06
May

Tuesday Morning – Earningspalooza

Print Friendly, PDF & Email

.

.

Market Sentiment Watch: Light on the economic data today but another avalanche of earnings from names we care about. In today's post please find earnings related comments on EOX (solid quarter with upped annual guidance and Low Rider EURs (as expected)), EOG (monster quarter with upped oil guidance and new oil plays), CRZO (nice quarterly beat due to Eagle Ford strength, Niobrara showing more promise and oil volume guidance boosted ...again), MCEP (OK quarter, temporary dip in coverage ratio), OAS (modest beat and showing off production improvements due to new frac design), GDP (miss but more TMS news around the corner so it could be forgiven soon), and ROSE (solid results but a miss as the Street was overzealous).  Note that given the high call volume and the fact that some names on this list refuse to publish their quarterly press releases the night before their call instead of the morning of their call like civilized little companies, some of the language in today's release for some names will be shorter than usual.  There is also a lot of call time overlap today so we will be circling back on certain names as noted below in the Stuff section of the post.  - 

Ecodata Watch:

  • We get the trade deficit at 8:30 am (F = -$39.8 B, last read was -$42.3 B) 

 

In Today’s Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Stuff We Care About Today – EOX, EOG, CRZO, MCEP, OAS, GDP, ROSE
  4. Odds & Ends

Click the link directly below this to ...

break

Holdings Watch:

ZMT (Zman Medium Term portfolio):

Yesterday’s Trades: None

ZLT (Zman Long Term portfolio)

Yesterday’s Trades: None

​The Blotter is updated.

Commodity Watch

Crude oil retreated $0.28 to close at $99.48 yesterday, moving lower early with markets in fear of further contraction in Chinese manufacturing. Brent fell on China as well. We should get a fresh STEO out of EIA later today and we'd expect them to move their US production number back up from 8.4 to 8.5 MM bopd either today or next month. This morning crude is trading flat.

  • Early Read on Oil Inventories:
    • Crude: Up 0.9 mm barrels
    • Gasoline: Up 0.2 mm barrels
    • Distillates: Up 1.1 mm barrels

Natural gas inched up a penny to close at $4.69 yesterday, staying buoyant despite another larger than 5 year average injection on the way this week as traders look for warmer temps to begin to push up cooling load. We continue to expect some near term softness.   This morning gas is trading up five cents.

Stuff We Care About Today

EOX Reports Bottom Line 1Q14 Beat; Ups Volume Guidance and EURs as Expected

 
EOX 1Q14
 
The 1Q14 Numbers: Essentially in line volumes and good cost control yield inline to slightly high EBITDA and EPS.  EBITDA margin is still low for a Bakken player but should travel higher now as additional volume growth kicks in. 
 
Guidance: Going up as expected.
  • 2014 was 3,550 BOEpd
  • and has been upped to 3,700 BOEpd, which is spot on with the Street,
  • Exit rate was boosted from New guidance has been boosted from 4,250 BOEpd to 4,900 BOEpd as they are now officially going to 4 rigs in late 3Q14 (read minimal impact on 2014 volumes but a head start for 2015) and will have more wells drilled than was the plan at the beginning of the year.
  • 2Q14 guidance is now 3,500 BOEpd, just above the Street at 3,400 BOEpd and we'd expect near and out quarter numbers to move up as our sense is they are bagging a bit in the out quarters.
 
Highlights:
  • Low Rider (McKenzie County, ND) estimate recoveries upgraded from 550 to 600 MBOE, as with production guidance this was expected.
  • Low Rider CWC cut to $9.5 mm (vs a prior $10 mm per well all in)
  • Revolver increased from $75 to $100 mm, which should leave them with plenty of liquidity ($296 mm including cash) to carry them well into 2015. 
  • Well Update: see table below with yellow highlights.  Note that 6 months out, their average well has cumulative production of nearly 91,000 BOE and their longest running operated well has surpassed 131,000 BOE in 9 months (those are good wells for McKenzie and will lead to payouts in less than 18 months. Also not the consistency of the results. 
  • Valuation remains quite compelling given the strong growth, consistent drilling results and if it sits at current levels for long it will look exceedingly cheap for an operator. 

Nutshell: Pretty much an as expected quarter from a quarterly numbers and guidance extent.  The $93 mm boost to the capital program may prompt a little indigestion with some but our thought is they are still an early stage in a maturing basin and are playing a bit of catch up. Estimates will likely rise slightly on the guidance (we expect the Street to continue to see it as conservative and our own estimates remain about 200 BOEpd for the year above the current Company/Street without the benefit of adding a 4th rig to the program. 2015 numbers will be heading noticeably higher and we'll put new ones out once the quarter settles down a bit (next week). Probably around mid 2015 they will need additional external financing (they're funded for 2014), likely in the form of a combination of debt and equity.  For 2014, they look covered by cash, revolver capacity and cash flow. We continue to own the name as a top 10 position in the ZLT and in the ZLT G accounts as well.  We'd expect to move up modestly on the guidance and well results.

EOX 1Q14 wells

EOG Crushes 1Q14 Estimates; Raising Oil Growth Guidance; Announces New Oily Plays

EOG 1Q14
The 1Q14 Numbers:  Production came in well above guidance. Oil hit its highest percentage of the mix yet at 47% driving total liquids to 60% and EBITDA per BOE to a new quarterly high at $45.49.
 
Guidance: 
  • 2Q14 guidance range established at 552 to 588 MBOEpd vs Street at 564 MBOEpd,
  • 2014 guidance moved up to a range of 551 to 595 MBOEpd vs prior guidance range of 547.2 to 591.3 MBOEpd, equating to growth of 12% YoY on the mid.
  • The increase was oily in nature and takes expected growth from the old 2014 target of 27% to 29% oil growth. 
 
Highlights: 

South Texas - Eagle Ford - More monster sized wells in the EFS, and specifically in Gonzales which should put upward pressure on names like PVA. We won't run through the list this quarter but again, it's a more than solid showing.  They expect to be HBP'd by mid year and continue to see further efficiencies that will drive completed well costs lower. 

Williston Basin 

  • Accelerating from 6 rigs to 7 by mid 2014, 
  • Testing tighter spacing (down to 700'), based on others in their core it should not be a problem.

Permian Basin - Delware sub basin (Leonard Shale)

  • Announced a series of strong wells in the Leonard
  • Lea County IPs ranging from 1,733 BOepd (71% oil) to 1,810 BOEpd (77% oil)
  • In Reeves County they announced some OK looking Wolfcamp wells. Look for more color on these on the call. 

New Ventures:  They see a combined 400 MMBOE of new potential in 4 zones in two new (as cores go for them) Basins. 

DJ Basin (Niobrara and Codell)

  • Codell - Laramie County, WY (Codell) - 72,000 net acres in "sweet spot", first five wells had IPs from 9,000' laterals of 1,294 BOEpd with cumulative production from the first well of 73,000 BOE in its first 3 months of life (really strong). 
  • Niobrara - 50,000 net acres in Weld County, CO and Laramie County, WY​ - Oily at 71% and the first three wells (shorter laterals delivered IP average of 690 BOEpd IP (which would be quite good if they were standard length), 
  • Handful of wells drilled so far with plan to drill 13 this year in a 1 well program. Look for details on the call. 

