product goes bad very quickly. 
     
    Only it's worse.
     
    As long as GGS is cash flow positive (which they are projected to be for 2013, by a wide margin), then the interest will be paid.  Question is:  what are the assets worth in a distressed scenario?  (Said another way:  what would you pay for a bag of rotten arugula?)  So you have to treat the company like an asset-light, service company.  That works, when people want your services.  It doesn't work when they don't. 
     
    I have no other insight than that into GGS.  But I have made a lot of money by NOT buying seismic company stock or bonds.  I am not smart enough to know if GGS is the exception to my rule.  But I'll be watching it, much like one occassionally checks in on a bad TV show, just to assure one's self that they are making the right decision NOT to TiVo it.

  102. 102
    nrgyman Says:

    Z, good call on NOG.  Bought with you earlier after having been out for some time.  Just too cheap to ignore any longer.

  103. 103
    nrgyman Says:

    HFC now in full breakout mode.  MPC almost there.  Other refiners doing well also.  Consolidation was brief, as the fundamentals remain strong.  Lower WTI and strong export demand are very bullish for them.  

  104. 104
    nrgyman Says:

    CLNE staging a nice reversal after initial sell-off from their Q4 report last night.  WPRT to report soon, but no date announced (curious).  WPRT/CMI engine delayed 3 mos has hurt the stock recently.  Bought both this morning, but may be early on WPRT.  Still believe in the natgas transportation story, but waited for these to come in after failing at higher levels.  My thinking is that they will see a slow but steady growth over the next year or so, then a bigger growth rate later.  Still early and these are very risky, volatile stocks burning cash until they get over the hump (still an IF).  For CLNE, I like it when bad news is anticipated and then reported, only to see the stock reverse and charge higher on the bad report.  WPRT might be the same shortly.  

  105. 105
    DaveH Says:

    OT: Re: 101, BOP, thanks for the info on RSO.   Are you saying  that my broker will report the gross dividends on the broker's 1099 and I must go to the RSO web site and determine how much of that gross was "return of capital" and exclude that from my income tax?

  106. 106
    RMD Says:

    101 your discussion of GGS reminds me of GSS.  Ok, it's Friday.

  107. 107
    BirdsofpreyRcool Says:

    GGS — if I was interested, i would be more inclined to buy the stock, than the bonds.  1) You can get out more quickly.  And 2) if the company does well, stock will be a 2-4 bagger with a downside of zero.  While the bonds will go from 76 or so to 100 with a downside of 10-20.  This is a case where bond returns are just too asymmetric vs the equity risk.  JMHO, of course.  And thank you for asking!!!

  108. 108
    BirdsofpreyRcool Says:

    OT:  DaveH — I only know that my broker reported the breakdown between interest income and return of capital from RSO incorrectly last year.  I think they finally sent me a corrected form… but it was on April 12th or so. 
    I recommend looking at your 1099 and cross-checking with the RSO website.  Brokers/1099s don't always get these things correct, somewhat surprisingly.

  109. 109
    DaveH Says:

    OT; 108, thanks, I get it know.   Yes, I have seen problems on the broker's 1099's.   When qualified dividends were first introduced I received modified 1099's as late as September after the April 15 filing when they finally figured out they had the wrong split on  which were qualified dividends for some Canadian stocks.  

  110. 110
    zman Says:

    re 102 – thanks, its a sleeper and I don't expect a big leg up from here but as leadership names assert themselves I would expect NOG to feel the pull higher and for the valuations discounts to shrink over time. 

    Liking the reaction in SWN, RRC, post quarter.  Expecting same REXX. 

  111. 111
    brodway Says:

    HK now trading at the lower CLVN level Zorg's chart indicated. Tempted to nibble.

  112. 112
    zman Says:

    re 111 – it just filled the gap from the end of December. 

  113. 113
    brodway Says:

    re: 112
    looks tasty. must resist. ๐Ÿ™‚

  114. 114
    zman Says:

    re 113 – we dca constantly so while we added some near $8 recently we were getting some in the $5s not all that far back. I don't get the selloff or the GHS downgrade but my thought is that's its 1) quite overdone and 2) not something I need to see run up soon. Data flow increases in April, May and beyond.  Odds are better than even we see improved well results Woodford and Bakken and then we have Utica and TMS to look forward to along with two stealth plays they will talk about at some point later this year. 

  115. 115
    brodway Says:

    re: 114
    In Floyd we trust

  116. 116
    zman Says:

    Rig Count Watch:

    Oil rigs up 4 to 1,333 vs 1,293 a year ago

    Gas down 9 to 420, from 691 a year ago

    Biggest drop was LA down 5 rigs

  117. 117
    BirdsofpreyRcool Says:

    OT and Friday Musings… File under:  Things I Dream About.
     
