05
Apr

Wrap – Week Ended 4/4/2014

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Wrap comments will be included in The Week That Was section of the Monday Post. 

The Blotter is updated. 

Questions on the wrap will be answered in the Subcriber Mailbag section of the Monday Post.

wrap 040414 

 

29 Responses to “Wrap – Week Ended 4/4/2014”

  1. 1
    Baylor Says:

    Is there any actual science to link fracking to earthquakes?

    Yahoo seems to think so…"long sconce linked earthquakes to O&G activity"

    http://news.yahoo.com/series-small-earthquakes-rock-oklahoma-record-seismic-activity-173349780.html;_ylt=AwrBEiLCQUBTDxwAIUvQtDMD

  2. 2
    BirdsofpreyRcool Says:

    Earthquakes and fracking?  I don't think so… per se.  But I do think that water injection wells (an offtake from fracking) can cause micro-seismic events.  Can they cause "The BIG One"?  No.  That comes from stresses built up in the earth.  And if water injection/fracking actually causes some of these stresses to be released on an earlier schedule, that is actually a good thing.  A lot of little quakes (to release pressure) is much prefered over one BIG one.

    Also, we are about to head into about 20 years of low solar activity.  And it will be cooler.  Turns out, Sun Activity (and the occassional volcano) trumps anything man (and cows) can spew.  (Just don't try to explain that to the U.N.  There is too much money at stake in the global redistribution of wealth via guilt.  They will hold onto the notion of man-made climate change until the concept is snatched from their cold dead hands…)

  3. 3
    tomdavis12 Says:

    NY Times Mutual Fund Sector today – J James & M Buck from Dreihaus Micro Cap Growth Fund: "Just before the financial crisis, there was concern that we were running out of gas and too dependent on foreign oil. Now our production levels are some of the highest in the world, thanks to good old-fashioned American innovation. One of the amazing parts of this is that the major oil companies have, by and large, missed it. They were focused overseas. … They seek companies undergoing "growth inflections" resulting from new technology. We believe the market tends to misprice stocks following these growth inflections – the market will underestimate where the growth can go.

  4. 4
    sc4 Says:

    Z Wounder if you have had any more thoughts on WLL? Given that they have holdings in two major basins and seem to have good numbers, would have thought that you might have added them by now. Could you share some thoughts on why you have not done this? While the Bakken may be hot, the idea of a firm that has two major basis, offers a bit of risk reduction. Clearly this has not been your view but I'm not sure why. Appreciate your thoughts as of the present.

  5. 5
    nrgyman Says:

    Bears love to plant seeds of doubt whenever they see an opportunity for profit from their shorts.  This one questions the validity of reserve estimates in shale plays, under the theory that the formulas used for calculating shale reserves MIGHT overstate those estimates.  This issue has been around for awhile, but now it is reappearing again and could cause some concern (and profit taking) among owners of shale focused E&Ps.  Seems to me there is no definitive answer until after the fact history shows what the answer actually was, but that the reserve engineers would try to use models adapted to the latest data from well histories in each play to give a best efforts estimate–and that these models may occasionally adjust downward the EURs in newer sections of a play as we have seen recently with SD, SM and AR.  At any rate, this has the feel to me of the shorts trying to sow seeds of doubt by highlighting the uncertainty around an issue at the core of E&P valuation.  I would appreciate any thoughts you might have on this subject. 

    http://www.businessweek.com/articles/2014-04-03/u-dot-s-dot-oil-supplies-may-be-overestimated-by-arps-formula

  6. 6
    Zorgnak Says:

    Oil Producers  

    XOP  http://www.charthub.com/charts/2014/04/06/stock_master390_140406120322

    Oil Producers Index  

    http://www.charthub.com/charts/2014/04/06/oil_producer_index

    Weekly

    http://www.charthub.com/charts/2014/04/06/oil_producer_index_wkly

  7. 7
    Zorgnak Says:

    Bakken

    http://www.charthub.com/charts/2014/04/06/bakken_index

    Weekly

    http://www.charthub.com/charts/2014/04/06/bakken_index_weekly

  8. 8
    Zorgnak Says:

    Permian 

    http://www.charthub.com/charts/2014/04/06/permian_index

    Weekly

    http://www.charthub.com/charts/2014/04/06/permian_index_weekly

  9. 9
    Zorgnak Says:

    Nat Gas Producers

    http://www.charthub.com/charts/2014/04/06/nat_gas_producer_index

    Weekly

    http://www.charthub.com/charts/2014/04/06/nat_gas_producer_index_weekly

     

  10. 10
    zman Says:

    Re WLL – I've got enough coverage in both basins that's higher growth rate and higher margin. 

  11. 11
    Bill Potter Says:

    Z or Zorg, what is your recommendation for a pure O&G E&P ETF?

  12. 12
    zman Says:

    re 11 – Depends on what you want it for, as a benchmark or as an investment.  I don't recommend things in general and certainly don't do ETF's and I'd note that their holdings can shift widely over time giving you over exposure to some plays you may not want. I'm out of the office today but can look at it tomorrow if you like, again, depending on what you want to use it for. 

  13. 13
    Zorgnak Says:

    #11 Bill, I don't know of a really pure oil and gas ETF. With that said, over time XOP tracks the pure Oil Producer Index pretty close and has by far the highest daily volume.

    Here's a side by side comparision of recent price action of XOP PXE and IEO.

    http://www.charthub.com/charts/2014/04/06/untitled_41_140406131155

  14. 14
    zman Says:

    re 13 – thanks Zorg. 

  15. 15
    Bill Potter Says:

    I'm using it as a benchmark so I should not have said ETF.  Whatever the best product to benchmark my E&P stocks against a larger sample.

    Zorg, those look like they track pretty close.  Is the scale different for each one?

    Thanks for the help.

  16. 16
    zman Says:

    Libya announces plan to reopen oil ports. 

  17. 17
    sc4 Says:

    Z  would be interested in your thoughts tomorrow on some combination of gdp and hk.Value your views but also interested in how the street might view such a combination? No hard news on this but with the large volume of shares which hk is going for and the increase in directors seems like something other than business as usual.tia

  18. 18
    zman Says:

    re 17 – Happy to. 

  19. 19
    Zorgnak Says:

    #15  I would use XOP as it has the largest # of oil and gas stock holdings in the ETF with the lowest weighting in the top 10%.

    Comparisons

    http://etfdb.com/type/sector/energy/oil–gas-exploration–production/#returns

  20. 20
    Zorgnak Says:

    S&P  A break below 1855 targets the very wide CHVN around 1829. An overshoot of the Major CVHN has key suppport at the confluence of the Major CLVN and long term trend line. at 1800.

    http://www.charthub.com/charts/2014/04/07/es_master_140406172024

  21. 21
    Zorgnak Says:

    SPY  Levels  Break of 186 targets the Major CHVN around 184. This large acceptance area is quite wide and dense. I'd expect momentum to slow coming into this area. Market hits high odds bounce levels with a close below 184.77.(May change slightly as the week goes on). Failure to hold above 186.61 has key support at 182 CLVN

    http://www.charthub.com/charts/2014/04/07/stock_master390_140406173254

  22. 22
    Zorgnak Says:

    Small Caps  IWM  Key support at 113.31. A break much below the 112.39 CHVN has little defined support until 108.92.

    http://www.charthub.com/charts/2014/04/07/stock_master390_140406174257

    Breadth..Still a ways to go for the oversold readings in the small caps………

    http://www.charthub.com/charts/2014/04/06/small_cap_breadth_0

  23. 23
    Zorgnak Says:

    #21 should have read… Failure to hold above  184 has key support at 182 CLVN

  24. 24
    nrgyman Says:

    Shale development reality outside of NAM:

    http://www.bbc.com/news/business-26735000

     

  25. 25
    Bill Potter Says:

    Thx Zorg.

  26. 26
    RB Says:

    Thx Zorg..I have a smallish put position against the SPY/IWM 

  27. 27
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  28. 28
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  29. 29
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