Powder River Basin (Parkman and Turner)

  • Parkman - 30,000 net acres "in sweet spot" with 3 highlighted wells IP'ing at ~ 1,315 BOEpd, averaging 87% light oil.  2 of the wells, through 90 days have cum's of 100 and 68 MBOE (from 4,000' laterals) 
  • Turner - 63,000 net acres, two IP's given, both just over 1,000 BOEpd with roughly 70% oil (not mix in their figure in the pr does not match rates given in presentation which the play to less oily by about half). 
  • The 2014 plan is to drill 28 Parkman and 6 Turner wells this year.
  • Look for more questions here on this one as these are not household horizon names. 

​​Other Stuff

Balance Sheet: In the best shape its been in in modern history (again). Total debt basically held flat for a 6th straight quarter while net debt continued to fall. Net Debt to LTM EBITDA is now only 0.5x an net debt to cap is 19%, well below EOG's long term max rate target.  Look for questions regarding acceleration vs further increases in the dividend or even significant buybacks on the call (doubtful on the buybacks but it's a worth cash use question as they grow).  

Nutshell: Monster quarter. Guidance increase adds fuel to the fire as do the addition of two more oily plays and the words "transfer of skill set" will be typed many times over the next 24 hours.  Look for lots of questions on the impact of the DJ and Powder River Basin programs (along with costs of those wells) during the Q&A portion. As always, look for good macro oil and natural gas color on the call. We continue to own the name in the ZLT and have been thinking to add to the position on weakness ... which we are not likely to get today as price estimates and price targets will traveling higher before and after the call. 

EOG 1Q14 b

CRZO Reports Nice 1Q14 Beat; Increases Oil Production Growth Target (again)

CRZO 1Q14
The 1Q14 Numbers: EBITDA margin rises to best level seen yet as oil mix continues to improve. LOE remains well in hand at just $5.28 per BOE despite increasing oiliness. 
 
Guidance: 
  • Oil volume forecast increased from 50% to 54%,
  • Capex inched up by $15 mm to a range of $665 to 685 mm
 
Highlights: 

Eagle Ford:

  • Volumes up 14% sequentially at > 12,700 BOEpd with another estimated 8,800 BOEpd in the form 23.5 drilled but waiting on completion wells,
  • Still has a 3 rig program but sees drilling 51 net wells, up from 47 net this year due to increased efficiency,
  • Downspacing test results on next call,
  • Leasehold now at 67,700 net acres up from 58,000 net

Utica 

  • First well, the Rector in Guernsey, OH,  produced 57 MBOE in first 113 days prior to shut in for infrastructure. Nice.
  • Second well, the Brown, also Guernsey, to spud during 2Q14. Expect results on the 3Q call. 
  • Acreage now stands at 25,700 net, up from prior 21,700. 

Niobrara

  • Production of 1,900 BOEpd, up 5% sequentially was dinged by weather for 450 BOEpd,
  • Downspacing to 60 acre spacing from 80 acre spacing in the Nio B has been confirmed adding ~ 120 net drilling locations (taking the inventory to 470),
  • CRZO has multiple operated and non-operated 40 acre spacing tests ongoing now,
  • Lastly, they noted that they are not including Nio A in their location counts but have been encouraged by what they've seen in the A.  

​​Marcellus

  • Production up 14% sequentially at 44.5 MM/d but not a real focus for the name at this time as their area remains infrastructure constrained.  They did note some relief on that front saying that April production averaged almost 60 MM/d (vs productive capacity of 70 MM/d).  

Balance Sheet:  Fine with net debt to TTM EBITDA at 1.9x and net debt to cap at 48%. Revolver was increased by $100 mm to $570 mm. 

Nutshell: Nice beat, all systems go.  Estimates will be moving up and our view is that given the rapid and expanding growth of the oil wedge in the volume profile that the name remains a bargain despite the recent run in the shares. We continue to own a full Core position in the name in the ZLT.   

MCEP Reports A Modest 1Q14 Miss

MCEP 1Q14
 
The 1Q14 Numbers: EBITDA was down sequentially due to lower commodity prices and hedges that worked against them during the quarter. Coverage was below 1.0 in the quarter at 0.92. 
 
Guidance: None as per usual. 
 
Highlights: 
  • Coverage below 1 due to increased number of units for an acquisition that didn't exactly line up in terms of cash flow contribution during the quarter. 
  • They acquired another 90 bopd in May that will be additive to the 2Q and forward numbers. 
  • We'd look for larger deals before year end 2014.

Nutshell: We entered the name in January 2013 at $21.41 and have not added more since. It's not really our kind of name (enhanced oil recovery vs growthy E&P) and while we've liked the increasing distribution (every other quarter or so) . We continue to own a small position in the name in the ZLT. 

OAS Reports Solid 1Q14 Results; Highlights improving wells due to change in completion method. 

OAS 1Q14
The 1Q14 Numbers: Volumes were up about 5% excluding divested volumes and the company had previously said look for a flat quarterly number due to weather.  LOE per BOE was above trend for the quarter due to weather related workover but that's going to be the case with all of their peers and it will back down as volumes ramp into 2Q and 2H14.  
 
Guidance: 
  • 2Q14 volume range established at 43 to 46 MBOEpd vs current Street consensus of roughly 45,000 MBOEpd
  • No change to full year guidance for them at this time which is normal for them.
  • They reiterated cost guidance saying they expect LOE to get back in line, fall from 1Q14's peak albeit they see it coming in at the high end of the guidance range. 
 
Highlights: 
  • Noting they have seen a whopping 25+% uplift in well production (didn't quantify or clarify over what period) due to slickwater fracs and said they will be going to 60% new methodology completions (slickwater and other changes) for 2H14.
  • Also noted that despite the harsh weather, average CWC has now fallen to $7.2 mm per well and they see room for further improvement.
  • Backlog of wells awaiting completion has risen 47 wells awaiting completion and a 16th rig to arrive soon.
  • Balance sheet - improved after recent equity offering with net debt to TTM EBITDA at 2.5x. 

Nutshell: Solid quarter despite the weather. They generally don't give a lot of details in the quarterly press releases and the commentary on the move to slick water fracs is about as exciting a thing as we normally see out of them.  The name remains cheap in our view at 6.5x TEV/'14E EBITDA and 5.3x next year's number in light of continued strong forecast growth this year and next and a move on free cash flow land in the offing this year. We continue to see their full year guidance as conservative and would expect them to boost guidance fromthe 40% YoY growth areas to closer 50% with the 2Q14 or 3Q14 call.  We continue to own the name as a top 3 position in the ZLT. 

GDP Reports a 1Q14 Miss; ------------

GDP 1Q14
 
Highlights: All TMS
  • TMS - last 2 wells were lower TMS target wells and noted the Blades well had 2 mm pounds of extra proppant in it and used composite (more easily drillable) plugs, their latest design.
  • CH Lewis well in Amite County being completed now (will use the Blades frac design) ... so news here soon. ,
  • Next up, the Nunnery well in Amite (completes after CH Lewis) and the Beech Grove well in East Feliciana Parish (on the frac schedule for end of May),
  • Drilling next well and will spud next two shortly.

Balance Sheet:  Borrowing base reduced to $250 mm "primarily due to lower bank deck natural gas pricing".  That's an odd comment.

Nutshell: Miss but our sense is the quarterly numbers are likely to get fleeting notice at present as more TMS color is just around the corner.  We do not own the name at present. 