    Someday STSI management will come out from behind the curtain and let everyone know what they have been up to for the last 10 years and the Heavens will open and the Angels will shine and all the little birdies will sing.  And STSI will go to $20.
     
    Someday the UltraDeep program will prove up and be the low-cost source of high BTU nat gas in North America and FCX will get a permit to build an LNG export terminal and Schiller will stop wearing gold bracelets and spending so much time at Rick's and EXXI will go to $60.
     
     
    Someday SYRG will drill a well in Nebraska and test a 500 b/d well and the sun will come out and RMD will sing and SYRG will go to $30.
     
    Someday Lynn Peterson will make good on his promise to sell KOG and the stock will go to $13 when EOG bids for it then $15 when Exxon swoops in to snatch it up and all the little Prairie Dogs in North Dakota will come out of their burrows and clap and cheer their little prairie dog cheers.  And the angels will shine and the little birdies will sing and STSI will go to $20.
     
    These are the musings of a BOP on a Sequester Friday in March.

  118. 118
    tomdavis12 Says:

    NOG: Got some sellsider comments. It seems the PV-10 value equaling enterprise value got a few sellsiders to sit up and take notice. It seems after the numbers came out but before the CC there was the usual they are not doing this or that. After the CC, the comments have much more sunshine in them.  

  119. 119
    john11 Says:

    Fyi..I added a little to my HK jan'15  7 calls at 1.94 (1.60bid 2.10ask) a little while ago.  I like the almost 2 yrs for it to play out.

  120. 120
    zman Says:

    Thanks guys, beerthirty a little early, have a great one. 

  121. 121
    RB Says:

    wanna make late book on whether the Dow and SP close green…I say they don't

  122. 122
    BirdsofpreyRcool Says:

    RB — i'll say they close green.  Sequester is ON and the world has not stopped on its axis.  Who knows what M&A might be lurking over the weekend…

  123. 123
    john11 Says:

    ot..sort of..Very good Krauthammer piece on the sequester in today's Washington Post;
    http://www.washingtonpost.com/opinions/charles-krauthammer-hail-armageddon/2013/02/28/ca8a32a6-81da-11e2-b99e-6baf4ebe42df_story.html

  124. 124
    RB Says:

    well, BOP they closed it green…my dreams are this for the next couple of days:
    1) I take down the pick 5 tonite at Santa Anita
    2)  I take down the pick 6 tonite at Santa Anita
    3.  A horse I own part of gets claimed outta the 5th race tomorrow at Oaklawn…poor guy can't run a lick; trouble is everyone knows it!

  125. 125
    BirdsofpreyRcool Says:

    RB — lol.  Have fun… I'll cross my fingers for ya!

  126. 126
    crysball Says:

    re:BOP  and  117  &  122  and  ealier 
    BOP  has  always  had  problems  coomunicating………and  am  glad  she  is   coming out of her shell  and  expressing  herself  more freely….ROFLMAO.
    BOP  You  are  one  sharp   stock  picker  and  and  have  benefitted  many  time  from  your  wisdom   & insights.
    Hey,  it;s fridday!
     
     

  127. 127
    BirdsofpreyRcool Says:

    crys — you are a fabulous writer… but your words in this case are too kind.  thank you.
     
    Meanwhile, for everyone who thinks IT SUCKS to live in Michigan in the Winter… well… I have just one word for you:  ICEBALLS.
     
    Nature's way of saying "get out and have a little fun!"
     
    http://www.myfoxchicago.com/story/21435811/massive-ice-balls-attracting-attention-along-lake-michigan

  128. 128
    Justin Says:

    RE 117
    Applause, applause. 
    And a good hearty laugh at Schiller and his chains at Rick's.

  129. 129
    brodway Says:

    re: 124
    would say break a leg, but don't want to jinx you.

  130. 130
    brodway Says:

    re: 127
    Ice, Iceballs, Iceman, Freeze your "fill in space" off….Its all good for natural gas usage. Rock On!!!

  131. 131
    nrgyman Says:

    State Dept approves XL pipeline.  45-day comment period begins, then it goes to the President.
     
    http://articles.marketwatch.com/2013-03-01/economy/37368418_1_keystone-xl-state-dept-transcanada

  132. 132
    Zman’s Energy Brain ~ oil, gas, stocks, etc… » Blog Archive » Wrap – Week Ended 3/1/13 Says:

    […] nrgyman on Friday Morning – Welcome To March – Natural Gas Supply and Demand Slide Shows Plus KOG a… […]

  133. 133
    ps1 emulator Says:

    ps1 emulator

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