ROSE Reports a "Solid" Miss for 1Q14 Results; Reaffirms Guidance for Year

ROSE 1Q14
 
The 1Q14 Numbers:   They don't guide for quarters but volumes were in line with their own expectations (both EFS and Permian were up sequentially) and the fact that they missed is due to Street exuberance with the shape of production growth this year. Notably, cash margins step back up close to recent highs from mid 2013 when oil prices were quite a bit higher than this quarter just past. 
 
Guidance: No change, still looking for 20 to 30% growth, no change to budget either. 
 
Highlights: 
  • Permian - 900 net locations, roughly double levels from the end of 2013 as they continue to delineate in Reeves County. 
  • Permian - announced 2 company drilled and operated wells in Reeves, both Wolfcamp As with 7 day rates of 987 BOEpd (strong for the area) and 692 BOepd (listed as an unstabilized rate)
  • Permian - Increasing focus on horizontals they put 4 to 5 rigs to work drilling horizontals in 2Q14 that will target: a) a lower WC well, b) a 3rd interval Bone Springs well, c) a 3 well spacing tests and d) a long lateral WC A test. 
  • Eagle Ford - not a lot of detail in the press release. Look for them to talk about the results of multiple stacked lateral upper and lower EFS tests on the call.
  • New Ventures - nothing mentioned and we'd like them to keep it simple a little longer. 

Other Stuff

  • Balance Sheet:  Fine, not stressed but net debt levels are elevated as they continue to pursue a second (see chart below),
  • Budget is running a little front end loaded due to more rigs than the year will average, running in the EFS but they did reiterate they plan to stick to the $1.1 B forecast.  

Nutshell: Solid quarter despite the miss. We continue to own the name in the ZLT. 

ROSE 1Q14 b
 
After the close / before the bell watch
 
MTDR
  • ​We own the name
  • Looking for downspacing comments in the EFS,
  • Also looking for a nice sequential drop in completed well costs in the EFS,
  • South Texas - maybe a comment on a planned Buda Lime test,
  • Possibly two more Permian wells to talk about, also possibly they talk about 2nd generation frac methods here (vs their 6th iteration in the EFS)
  • They'll probably talk about timing on a test of their northern most slug of acreage, Twin Lakes on the call. .
  • Potential for an earnings beat here is elevated to many of our other names but we only hold a Starter position in the ZLT so a miss for the right reasons would be welcomed as well as an adding opportunity. ​WPX
  • ​We own the name
  • Tone will likely be more important than the quarterly numbers as the new CEO takes over, 
  • Looking for direction on the call for the San Juan oil program and Niobrara high pressure gas well program in the Piceance. 
ATHL
  • ​We own the name,
  • Looking for more data on the initial Howard County discovery well and additional wells there.
  • Still getting to know them but as we've stated repeatedly, we like the way they present and thing this quarter likely puts them in the easier to own category of ZLT names. 
 
Odds & Ends

Analyst Watch:

  • TBA in comments. 

111 Responses to “Tuesday Morning – Earningspalooza”

  1. 1
    zman Says:

    Analyst Watch – EOG

    Morgan Stanley ups target to $130, stays Overweight

    UBS ups by $2 to $115, stays Buy

    Goldman ups by $4 to $124, stays Buy

    Citi ups by $10 to $115, stays Buy

     

  2. 2
    zman Says:

    EOX call in 30 minutes

     

  3. 3
    zman Says:

    GDP off 9% pre market on the miss

  4. 4
    zman Says:

    Analyst Watch

    OAS – Topeka ups target by $4 to $56

    ROSE – Topeka trims by $4 to $62, stays Buy

    ROSE – BMO cuts by $6 to $46, stays unimaginative at Market Perform

  5. 5
    Dedwards Says:

    FST taken out by Sabine, all stock… Was watching this one in the hopes it might rebound.  It is better off getting bought out.  Good acreage.  Miserable leadership.

  6. 6
    Stewart Says:

    ~~
    Tuesday, May 06, 2014 6:34:11 AM Valero Energy Corp Oppenheimer Raised VLO to Outperform from Perform, price target: $70- Firm expects VLO's year-end cash balance to be >$5B this year and $7.5B in 2015, or $1B above total debt and thinks VLO can fund $1-2B/year of share buybacks, grow its cash dividend by 10% annually and still maintain strong financial flexibility with net debt ratio under 15% – Source TradeTheNews.com

  7. 7
    zman Says:

    re 5 – thanks, happy to have avoided them all these years. As Reef said awhile, net of debt no value, so getting taken out far under most people's average cost. 

  8. 8
    zman Says:

    Today's post is open to the public, please feel free to share the link about the internet to help keep subscription prices down. 

    http://zmansenergybrain.com/2014/05/06/tuesday-morning-earningspalooza/

  9. 9
    zman Says:

    EOX call about to start, notes in a bit. 

  10. 10
    zman Says:

    OEDV on the tape announcing first operated Woodford well drilled ahead of schedule and under budget.  Took 14 days vs 23 day plan. Saying they were within 1.5 " of planned lateral depth.  Plan is to frac both this well and the sister Miss Lime well in late May. 

  11. 11
    zman Says:

    EOX 1Q14 Notes

    – 1Q14 in line with guidance

    – weather has improved, running rast in McKenzie and Williams Counties

    – increased guidance due to better well performance

    – Easy Rider EUR also increased 

    – hedged at maximum allowed under credit agreement, will add more hedges upon new bank  line redetermination in October. 

    That was quick, headed to Q&A now …

     

  12. 12
    tomdavis12 Says:

    Z: Thanks for all your work on today's earnimgspalooza.

  13. 13
    zman Says:

    re 12 – great thanks, tell your golf buddies. Q&A notes from EOX in a bit. 

  14. 14
    zman Says:

    EOX 1Q14 Q&A

    Q) Downspacing question – how did you come up with tighter spacing at Easy Rider (given you just really started drilling there) as well as the EUR increase

    A) Offset operator experience.   Easy Rider EUR went from 450 to 550 MBOE.  Low Rider went to 600 MBOE, that's probably conservative. 

     – were also given confidence to go to 8 m Bakken and 4 TFS wells per DSU (drilled from 2 pads) by having fully downspaced at Caper and Excaliber – little to no communication (6 wells in each) … plan is to drill 3 to 4 wells out of the gate, batch drilled. 

    Q) 4th rig – 1 net well assumed this year, may not get completed this year, will run a 4th rig all next year. 

    Q) LOE improvements – more room to improve?

    A)  Yes, just electrifying Low Rider, changing over from diesel to natural gas has brought the reduction so far, then from natural gas to electricity.  Also a centralized natural gas compression facility will help. 

    Q) Frac spreads this year

    A) Will use 1 or 2 spreads going forward. 

    Q) 38 net wells next year (pad vs HBP) and 

    A) in Low Rider we are pad drilling now, setting up for a minimum of 4 wells to DSU and some will be 6 or 7 

      – 2 rigs will be on pads

      – rigs 3 and 4 will be working to HBP acreage

    Q) when HBP

    A) by end of 2015

    Q) timing of 3rd rig

    A) first well comes online from Easy Rider in June, rig #3 has moved to Prong Horn to begin program there. 

    Q) Differential?

    A) Continue to use $10 off WTI for now … can go either rail or pipe from Enbridge offtake. Seeing more pipelines inside of the Basin being built. So no problem getting it to whichever market is paying best.    

    Q) non operated position (trade up to operated or monetize)

    A) value of the non-op has continued to rise, our sense is that it's best to not sell it but hold onto it for swaps, would monetize for right price, has a pretty high value though since a lot of it is adjacent to operated acreage. 

    Q) cemented liners

    A) slickwater fracs working well for us, reluctant to change to cemented liners yet but will have more data in the next few months. 

    Call over, mildly positive tone. There was a little incredulity on the part of sellside guys regarding the decision to step up the spacing assumptions but management handled it pretty well.  As per post, 2015 numbers are going to be headed higher, will have a new model out here late this week or early next. 

     

  15. 15
    elduque Says:

    EOX- management seems sharp!!! just a qualitative impression. 

  16. 16
    RB Says:

    got my short rebate yesterday on HK…firing the dough back at 'em…not a lot but it adds up

  17. 17
    zman Says:

    re 15 – yeah, not first rodeo there, this is the most straight forward non-op to operated story in the Basin. 

  18. 18
    brodway Says:

    ROSE has found solid support in the 41-42 range since 2012, so i don't see it crashing much further beyond where it traded premarket at 43.

  19. 19
    zman Says:

    CRZO, EOG, OAS opening well on their quarters. EOX a little tentative but that's to be expected given size and a bit of a negative opening to the day. 

    EOG and CRZO calls in 30 minutes (10 am EST).  I'll be on EOG and then will circle back to CRZO this afternoon. 

  20. 20
    zman Says:

    re 18 – and that's really a miss on the sellside's part, the quarter was good. 

  21. 21
    zman Says:

    Pleased with the rebound open in OAS. Last trading position added there at the time of the weakness surrounding the 4Q13 report, remains a top 3 ZLT position. 

  22. 22
    brodway Says:

    re: 20

    than i need to be a buyer of trading shares. not suggesting you should be 🙂

  23. 23
    brodway Says:

    re: 21

    makes two of us. i had re-invested the EPL proceeds into OAS when it was down to 42-43

  24. 24
    john11 Says:

    Anybody look at this Sabine FST merger deal?

     

  25. 25
    nrgyman Says:

    Z, now that the Q1 reports are out and analysts are making there adjustments, when do you see it as a good time to book profits.  Oil inventories in the Gulf are not getting any smaller, May is here, and many of these E&P names have had a good run.  

    "If your are long on crude, I am sorry for you" —Jeff Gundlach (yesterday)  At the Sohn Conf yesterday another big PM came out bearish WTI, but liked Brent.  Recommended VLO, MPC.

    Re 6:  VLO caught an upgrade

  26. 26
    zman Says:

    CRZO marching with 5 minutes until their call. 

  27. 27
    zman Says:

    re 24 – not more than as noted above.  I'll look at the pro forma later but it's hard to imagine there is a lot of asset value over debt in that deal.

    re 25 – We've been noting occasionally for about 4 weeks now that we plan to raise 10 to 15% cash as quarter end approaches, not Cores but some Trading positions will go.  We did our buying of Trading adds quite awhile back now and we'll peel some of that back likely next week. 

    Getting on EOG call, notes in a bit …

  28. 28
    zman Says:

    re 25 – and his statement, wondering how long he's been voicing that view? 

  29. 29
    nrgyman Says:

    RE 27:  Thanks.

  30. 30
    zman Says:

    re 29 – you're welcome

    Opening gaps getting a least partially filled on broad market tepidness. 

    EOG notes in a bit. 

  31. 31
    zman Says:

    Brodway, hear ya re ROSE adds, will listen first. 

  32. 32
    zman Says:

    EOG 1Q14 Notes

    No Mark Papa on the call is hard to get used to but the style remains the same (quarter view, ops update, macro view)

    Walking through New Ventures – all in post

    DJ Basin

       – Codell – 26 net wells planned , EUR of 695 MBOE – these are long laterals for $7.3 mm, AT ROR > 100%

       – Niobrara – AT ROR of 40%, see plenty of upside to that, 13 net wells.  Completing first long lateral well now.  

    PRB

      – Parkman – note those 4,000' laterals in the post, planning longer laterals

       – AT ROR > 100% (highest return of the 4 palys added with this quarter)

       – Turner – will vary laterals a lot, have been working on this for awhile, now drilling in sweet spot, AT ROR also over 100%  

      34 net wells, 28 Parkman, 6 Turner

    Other Exploration 

     – continue to look for new plays

      – won't be another EFS but the plays announced yesterday are impactful. 

    EFS 

     – 26 rigs running

     – responsible for the 1Q14 outperformance on oil

      – number of IPs > 4,000 BOEpd … PVA you can do it!

      – think they can increase EFS production on current productivity and well costs through 2014 and stay in free cash flow land for this segment this year and each year for the next 10 years. 

    Williston Basin

     – increased spacing density from 2 to 4 wells last year (1,300' spacing)

     – now testing 700' spacing, early in life of these tests

     –  6 rigs now going to 7 this summer

    Permian 

     – testing Leonard and Wolfcamp tighter spacing

     – 4 rigs running

     – completion costs falling a they use own sand. 

    … 

     

  33. 33
    nrgyman Says:

    PDCE:  http://finance.yahoo.com/news/pdc-energy-announces-2014-first-123000662.html

    Solid liquids growth (57% YOY) , overall production growth of 44% (yoy), 7% decrease in per BOE production costs–but still missed estimates on weather related issues:

    PDC Energy misses by $0.09, misses on revenue • 8:44 AM

    PDC Energy (PDCE): Q1 EPS of $0.27 misses by $0.09.

    Revenue of $130.26M (+81.3% Y/Y) misses by $4.59M.

     

  34. 34
    zman Says:

    EOG Macro Notes

    Oil

    See continued globally tight markets

    US slowing

    OPEC supply revised downward

    OEDC demand continues to rise  (non too)

    Natural Gas

    – late next year expect to see the first LNG export start up

    – in 2016 expect to see a number of petro chemical plants start up

    – in 2018 expect a big batch of LNG plants to start up. 

    Summary of the prepared 1Q14 remarks

    1) new oil plays compare favorably with our current projects

    2) increased guidance for oil from 27 to 29% YoY growth

    3) continues to see improvements for the EFS wells, see growth for the next 10 yeers

    4) testing downspacing in the Bakken, Leonard, and Wolf Camp.

    Q&A about to start … 

  35. 35
    zman Says:

    re 33 – thanks, lost those guys in the mix, will try to have a look later. 

  36. 36
    DaveH Says:

    RE: 22   I sold some ROSE Oct. $35 Puts for $1.10

  37. 37
    nrgyman Says:

    EOG:  These guys are really good.

  38. 38
    zman Says:

    Can someone take and relay notes on the GDP call?, for 4 at once at that time, and I'll probably be on the ROSE call, if not that then the OAS call. Thanks. 

  39. 39
    zman Says:

    EOQ 1Q14 Q&A

    Q) capital allocation given the high IRRs you have now. 

    A)

    – 1st priority is to continue to increase the dividend

    – 2nd reinvest into highest return.  EFS first, then Bakken, then Leonard, then the new Nio, Codell, Parkman, Turner

    On the EFS that's making the cut off of 60% IRR that are not included in the drilling inventory – they are woking to get those costs down, productivity up, not a big focus, not drilling a lot of those more non core EFS wells but they are doing some work on it. 

    Q) Other new plays?

    A) will not talk about new plays until we feel we have captured the sweet spots.  

    Q) EFS post HBP (mid 2014) – how do efficiency gains translate after that.

    A) Drilling a bunch of acreage retention wells in 1Q14, after we complete that process we go back in and focus on pad drilling (no kidding) … 

     Can you quantify? With, like, numbers?

       – Not having to spend money on roads, pads, gathering, spud to TD falls (some down to 5.3 days)

       – finally said at least 5 to 10% type savings (that would be per well, nice)

    Q) DJ Basin – well control vs historic variability

    A) We have lots of well control, we believe we have defined the sweet spots, set up by the basin architechure, we believe our mapping on our acreage will lead to more consistent than historic results. 

    Q) Your natural gas macro outlook is more bullish than in recent past (no kidding), how do you stay disciplined

    A) We are mildly bullish on near term gas, we think it will be in the $4.50 to $5.  We still don't want to invest any $ in dry gas drilling.  We want to see what other operators are going to do at these gas prices.  There is the potential for people to drill a lot of wells (and crunk gas prices) and so we want to see $5.50+ and that it would stay around for multiple years before we thought of drilling for dry gas.  Good answer. 

    Q) Oil outlook vs growth in EFS oil growth at EOG

    A) We remain bullish on light oil prices, we see a tight supply worldwide, we don't see a pending crisis in the US to process all that oil.  Hmmm.     We continue to reinvest in US oil projects. Focus EFS, Bakken then the other plays. Focus will be oil for quite some time.  They see fairly consistent oil growth (for EOG). 

    Q) where is the EFS acreage that's not in the location count?

    A)  all of it is in the oil window.  It's in areas with more geohazards (faulting), forces them to work to get the frac more evenly distributed (frac containment, differing lateral directions).   Not low hanging fruit.

    Q)  Got a 10 year plan for the Bakken like you have for the EFS

    A) Not yet, still early in the downspacing stage. Until we figure out the formula we are hesitant to try to provide guidance on that. Will be working more on it. 

    Q) NGLs in 2016, question on the combo play (Barnett)

    A) NGLs kind of go along with the gas, hopeful NGL demand firms up enough to help out on pricing, but we are focused on oil for the next several years.   Those combo plays will become competitive down the road but near term, it's oil. 

    Q) questions on the Powder

    A) Parkman and Turner partially overlap, both are sands, mapped it out. Midstream in place to get oil to market. 

    Q) First EFS potential; do the plays today have that upside potential. 

    A)

     – 900 MMBOE net origional.   Now 3.2 B barrels

     – no, they are sands (Parkman, Turner, Codell) not shale plays (Nio is a shale)  – there is upside potential based on downspacing but they are not going to be (singly or combined) the next EFS. 

    Q) Serivce cost inflation?

    A) not much, a little tightening on drilling rigs, maybe up 5%, but otherwise, very locked in.  There is some on trucking but that's why we put in the liquids gathering system on there new plays as they have long term potential. 

     

     

     

     

  40. 40
    zman Says:

    Thanks for the retweets and refferals on today's post. 

  41. 41
    zman Says:

    EOG Q&A

    Later this year:

      – Will drill 4 Nio and 3 Codell

      – 6 Nio (3 upper, 3 lower) + 3 Codell

    Q) 4 new plays, minimum acreage capture

    A) For sandstones, they will be a bit smaller, shales large – but focus on sweet spot. Didn't address how small they can go and still move the needle for a company of their size (smaller may =not worth doing from a gathering and local office standpoint).  Play potential – we do see opportunities out there still, working on some now, but not the EFS sized ones. 

    Jumping over to ROSE. 

     

  42. 42
    tomdavis12 Says:

    Z  34 On the EOG macro notes re oil where they say US slowing. Is that the US economy slowing or US oil production slowing?

  43. 43
    zman Says:

    re 42 – that was oil production rate of growth.  

  44. 44
    zman Says:

    ROSE 1Q14 Notes

    – down 5.7% at start of call

    – 5 WC A wells on now, will complete 4 to 8 HZ WC A wells in 2Q

    – Gates Ranch – Upper Eagle Ford – 3 Upper EFS tests, one on a year now, one on 9 months. 

    Going to be talking about the upper EFS stuff, as noted in yesterday's post, in the operations update.  Why not in print in the pr, no idea … 

  45. 45
    zman Says:

    GDP latest presentation

    http://www.goodrichpetroleum.com/presentations/MgmtCurrent.pdf

  46. 46
    tomdavis12 Says:

    43  If they are correct, I don't think that is a consensus view of the street. 

  47. 47
    zman Says:

    ROSE 1Q14 notes

    57.5 BOEpd in March

    Upper EFS on slide 7:

    http://ir.rosettaresources.com/events.cfm

    Starting presentation now ..

  48. 48
    zman Says:

    ROSE

    EFS of 270 ' 

    Upper 190'

    Lower 90'

    Wells placed in lower EFS are getting all of lower EFS and bottom 60 feet of the Upper

    So 130 ' of upper EFS not being stimulated by lower EFS wells

    Not all areas are candidates for targeting upper EFS

    6 of their areas will have Upper EFS tests (or already have them)

    Walking through the first 4 pilots -testing frac height above vs below the lateral (they know it grows up better than down)

    Pilot 1 – East Gates Ranch – don't see comunication – see production profiles slide 11 , landed upper level of upper, perfomring under Lower EFS wells there, 

    Pilot 2  – South Gates – also upper not detracting from the existing lower EFS, also below. . 

    Pilot 3 – L&A Area – upper producing about the same as the lower (this one was landed in the middle of the upper)

    Pilot 4 – 

    1) upper EFS has different characteristics than the lower EFS and we are treating it 

    2) the lower EFS wells are effectively stimulating up to 150' above the Buda and into the bottom of the upper EFS

    3)

    4) upper EFS perform below lower, 200 to 250?  MBOE

    5) Pilot #3 interesting

    6) Pilot #4 – see slide 14

    Will soon be testing Bricsoe and ——-where the section is thicker. 

    ….

  49. 49
    zman Says:

    ROSE Permian Notes

    – increasing horizontal location count (exludes Bone 1 and 2 and Avalon as being lower pressure and the WC D (cline) for now although they like the pressure.  Location count upgrade shown on slide 18. 

    3rd Bone Springs 

    WC A

    WC B

    WC C

    See slide 17

    On the West side, Roy Bean well – first WC B – look for it on the next call

    Noting some big offset operator wells through the middle of their acreage. 

    Heading into Q&A, notes in a bit …

  50. 50
    zman Says:

    ROSE Q&A

    Q) upper EFS ?'s

    A) on the lower ones now, the lower EFS is higher quality rock in the Gates area.   Porosity just not as good, Noting the better wells was lower in the section, getting better height growth into the unstimulated. In the areas where the upper is thicker, it's going to work better. 

    Briscoe – thickness is 260' that's unstimulated. 

    Likely sellside guys going to go both ways on talking about ROSE's upper EFS comments.  To me it sounds like it's going to work (very likely in the thck) and some areas just won't get them.  The lower results in Pilots 1 and 2 not a bad thing, will take another couple of quarters to get a lower landing upper EFS down. Name should recover some but you may see some guys call the upper EFS disappointing and that's a premature comment in my view. 

  51. 51
    zman Says:

    ZTRADE – ZLT .- ROSE

    ROSE – Added a Trading positon in ROSE at $44.55 on a quarterly miss weakness (off a little over 6% at present), call ongoing, guidance remains intact, Upper Eagle Ford shows tentative promise, Permian increasingly interesting. Street got the shape of the quarter vs the year wrong.  Please comments in post for details. 

     

  52. 52
    Wildcatter01 Says:

    REN getting some love (+5%) with the Frontier/Turner comments from EOG.  They recently drilled their first well that IPd at 1134 boepd in the Turner.  They also have some nice Permian wells.

  53. 53
    elduque Says:

    nice call on ROSE!!!!

  54. 54
    zman Says:

    ROSE Q&A

    Stablized definition

    A) load recovery, then gas break through, then oil startings coming as frac load falls off and pressure rises, they then go into the life of the well to get the 7 day rate average (probably starts about 20 or 30 days in) when pressure is no longer rising. Same goes for the 30 day rate (so it's not the first 7 or frst 30 days), he's just clarifiying.  

    So moving to the Sam Bass well, the unstabilized rate noted in post, completed the well normally in the WC A.  Area was naturally fractured and had faults, and produced water from lower zones along (B,C), saying they thought they could have a chance to produce that from the east side, now have a jet pump in and will adjust fracs to try and not get that contribution in future wells on the east side of their acreage. Trying to figure out if being updip is giving more gassy or if they are not getting the oil due to the water contribution. So will try to not frac into the B, C … did note it was not a big area, just a few sections. Oh, 3 or 4 sections.  Not sure why I just typed that paragraph.  

    Q) EFS production and midstream issues

    A) We front end loaded the 2014 capital program for two reasons: a) if you look at a Gates Ranch lease map, we turned the row and so we had to shut in a bunch of wells to add the new row.  This was the first time we started completing wells on the 3rd row.   So we are shutting in twice as many wells to shut in the same geographic area.  (look at their lease map in the slides (slide 7 is a good one for this). Then noting they brought on more Tom Hanks wells (those are about 1/2 of a GR area well so it's a lot of moving piece. Later in the year, as they shut in row 2 wells at GR to complete new 3 row area wells they will be shutting in lower rate wells. It's not as confusing as that sounds but don't try saying it 3 times fast. 

    Call over. Tone was good.  Somebody jumped the gun and hit the squawk box right after I add that Trading postion.  As a reminder, our Cores are taken with the thought of a 2 to 3 year hold and our Trading Positions are taken with 3 to 9 months in mind. 

  55. 55
    zman Says:

    re 52 – thanks for that, had not bothered to think about who were the PRB play love beneficiaries yet of the EOG new venture adds. We've done a couple of write ups on REN (see pull down menu) but it's been awhile. 

     

     

  56. 56
    zman Says:

    Analyst Watch

    EOX – SunTrust cuts target by $0.50 to $9, post call, guess would be the higher capex without significant further increase in the guidance as they only came up to match the Street with the new 3,700 BOEpd. Pssstttt … hey, you, SunTrust guy, they're bagging you, you do get that, right?  

  57. 57
    zman Says:

    Will move to the first available replay between OAS and CRZO next. 

  58. 58
    Dedwards Says:

    Re 56 – Z, if you have the SunTrust note, would you mind forwarding it to me?

  59. 59
    zman Says:

    re 58 – I don't have it, just the headline. 

  60. 60
    Dillon Says:

    I think SM Energy has acreage over in the powder river by EOG's new discoveries.

  61. 61
    Dedwards Says:

    Re 59 – K, I'll see if I can track it down, not likely as I don't know anyone who gets their research.  

  62. 62
    nrgyman Says:

    Re 55:  It would be nice if SWN found one of those to build liquids growth.  How about the Sand Wash?

  63. 63
    zman Says:

    re 62 – too early to say, will know a lot more by 3Q14 pr. 

    On the OAS 1Q14 Replay, notes in a bit … 

     

  64. 64
    nrgyman Says:

    EOX:  somebody figured the 'bag job' out 🙂

  65. 65
    zman Says:

    re 64 – heh,

    notes on OAS in a few minutes. 

  66. 66
    Dedwards Says:

    Re EOX – I can't understand for the life of me why the sellside doesn't get the story.  The production story is as simple as A+B=C.  Does it really matter if a handful of wells come online January next year as opposed to December?  SS targets for such a quickly growing biz seem awfully arbitrary.

  67. 67
    zman Says:

    OAS 1Q14 Call Notes

    – 16 wells in 2H14 with slickwater (Indian Hills and Red Bank) where they have seen it working

    – 7 other wells in 2H14 with slickwater were they think it will work

    Operations Update

    Slides:  http://www.oasispetroleum.com/wp-content/uploads/2014/05/2014-5-OAS-IR-Presentation_vFINAL1.pdf

    – grew by 5% ex Sanish non op despite the very bad winter weather

    – doing more work to varying completions by area

      – noting use of slickwater, increase or decrease amount of proppant, type of proppant, and coil tubing completions (which is what WLL was talking about last week) – 60% of wells in 2H will go to the new completion methods 

    – see slickwater helping to > 25% production uplift through 90 days of production in West Williston- right now seeing it help on >100,00 of their acres … said they see over 30% uplift through 12 months at Foreman Butte (south McKenzie County) and Red Bank (north Willaims)

    – will test in the White Unit, south of Foreman Butte, 7 wells with slickwater and be a partial spacing test with wells in the m Bakken and then TFS 1, 2, 3. 

    – about 20% of well will be the slickwater change  (slide 10 = wow)

    – about 40% will plan with the proppant amount, mix, and CT delivery of fracs – will release results later this year. 

    Montana Comments – 40 wells tracking right on type curve *51 to 65% IRR at $90 to $100 oil … in Montana … nice 

    Lower TFS well comments:

     – added 4 since last call, now have 9

     – see slide 13 – all within or above type curve but one well

      – 4 more wells have not been included as they have not yet got 30 days, but looking good so far. 

      – moving to full DSU development for 20% of acreage with all of the lower TFS benches

      – helps with lowering well costs 

      – will use multiple rigs on each DSU to cut cycle times (spud to sales)

    In general, 90% of 2014 drilling will be on pads (think 2013 was about 50%)

    Differentials – staying at 8 to 10% long term view

    Only had a $68 mm outspend this quarter … getting closer to FCF. 

  68. 68
    elduque Says:

    early Robry at 75

  69. 69
    zman Says:

     

     

  70. 70
    sc4 Says:

    re ren– look closely at management. These guys are very conservative and managed to disappoint for years. Not sure if there is anything new here. Originally bought ren at the same time as kog. But gave up on them. I don't claim to understand the geology but know that the management has disappointed time after time. good luck and do your own dd.sc4

  71. 71
    zman Says:

    OAS Q&A

    Q) slickwater vs base design

    A) $1.5 to $2 mm for the slickwater. 

    Q) capex was on base frac design so going up?

    A) bulk of these jobs will be in 2H14 so mostly a 2015 issue but could be some drift up on 2014. 

    Q) Slickwater – early impact only or over life

    A) so far over life but well data set is small

    Q) can you reduce the cost of the slickwater fracs

    A) As we do more we can reduce it, biggest issue is handling the much higher fluid volumes (like 3x more water to source, handle, and dispose of). 

    Q) Delta between TFS 2 and TFS 3

    A) don't have enough data, some better some worse than each other, kind of treating as the same at this point. 

    Q) Sand in particular and Service cost inflation

    A) Sand – there was a period in the winter where getting it to wells was challenged but that was due to the rail, there were some bottlenecks, led to a bit of extra waiting time, as weather has gotten better deliveries have gotten back on time. Longer term we don't see a tightness in supply from the mines, issues have been logistics, not concerned about our sand costs. 

    Service costs – supply in decent shape for frac crews and rigs at least for the next 6 to 12 months. 

    Q) Slickwater costs

    A) using ceramic, same amount of proppant but 4x the fluid. 

    Q) how much cemented liner and CT work have you been doing?

    A) we've done a number of tests (probably 5 to 8 wells) in the past, we have 11 planned for this year. 

    Q) weather question for 2Q14

    A) nice warm up in April, frost is effectively out of the ground, had a couple of days of road bans due to a snow /rain storm last week, but expect road restrictions to come off everyone by end of month and the weather really has not hampered them much at all this Spring. 

    Analyst tone pretty positive. 

  72. 72
    zman Says:

    Getting on the CRZO replay in a minute. Notes to follow. 

  73. 73
    zman Says:

    CRZO 1Q14 Notes (on replay)

    13 years of EFS inventory at 550' spacing

    new spacing being tested would take them to 17 years

    mostly reading the pr operations update so far. 

    Uitca – very pleased with Rector well so far – will start drilling again in June

    Next call look for #s on a) EFS downspacing 330' spaced wells b) 40 acre spaced Nio c) stacked in Nio, and d) an upper Marcellus test. 

    Going into Q&A 9 minutes into call…

  74. 74
    zman Says:

    Got asked via email, yes, Zorg is on vacation. 

  75. 75
    Stewart Says:

    Is the slickwater frack something new?  Any color on what is different?

  76. 76
    zman Says:

    CRZO Q&A

    Q) Backlog change over the year

    A) 28 gross at beg of year will be down to about 23 at YE14

    Q) EFS acreage adds – La Salle, pricing. 

    A) All 5,500 were in LaSalle, only 1,500 adds since last call, prices are $2 to $4,000 , bolt on acreage, not easy for others to use given where it's at. 

    Q) Allocation of capital – accelerate vs add acreage

    A) First priority is to add acrreage, we know eventually we'll have to add more rigs

    Q) Acreage adds quesitons

    A) last year we added 13,000 acres, probably can do that again in 2014 and 2015 given coming expiries in the area, thinking they will need to $2 to $6,000 /acre

    Q) Utica – next well position

    A) it's the north central part of Guernsey, not geologically worried about it all despite a lack of wells in the area, we know how thick it is and what the porosity is. Acrage in the condensate area (buying some now) but ranges from $3,500 to $12,500 per acre (and there's one company that will pay more than that … hello Aubrey).   Also have brokers looking for acreage in the dry gas window. 

    Q) Utica well costs

    A) $10.1 mm but that's also roads and pad, actually drilled well, drilled very fast in the lateral. 

    Q) EFS Downspacing … any of the EOG pads offsetting your acreage

    A) Most of the EOG stuff in downspacing is to the northeast in Karnes and Gonzales.  We're looking at all the local data of 330' pilots (EPE most active around their acreage – that's one that IPO'd not that long ago and we passed on it), and CHK.  

    Q) Proppant issues 

    A) Generally no. 

    Lots of sand questions/worries on calls today … all met with a big "no problem"

     

     

  77. 77
    zman Says:

    re 75 – not new, been around awhile, more water no gel. It's still going to have chemicals that speed the water into the fracture, and surfactants and biocides but its just a lot more water.  

    Her's a quick on the different types

    http://momentivefracline.com/fracturing-fluids-101

  78. 78
    gdr Says:

    Curious if these companies reporting today are ones likely to be using FTK's CnF? If so, is it mentioned on the calls?

  79. 79
    zman Says:

    re 78 – It's possble.  PXD does use it in the Permian and we know its in the other basins.  No one mentions it by name. 

  80. 80
    Stewart Says:

    re 77.thanks

  81. 81
    RMD Says:

    79 I ask every E&P mgt about their use of or opinion of CnF.  Very few are willing to comment though most have heard of it at this point.

  82. 82
    nrgyman Says:

    PVA:  did you see any read through for PVA on the EOG results?

  83. 83
    zman Says:

    CRZO Q&A

    Q) Niobrara and other ?

    A) Have done some A's, and have some C to test, our Codell may be too thin to test … of course if they have Carlyse underneath as BCEI has been talking about then the Codell may still be interesting down to some very thin slices. 

    q) broad downspacing issue vs acceleration

    A) comfortable Nio B at 60 ac is going to work and also thinking the 330' spaced EFS wells will work but want to have own data before running faster. 

    Sidebar – every call has had at least one question re service price inflation.

    – their answer – No, prices are pretty flat.  Amazing the group think spreads from call to call to call even as all the E&Ps say, "ummm, nooo". 

    Don't want to go faster in the Nio now since the returns are lower than their EFS and they don't know the right spacing is. 

    Sounds like they are going to beat on the gas side this year, sounds a bit conservative on that for midstream constaints that are getting alleviated … and that's more of a rounding error thing in terms of pushing estimates up. 

    Marcellus – didn't really have weather issues in the area (for CRZO)

    If we see outperformance on volumes or price driving higher cash flow we would probably pull the EFS well backlog down a little faster.  We could add a rig but that sounds like a decision that will be for 2015. 

    Utica 

     – no more production until a gas line is in place, have all data we need

     – 2nd well, frac in July, rest 60 days, then extended test so maybe an IP on the 3Q call.  Guy (not sure who is) asking about uncertainty around the Brown well – updip to what's been drilled, pretty confident it's going to work, but in the Utica, it could produce too much condensate and not enough gas to be economic (not enough gas to drive it).  

     – probalby won't come out with own type curve until YE14

    Tone positive, a bit tired sounding out of the sellside. Estimates will be going up on the beat and on the guidance increase.  

    Ended by highlighting all the good stuff on the call (Nio 60's work, strong Rector well – said it might be the best condensate well in the Utica so far, noted the increase in the revolver that remains untapped).  As with all calls, every sellside guy wants them to run faster (despite the 54% oil growth in the name this year) and would, at a later date once they have indeed racked up more debt growing faster then fault them for that.  I like the lack of rush and getting it right on spacing (always) before you really try to run fast. 

  84. 84
    gdr Says:

    thanks RMD. Why do they play so close to the vest re CnF?

  85. 85
    zman Says:

    re 82 – only the usual thought that they are just right over there, in the same county, with much bigger IPs.  But the rock vaires across the county and we've talked with PVA and they don't seem to think they are sitting on that same sweet spot to use a phrase over used today.  Those EOG wells are way on the high end of the range for EOG at likely over 1 mm barrels.  But, at the same time, PVA has come up in terms of early time rates and that's been driving growth faster than many expected.  The PVA call, next week, is going to be highlighting those stacked tests with the Upper and its deeper there than what ROSE was talking about this morning to the southwest and the first of those was intersting after the initial reading so it will be very interesting to see what a couple more look like and what PVA decides to say at that point about location count increases as they move to (maybe) two produceable zones in the EFS over a good chunk of their position.  

  86. 86
    Baylor Says:

    Where can I find who all reports this week?  Sorry z I know you've pointed this out but on my phone can't find it. 

  87. 87
    Dillon Says:

    anyone have a clue what was said on the GDP call? I plan on listening to it tonight when I have a chance and will pass on anything of value I think.

  88. 88
    nrgyman Says:

    RE 85:  Thanks.  Look forward to their call.

  89. 89
    Dillon Says:

    re GDP – stock has a large gap below it that Z mentioned was left behind on the sudden run up. I sold my position higher than here with hesitance and luck and am looking to redeploy long capital lower if things keep moving forward. I'd like to see that gap fill though first.

  90. 90
    Baylor Says:

    Surprising resilience in nat gas pricing. My KOLD trade has been straddling profitability. 

  91. 91
    zman Says:

    re 87 – about to get on the replay of that call, will have notes in a bit. 

    re 86 – no worres, here ya go: http://zmansenergybrain.com/subscriber-data/calendar/

  92. 92
    zman Says:

    re 90 – heat wave holding it up

  93. 93
    elduque Says:

    GDP – new wells are expanding the outline of the TMS. Think that they have solved the problem of going through the rubble. Expect that costs will reach 10 m. costs sometime next year. will have three wells fracked this month. Stock will jump if they get positive results out of them. 

    Go to it Z. 

  94. 94
    zman Says:

    GDP 1Q14 Notes (replay)

    TMS Notes

    – 10 to 15 degree angle change in the lateral has reduced amount of time they are in the rubble zone, allowing the landing in the lower target, then using drillable composite frac plugs, and have not had the casing deformation issues seen earlier.  As always, everyone is sharing to come up with best practices. 

    – expect to have the next 3 wells completed by the end of May 2014 (so look for a June pr)

    – Nunnery will be most northeasterly drilled wells in the play so far

     – Beach Grove will be most southwesterly well using their new design

    map slide 11:  http://www.goodrichpetroleum.com/presentations/MgmtCurrent.pdf

    – will cross 50 wells in the TMS soon with help of industry acceleration

    – reiterating looking at a JV in 2H14 (either an expansion of their current with ECA or by bringing in a new partner)

    – Blades – tweaks made increased BOE per Linear foot.   Saying the results have been consistent and that the variance in wells has been landing zone related. 

    – expect well costs to continue to fall as they shave sput to TD times, then pad drilling on a limited basis beginning soon, moving eventually towards $10 mm CWC. 

    – expect to see other operators with good drill times soon  (HK later this week for one – my comment, not his) 

    – CH Lewis 6,600' lateral with 26 stages, also Nunnery (northeast) and Beach Grove (southwest)

    – further extension to the west being drilled now with the SLC,  Inc well (not all that far from HK's Horeseshoe well which is completing now and which we may hear more about later this week from HK).  

  95. 95
    zman Says:

    GDP 1Q14 Q&A

    Q) on the latest wells, these two are sticking out above prior wells (kind of early in my view but that's fine

    A) the two wells are sub 7,000' laterals (slide 20) so quite strong, they're pleased.  Also noted the tweaked lift helping with the older wells (Andersons), keeping them on track with the 600 MBEO

    Drilling first well off existing pad in the next couple of months off the CH Lewis pad

    Q) JV question

    A) open to how it might be structured, lots of options to do all or part of their postion. Would like to see a handful more of TMS wells completed before they go into the JV process probably starting in July. 

    On a ramp up in production from the TMS – 1 week to frac, 1 week to drill out plugs, 1 week to hit peak production … he's pointing to a 3Q ramp in corporate volumes from this. 

    Q) TMS and Pads

    A) 2015 timing is reasonable.  Will be doing 2 well pads and some 3 pads. 

    Q) NG production – when stabilize

    A) 4Q14.

  96. 96
    elduque Says:

    Z- you sure make some great calls on earnings day. Worth the price of admission. If you just happened on the site today by accident. Get a subscription, it will be the best investment you can make. 

  97. 97
    zman Says:

    Thanks Elduque

  98. 98
    zman Says:

    Analyst Watch:

    OAS – later day move, SunTrust ups target by $7 to $59, stays at Buy. 

  99. 99
    zman Says:

    Have to get on a call will listen to last 30 minutes of the GDP call after the close. Interesting but margin utility of each additional question is falling. 

    After the close we get MTDR and much anticipated ATHL. WPX before the open. 

  100. 100
    Stewart Says:

    Z. do you think GDP has cracked the code on the TMS and does your gut tell you it will work? 

  101. 101
    zman Says:

    re 100 – yeah, probably.  It's the EFS but in MS and LA and a good bit deeper. Delineating extent of the part of the play that it makes sense under the current and project cost regime with prices somewhere in the current ballpark is next and honing (further) completion mix and then spacing and then development mode.  I would not be surprised if it takes long than 2015 to get to $10 mm CWC and I would not be surprised if someone else got there first but since they are all sharing that's fine too. 

  102. 102
    zman Says:

    Beerthirty, back in a bit with MTDR and ATHL. 

  103. 103
    tomdavis12 Says:

    PXD numbers look good. Hope another General leads the troops higher. 

  104. 104
    zman Says:

    MTDR quick view

    Ahead of guidance and Street for oil volumes, light to the Street on total due to shut ins and timing issues for natrual gas wells. 

    In line quarter

    Revenues came in at in at 77.1 vs 77.3 

    EBITDA in line at $56.3 mm vs $56.4 mm

    EPS ex items of $0.30 vs $0.28 Street. 

    Guiding full year up due to oil moving to top end of their range, new EBITDA range for 2014 is above current Street. Estimates will be traveling higher. 

    Details in morning post. 

     

     

  105. 105
    zman Says:

    WPX on the tape selling some Piceance working interests to LGCY for $355 mm plus incentive distribution units.  Well that's one way to monetize without creating an MLP yourself. 

  106. 106
    Dillon Says:

    re 99 – Z, when you said margin utility of each additional question is falling, what exactly do you mean? My first guess is that each question is uncovering less and less value and/or data points?

  107. 107
    zman Says:

    re 106 – yep. Will still listen to the back end of the call but a lot of the questions were pretty rote at about 45 minutes into the call. 

  108. 108
    zman Says:

    WPX – big beat for 1Q14

    Volumes slightly above Street and guidance

    EBITDA of $320 mm vs $260 mm consensus

    EPS of $0.21 vs $0.03 consensus. 

    Oil was higher than expected, Williston and SJB driving. Operational details in the morning post. 

     

  109. 109
    brodway Says:

    re: 108

    wow am i glad i didn't rush to have sold off my position. that is quite a beat on both the revenue and earnings per share side. the new management will have a tall order keeping up with those kind of beats.

  110. 110
    brodway Says:

    NOG sneakily up on the day with very good volume. One day…..

  111. 111
    zman Says:

    Re EIA

    Ha, they revised oil production back up for 2014:

    • EIA estimates U.S. total crude oil production averaged 8.3 million barrels/day (bbl/d) in April 2014, which would be the highest monthly average production since March 1988. U.S. total crude oil production, which averaged 7.4 million bbl/d in 2013, is expected to increase to 8.5 million bbl/d in 2014 and 9.2 million bbl/d in 2015. The 2015 forecast represents the highest annual average level of production since 1972.

Leave a Reply

You must be logged in to post a comment.

Zman’s Energy Brain ~ oil, gas, stocks, etc… is is proudly powered by Wordpress
Navigation Theme by GPS Gazette

s2Member®
%d bloggers like this: