Wednesday Morning

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President Obama spoke on a wide range of topics last night, including energy. See the full text of the speech here. Solar power was mentioned three times, wind twice, and clean coal once. Natural gas scored a big goose egg.  He also asked congress to "send me legislation that places a market-based cap on carbon pollution and drives the production of more renewable energy in America".


In Today's Post:

  1. Holdings Watch - added FSLR and HK calls.
  2. Commodity Watch
  3. Crude Oil Inventory Preview
  4. Earnings Watch - FSLR, HK, XCO, NBR
  5. Other Stuff We Care About Today
  6. Odds & Ends

Holdings Watch: The wiki tab is updated.

  • $10KP - Added (1) FSLR March $140 call (QHBCH) for $8 with the stock at about $126.50. This got executed on the low side of the mid right before consumer confidence came out at the record low 25 with 35 expected. They report after the close tonight with a conference call 30 minutes after the close. The stock has been trying to creep up into earnings this morning and those moves have a way of building if the broader market will cooperate and not tank on the confidence results.

  • $10KP - Added (10) HK March $20 Calls (HKCD) for $0.65 with the stock set to announce before the close. The stock has been beaten up along with the other gassy names, I don’t expect a positive surprise on the numbers as they’ve already spilled the beans on production. Its possible they have further positive well news on the call but I don’t expect anything earth shaking, maybe 2 to 3 good rate Haynesville wells. The continued management of the low price environment, the ability/willingness to stay within cash flow is really what I’m looking for leaving them as one of the increasingly few gassy and growthy mid cap E&Ps out there.

Commodity Watch

Crude oil rallied $1.52 with the broad markets to close at $39.96 yesterday. This morning oil is trading up slightly above $40 again.

  • Super Size of the SPR Rejected - the House of Representatives left out a $205 mm attachment to the latest spending bill that would have doubled the size of the U.S. Strategic Petroleum Reserve from its current 727 mm barrel capacity level. 
  • API Watch: API released the following:
    • Crude: up 341,000 barrels
    • Gasoline: down 898,000 barrels
    • Distillate: down 1.8 mm barrels
  • Iran Watch: Iran began testing its Russian built nuclear reactor today. Israel called for "immediate and very determined steps in order to prevent Iran from becoming a nuclear power."


Natural gas rose $0.14 with crude and the markets to end the day at $4.24 (having traded briefly below $4 yesterday). This feels like a bit of a short squeeze as much as a go along rally with the stocks. This morning gas is trading flat.

Crude Oil Inventory Preview (EIA releases today at 10:30 EST)


  • Crude: Imports remain key. They fell last week to a multi-month low implying either weather related outages (of which I found no evidence) or actual lower movements of crude to the U.S. (something we've been waiting on for a long time) were responsible for the dip. Need to see it continue to bolster crude.
  • Gasoline: the five year average change for gasoline inventories for this week is flat so its not hard to determine where they are coming up with the numbers. The important number here is demand. I think falling production over the next 3 to 4 weeks is a given. But demand had started to recover and then retreated in the face of price. If demand can move side ways then the gasoline inventories are likely to decline pushing them lower against year ago levels and bolstering the case for buying the refining group. Gas demand will also increasingly start to impact crude prices as we approach the driving season (3 months or so from now).
  • Distillates: I have to admit I was pretty skeptical of another decent size draw down on distillate stocks this week having seen a recent lack of response to colder weather in the numbers but the API numbers may be showing a restocking at the dealer level. In any event, demand appears to be teetering and inventories are too high. Any larger than expected drawdown of stocks will be welcome news to the refiners.


Earnings Watch:

FSLR Beats The Street; Sticks Foot In Mouth, Chews Vigorously. Revenue guidance unchanged but cites "difficult industry outlook" which dropped the stock by as much as $25 in the after market.

  • The 4Q Numbers:
    • Revenues of $434 mm vs $410 mm expected (came in just above the high end of the guidance range for the year).
      • Production hit 173.6 MW, up 125% YoY,
    • EPS of $1.61 vs $1.30 expected; up from $1.20 in 3Q08.
      • Gross profit margins eased 2%

  • Bad Contract Potential In 2009. They had previously identified 15 to 20% of their 2009 business that have "financial concerns", they see this as 10 to 15% now so that's an improvement. They said before and reiterated again they are working to put these volumes into the hands of other buyers. Note that these are not bad accounts receivable but instead undelivered product under contract.
  • Guidance:
    • 1Q09 - flat to slightly down
    • 2009 sales were guided to 2 to 2.1. Same now except they are treating $200 mm of it different from an accounting perspective.
    • 2009 production: 1.1 Gw maintained
    • 2009 pricing: not seeing price pressure but may drop prices a bit (won't say how much and probably not a lot of impact in 2009) to open new markets. It will be small reduction in price if at all.
    • Sees operating margin of 33 to 34% of sales.
    • Short term outlook never more difficult
      • Bank lending: 1Q09 marginally improved vs 4Q08 ... but global banking system remains fragile.
      • Equity financing: continuing but less predictable and in some cases more expensive, seeing some investors coming in
      • Pipelines: the previous two make
      • Utilities: spending less on renewable projects
      • States are strapped: so they are worried about them cutting subsidies.
  • Backlog at 3Q was $6.3 billion. They are in the process of signing a number of contracts and opted to not disclose the current backlog until the 3Q call. 
    • Germany talks have revealed strong support will be continued in 2009 and 2010. This is their biggest customer by far.
  • Highlights:
    • $0.98 per watt (this has been a milestone the industry has chased for 20 years). They are the only ones that have reduced costs this low.
    • They continue to see 65 to 70 cents cost per watt by 2010 to 2012. 
    • 2009 production capacity will double to 1GW  (that's like building a nuke each year)
  • Nutshell: Great results, earlier than anticipated move below the $1 per watt cost threshold. Conference call was last night and the stock went on a roller coast ride hitting a high of $142+ on the disclosure of the low coasts before trading as low as $111 when the CEO said they had never faced a more difficult near term environment. And then they kept their guidance flat. I'll watch it to see if the analysts come away emboldened by the results and continued strength of the outlook or threatened by the "scary possibilities of what the global economy might bring".

HK Reports 4Q08; Top Line Beat, Bottom Line Miss; Raising Production Guidance, Costs Remain Low.

  • The 4Q Numbers:
    • Production: 361 MMcfepd was previously announced, up 15% sequentially and 52% YoY, 92% natural gas
    • Revenues of $270.7 vs $226 mm expected. Much of this beat was due to higher than expected marketing revenues (lower margin than oil and gas revenues)
    • Lease Operating Expense (LOE): $0.45 (very low)
    • EPS of ($0.04) vs $0.03 expected (quarter was clouded by the previously announced ceiling test writedown)
    • CFPS of $0.48 vs $0.54 expected
  • Guidance:
    • 1Q09: 400 to 410 MMcfepd (HK had previously stated a 2008 exit rate of 400 MMcfepd).
    • 2009: 422 to 432 MMcfepd, up 40% from 2008's average production of 305 MMcfepd. The last target range given for production was 25 to 35% growth so this is an increase to guidance.
    • LOE seen falling further in 2009; targetting a range of $0.36 to $0.44.
  • Balance Sheet: 41% debt to cap
  • Hedges: About 60% hedged with floors in the mid $7s.
  • Conference Call:  Today, 10:30 am EST.

 CXO Reports Strong 4Q08 Results

  • The 4Q Numbers:
    • Production: 25,000 BOEpd (70% oil coming out of its Permian Basin plays in Tx and NM)
    • Revenues of $119.2 vs $136 mm expected
    • EPS of $1.51 vs $0.31 expected. The variance is due to a large, $206 mm non-hedge derivatives gain, about 80% of which was non cash. This is a good reason to not use EPS to look at E&P companies as this kind of thing is common, especially when you have large swings in commodity prices. It simply does not tell you anything about the health of the business during the quarter. 
  • 2008 CFPS of $4.86 vs $4.61 expected
  • Guidance:
    • Unchanged on the production side: still looking for 36% production growth to 26,575 BOEpd
    • cash component of taxes is going to be higher than expected which will result in lower CFPS estimates.  
  • Nutshell: I've always liked this guys but I don't track them closely. I'll listen to the replay and given them some more thought in the future, tucking them away with names like CRK and WLL where I feel I both need to do a little more work and where I think there isn't a huge rush to jump in. 
  • Conference Call:  9 am EST

NBR Reports Better Than Expected 4Q Results

  • Revenue of $1.48 B vs $1.44 B expected
  • EPS of $0.83 (clean of impairment charge) vs $0.81 expected
  • Guiding 2009 flat to modestly down vs 2008
  • Conference Call: 11 am EST


Other Stuff We Care About Today

Report After The Bell. A Lot of companies are reporting after the bell, please see the Calendar tab for the list. 

Canadian Stock For VTZ - I will look at it today. 

Odds & Ends

Analyst Watch: FSLR: Kaufman cuts from Hold to Sell; FBR cuts target from $120 to $110, Jefferies cuts target from $180 to $170. 


147 Responses to “Wednesday Morning”

  1. 1
    Sambone Says:

    By Lananh Nguyen

    LONDON (Dow Jones)–Crude oil futures were broadly steady in London as traders
    cast their eyes toward the U.S. inventory snapshot later Wednesday.
    At 1253 GMT, the front-month April Brent contract on London’s ICE futures
    exchange was down $0.06 at $42.44 a barrel.
    The front-month April contract on the New York Mercantile Exchange was trading
    $0.31 higher at $40.27 a barrel.
    The ICE’s gasoil contract for March delivery was up $5 at $377.75 a metric
    ton, while Nymex gasoline for March delivery was up 123 points at 109.60 cents
    a gallon.
    Prices remained in a holding pattern as participants awaited weekly petroleum
    stocks data from the U.S. Energy Information Administration, due to be released
    at 1530 GMT.
    Analysts surveyed by Dow Jones Newswires expected U.S. crude oil inventories
    to rise by 1.2 million barrels, while gasoline stocks are seen unchanged and
    distillate supplies are expected to decline by 1.2 million barrels.
    “We would certainly watch out for the total product demand reading, especially
    after the positive improvement…last week,” said Andrey Kryuchenkov, vice
    president of commodities research at VTB Capital in London.
    Crude oil and equity markets Wednesday surged in reaction to comments from
    U.S. officials Tuesday, but later gave back some gains.
    Stock markets were cheered by U.S. Federal Reserve Chairman Ben Bernanke, who
    said Tuesday that nationalization of major U.S. banks isn’t needed to ensure
    their viability.
    Market sentiment was also spurred by U.S. President Barack Obama, who vowed
    Tuesday to use the “full force” of the federal government to make sure that
    major banks can continue lending.
    In the absence of fresh fundamental news, oil markets continued to look toward
    equities as a gauge of sentiment and future oil demand.
    “The correlation between equities’ movements and crude prices remains tight,”
    said Marius Paun, a broker at ODL Securities in London.
    Oil market participants will also focus on the EIA statistics to determine the
    impact of the Organization of Petroleum of Exporting Countries’ output
    rollbacks announced late last year.
    Recent data suggest that OPEC will reduce production in February by 4.3
    million barrels a day versus September, opening the door for further production
    curbs when the group meets on March 15 in Vienna.
    “If they are at good compliance when they meet…the chances are much higher
    for further quota cuts,” said Torbjorn Kjus, oil market analyst at DnB NOR in
    Oslo. “People have seen that they are delivering…(so) the psychological
    effect of a quota cut would be much stronger,” he added.
    In the meantime, prices would likely remain rangebound until it becomes clear
    that a global crude oil overhang has dissipated.
    “For oil prices to stage a lasting recovery, the market needs confirmation
    that commercial inventories will start shrinking in response to OPEC’s
    production cuts,” said Eugen Weinberg of Commerzbank in Frankfurt.
    Despite recent bounces in equities and crude prices, there “is no support for
    oil prices from the demand side,” he added.
    -By Lananh Nguyen, Dow Jones Newswires (Brian Blackstone, Maya Jackson Randall and Henry J. Pulizzi in Washington
    contributed to this report.)

    Dow Jones Newswires
    02-25-09 0813ET

  2. 2
    Sambone Says:

    By Ian Talley

    WASHINGTON (Dow Jones)–The Obama administration is prepared to tap the
    nation’s Strategic Petroleum Reserve should prices become too burdensome on the
    economy, and it’s mulling the creation of a products stockpile, a Department of
    Energy official told Dow Jones Newswires Tuesday.
    The stance is a complete turnaround from the position of the Bush
    administration, which had only tapped the emergency stockpile during severe
    supply shortages and even filled the reserve at a time when crude prices were
    on their way to record highs near $150 a barrel.
    The DOE official also said that for the first time the department is
    considering setting up emergency stockpiles of diesel and gasoline. The federal
    government currently maintains strategic reserves of crude oil and heating oil
    in the Northeast.
    Although oil prices are currently trading at a fraction of last year’s record
    levels due to much weaker global demand as economies struggle, many analysts
    say they could return to historic highs in coming years when economies recover
    and the current restricted investment in new output squeezes markets again.
    “President Obama stated this summer that he recognizes that when Americans are
    suffering as a result of high gas prices, we need to look at the issue
    strategically, and in some cases make the decision to tap the (SPR),” DOE
    spokeswoman Stephanie Mueller said in an e-mail.
    Mueller also said that while the DOE was studying the option of a petroleum
    products stockpile, no decisions have been made.
    As expected, House lawmakers rejected Monday a funding proposal made by the
    Bush administration before Obama took office that would start an expansion
    project to double the size of the SPR from its current capacity of around 727
    million barrels to 1.5 billion barrels.
    The policy debate on tapping the strategic reserve – created in the mid-1970s
    in response to the Arab oil embargo – reached a head last year as prices
    rocketed up at breakneck speed. As consumers saw their gasoline bills multiply,
    the Bush administration refused to tap the SPR in the face of lawmakers’ calls
    to alleviate the price pressure with crude stocks. Congress ultimately
    reprimanded the then-president’s policy to continue to fill the emergency
    reserve at an average rate of around 100,000 barrels a day for months by
    forcing the administration to halt deliveries.
    Sen. Jeff Bingaman, D-N.M., head of the Senate Energy and Natural Resources
    Committee, said at the time that Congress needed to review SPR policy, and many
    experts recommended both tapping the reserve to tame prices and building a
    products stockpile.
    Phil Flynn, an energy analyst at Alaron, said the benefits of a national
    products reserve were highlighted during the past several hurricane seasons
    when refineries were shut down. Major gasoline shortages forced the federal
    government to issue fuel quality waivers, increased reliance on imports and
    helped push prices over $4 a gallon.
    “It would help the economy survive a major hurricane blast,” Flynn said,
    adding that it would also buffer the competition for imports that was seen last
    year when China bid up diesel in its search to meet Olympics-generated demand.
    Flynn said that while the DOE is pushing to site any products stockpile in
    salt caverns along the Gulf Coast where existing crude reserves are stored –
    saying it would be the cheapest option – some lawmakers are lobbying for
    stockpiles in California and Massachusetts.
    “It may end up where the political power base is strongest,” he said in a note
    to clients.
    One of the weaknesses exposed during the 2006 Alaska supply disruption – when
    the country’s largest oil field was shut down after a major pipeline leak – was
    there were fewer refining options for the West Coast than the rest of the lower
    48 states.
    A report last year by the James A. Baker Institute for Public Policy at Rice
    University said that the Bush administration has weakened the leverage that
    could have been gained from a more flexible management of the stockpile by only
    using strategic stocks under a narrow range of emergency circumstances.
    Amy Myers Jaffe, an author of the Rice University report, told Congress last
    year that besides increasing supply to the market, releasing oil from the
    reserve would also force out some speculation in the futures market.

    -By Ian Talley, Dow Jones Newswires

    Dow Jones Newswires
    02-25-09 0737ET

  3. 3
    BirdsofpreyRcool Says:

    Fertilizer sector still cheap, it seems. AGU launching hostile bid for CF. Should boost TRA too.

  4. 4
    BirdsofpreyRcool Says:

    Technical Traders Guide to the Universe… for Today —

    Same game plan as yesterday. Slightly worse odds of it being correct.

    Similar hard to trade color pattern. Go Long on the morning pullback, usually early, and which may not amount to much, for a rally up through lunch and into the afternoon and last hour. Look for a few points with less than average odds of 55/45. Be sure to tighten stops after any rally in the morning and especially after 11:50 and 12:10. Tighten again at lunch at 1:40. And in the afternoon at 2:35 pushing long positions into the last hour

  5. 5
    elduque Says:

    BDI -50 1960

    Slipping again.

  6. 6
    elduque Says:

    Do you think the reaction with FSLR is over done?

  7. 7
    BirdsofpreyRcool Says:

    Further deets — AGU’s bid for CF is conditioned on CF terminating their bid for TRA.

  8. 8
    Dman Says:

    (oops, posted this on yesterdays thread. Here it is again)

    Z – in case I missed it, has there been any impairment news on WLL or the other little guys? (aside from PQ, which you wrote up a week or so ago)

  9. 9
    BirdsofpreyRcool Says:

    Credit Market Update —

    Investment Grade index just a little weaker than yesterday’s close. Ditto for High Yield. Feels like Credit will take it’s cue from stocks today.

    IG 217 +1 bps

    HY 73.25 -0.125

  10. 10
    zman Says:

    Dman – WLL’s was a very small write down.

    Eld – I think so yes, they said difficult environment and the shares tanked. Then they went on to say that after talks with the Germans who represent between 60 and 70% of sales things look to be solid for the next 2 years. They also have their bad contracts down from last quarter and those volumes are well on the way to being places elsewhere.

  11. 11
    zman Says:

    Eld – I plan to daytrade it today

  12. 12
    zman Says:

    CNBC just said FSLR’s guidance was weak. Simply not true. Guidance was maintained. Those CNBS guys are dangerous for their lack of attention to details/accuracy etc.

  13. 13
    zman Says:

    HK reacting favorably so far to the upped guidance. There was no ops update with the release as they just had one in early Feb. I would expect them to go over their plans by regions and also to have a little well news on the call in one hour.

  14. 14
    zman Says:

    ZTRADE: Added (3) FSLR $135 March Calls (QHBCG) for $3.20 with the stock at $116. See today’s post on my thoughts to the market’s over reaction to statements made during the conference call.

  15. 15
    zman Says:

    I missed this in the HK press release this morning:

    “Additionally, Petrohawk increased its estimated ultimate recovery (EUR) in the Haynesville Shale to 7.5 Bcfe per well and confirmed the hyperbolic nature of its Haynesville Shale well production. The estimate is based on performance data from its first fourteen completed wells and excludes data from two previously reported wells with mechanical issues. The graph below is a time-zero production plot from these wells, which were all completed and put into sales according to common production practices. The increased EUR estimate increases Petrohawk’s total resource potential in the Haynesville Shale to 13.7 Tcfe.”

    It’s good to see them having the confidence to step up and take the EUR for the Haynesville wells higher. Has positive implications for other HS players, CHK, GMXR, GDP etc.

  16. 16
    BirdsofpreyRcool Says:

    Fertilizer Deal Becomes Bizarre Love Triangle
    By Heidi N. Moore

    When looking for hints on how a merger will turn out, never rule out the arbitragers.

    Arbitragers are investors who bet on whether mergers that are announced will actually go on to completion. And, ever since fertilizer maker CF Industries announced its unsolicited $2 billion takeover offer for Terra Industries, arbs were convinced that another bidder would show up for either CF or Terra. The deal’s stakes were high — at least in the fertilizer industry — where the CF and Terra would have such high market share that some analysts were concerned it would trigger an antitrust review.

    One person familiar with CF’s plans rejected the possibility of another bidder repeatedly. But, today, the arbs were vindicated as Agrium announced a $72 a share offer for CF.

    The bid turned a staid fertilizer deal into a fascinating love triangle. Agrium CEO Mike Wilson urged CF to drop Terra: “We expect to achieve significant operating synergies – well in excess of those contemplated in CF’s proposal to acquire Terra Industries Inc. – and expect the combination to provide many benefits to the customers, suppliers, and employees of both Agrium and CF, as well as the communities in which both companies operate.”

    For CF, any other offer is a complication for its own hostile offer for Terra, which has been running like clockwork so far. The offer for Terra was cheered by the markets and on Monday CF officially launched its tender offer — along with a plan to place representatives on Terra’s board.

    The next negotiation hurdle for CF and Terra would be the price. Terra and some analysts that cover the company believe that CF’s bid is too low.

    CF made an all-stock offer for Terra. Investors have pushed CF’s shares so high that its bid is now worth $23.60 a share, a 49% premium to Terra’s 30-day stock price.

    On Jan. 16, CF’s bid was worth just $20.51 a share, a 34% premium to Terra’s average price.

    Oppenheimer analyst Joseph Gomes estimated, however that CF should be prepared to pay two to four times its current offer for Terra. He estimated that the appropriate price would be anywhere between $3.65 billion to $9.1 billion.

    Gomes’s estimates were based on recent comparable deals: Mosaic’s sale of its Mosaic nitrogen fertilizer business, Saskferco Products, to Yara International for $1.6 billion and Agrium’s purchase of UAP Holdings, a deal that completed in 2008. According to Gomes’s analysis, the Mosaic deal implied a value for Saskferco at an enterprise value-to-earnings before interest, taxes, depreciation and amortization of 7.9 times. Using the same valuation for Terra, CF should be paying anywhere between $7.3 billion to $9.1 billion for Terra. “Even if we discount the multiples by 50%, this still suggests a fair value for Terra of $3.65B-$4.55B, substantially in excess of the $2.0B value of CF’s proposal,” Gomes wrote earlier this month.

    The UAP deal, similarly, implied a value of 12 times EV/EBITDA, which would imply Terra’s value at around $3.3 billion, according to Gomes.

    But all is not lost. While Terra rejected CF’s offer as too low, CF chairman and CEO Stephen Wilson responded that perhaps there was room for negotiation:

    “Our conversations with our stockholders (who significantly overlap with your stockholders) also lead us to believe that we have no reason to consider changing the terms. However, we have communicated to you that we are prepared to review any information you can provide us that you believe justifies a change in terms, and we are prepared to keep an open mind in that regard.”

  17. 17
    1520sbroad Says:

    z- are you planning to listen/provide ongoing notes to HK call? I was encouraged by their release – particularly their low cost outlook. I guess that comment from some conference a while back from Floyd about “If things get really shi–y” might be true.

  18. 18
    zman Says:


    Absolutely will be on the call. The stock was restrained yesterday awaiting results. Today it would be up more than its 5% pop if the market would play along.

  19. 19
    BirdsofpreyRcool Says:

    Existing Home Sales unexpectedly fell, -5.3% MoM. Were expected to rise, 1.1%

  20. 20
    zman Says:

    Gotta wonder why anyone thought they would rise at all.

  21. 21
    BirdsofpreyRcool Says:

    This is consistant with Mortgage Applications, reported early this morning. They were down -15.1% for the Feb 20 reporting period. Last month, mortgage applications were up 45.7%.

    Amazing volatility. Amazing uncertainty. IMHO, the injection of the Govt (GGG) into the home-buying process has got the private sector pulling back. Not good.

  22. 22
    gaamblor Says:

    Z, sane said API distillate UP 1.8 yesterday do you have a typo or different data?

  23. 23
    BirdsofpreyRcool Says:

    z — mortgage applications were up, a lot, last month. I should mention, this includes re-fi’s as well as home sales.

    There IS an appetite to buy houses at the right level. We saw that last month in Calif… but, with all the “stuff” flying around Washington now, people just are in “wait-and-see” mode. Like the commercial property auction you mentioned yesterday… or Monday. With the Govt in the room, no one else is bidding.

  24. 24
    elduque Says:

    Is Timmy speaking today and at what time.

    Thank you

  25. 25
    zman Says:

    Gaamblor – It a typo in my piece and makes a lot more sense for my ZComment.

    BOP – I don’t see a lot of homes being sold, but I can’t get a call back from my mortgage broker because he’s so busy doing refi’s. The right level seems to be far below what the last round of re-fis were appraised at, at least in my neck of the woods.

  26. 26
    zman Says:


    I know Ben is about to speak to the House, Barnie Frank is railing about something now. Will look around for a Timmy tee time.

  27. 27
    BirdsofpreyRcool Says:

    No TIMMEH… just Ben-redux

    Catalysts to watch: Bernanke will testify to the House today @ 10amET; his written text should be the same as yesterday (when he spoke to the Senate), although the Q&A could bring incremental headlines (it was the Q&A yesterday that sparked a rally in stocks). The bank “stress tests” are due to kick off today, although its not clear if Treasury will disclose information to investors (i.e. what are the specific parameters banks will be subjected to, how long will the tests take, will the results of the tests be made public, etc).

  28. 28
    zman Says:

    All about Geithner:


    I see no mention of when he will speak

  29. 29
    Dman Says:

    HK winning the E&P show.

    ALY winning the service show (up to $2.05 !!)

  30. 30
    zman Says:

    Dman – you saw the CEO was selling shares yesterday at Allis? I probably should have punted my HK shares when Floyd did in the $20s and waited for him to start buying again.

    By the way, my least favorite thing in the world is a quarterly beat followed by an after hours retreat. There were some very positive things in the release and in the supplemental info from FSLR. There is obviously some split in the opinions here as you have Kaufman saying Sell and you have Jefco saying $170 price target. The CEO is a conservative guy. He scared the market when it was essentially asleep – after market volumes are light so they are subject to big swings. So the market hits the reset button $20 lower in the morning and then we have a weak market day sending it off another $6 which is a typical move on a down day. If the analysts were in another industry, looking at the YoY growth, they wouldn’t be tempted to give a Sell opinion.

  31. 31
    zman Says:

    Crude Inventory

    oil up 0.7 mm barrels
    gasoline fell by 3.4
    distillate up by 0.8

    that’s fairly bullish all around …

  32. 32
    zman Says:

    Crude imports were 8.8 mm bopd, remaining low for a second week. Could be sign that OPEC cuts are finally impacting U.S. numbers.

    Gasoline demand ticked back up to 9 mm bpd, not bad, just about holding the line there the last 4 weeks.

  33. 33
    zman Says:

    Refinery utilization fell to its lowest level for this time of year as the maintenance season goes on longer than normal. This is good for refiners.

    Gasoline up 4% post numbers.

    HK conference call about to start, running late as they add participants

  34. 34
    elduque Says:

    Where do you find the Cushing data on report?

    Thank you

  35. 35
    zman Says:

    HK Conference Call

    Borrowing base was reconfirmed at same level under same terms.

    Eld – its about half way down the special file (http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/weekly_petroleum_status_report/current/txt/wpsr.txt),

    Cushing fell 400,000 barrels to 34.5 mm barrels, you could open a search window in the page for Cushing to get it quick.

  36. 36
    zman Says:

    HK CC #2

    Haynesville development will lower LOE, this is the lower guidance I refer to in the post.

    Target goes from mid point 30% to 40% growth, they are doing this with the same capital budget.

    Says the EURs are remarkably consistent which is what gave them the confidence to go to 7.5 Bcfe.

  37. 37
    benbobby Says:

    Zman,what was the utilization percentage?tks

  38. 38
    zman Says:

    HK CC #3

    Comment on the high yield deal. Used $535mm to pay off all of the borrowings on the revolver. So they have $950 mm available.

    Impairment comment: net cap was 38%

  39. 39
    zman Says:

    Utilization was 81.4%, hasn’t been that low since recovery from Gustav Ike. 5 year average for this week is closer to 87%

  40. 40
    zman Says:

    HK CC #4

    Floyd comments:

    “we’re excited, I know its a strange time to be upbeat”

    Gotta like the enthusiasm, going directly to Q&A.

  41. 41
    Dman Says:

    Z – er… what does “net cap was 38%” mean?

  42. 42
    BirdsofpreyRcool Says:

    HK — excellent comments re: hedges. Important to have hedged farther out when you have 38% net debt to total capital. Makes common sense.

  43. 43
    zman Says:

    HK Q&A

    Joe Allamn – JPM? Talking about the EUR 7.5 Bcfe.

    There will be variability, this is the answer so far, it comes from the small set of publicly released wells they’ve drilled but stretches over a broad area over many miles both in the Elm Grove area and outside of it.

    When do you reduce capex: Not until they see a three year gas strip around $4.

    UBS? Reserve growth seen as very consistent with production growth and they think it will be that way again this year … so that implies 40% boost in proved reserves.

  44. 44
    zman Says:

    Net debt to total cap of 38%, sorry listening and typing fast. Just strips the cash out of the calc. Debt to total cap was 41%.

  45. 45
    BirdsofpreyRcool Says:

    see bids in the Street for BAC bonds… no offers, just bids. Short maturity bonds, tho.

  46. 46
    zman Says:

    HK Q&A #2

    Tudor Pickering?

    Capital budget question: how much is to hold acreage in the Haynesville. Answer: good percentage is to hold acreage, probably 75% … I think I recall their spend there this year is $700 mm

    At $4 gas they make money in the Haynesville wells.

    They will drill 70 to 80 wells out of 1,000s of potential locations (so they are cherry picking their Haynesville targets in this low $ gas price environment).


  47. 47
    Dman Says:

    Just saw a comment by Ryan Krueger (Minyanville) that India’s cooking oil imports last month were up 87% YoY.

    Any of our E&P’s finding cooking oil? Canola futures anyone?

  48. 48
    zman Says:

    HK Q&A #3

    FBR ? – Cost front

    mud, pumping, tubulars 15 to 30% down in price from 2 to 3 months ago. See costs down by a “significant” amount but don’t want to throw out a number yet. Translation, lower F&D. Second iteration of translation. If we don’t have much lower gas prices we won’t have a second set of ceiling test writedowns that cloud the F&D, especially with the new, kinder, gentler SEC reserve calc rules.

  49. 49
    zman Says:

    Dman – probably because the ethanol industry has shuttered and rejected so much corn.

  50. 50
    BirdsofpreyRcool Says:

    HK — good acreage position, good rocks (geology), know how to complete. No tectonics to mess with this… so, just an engineering project at this point. Low risk hydrocarbons. Wow.

  51. 51
    zman Says:

    HK Q&A #4

    RBC – Leo M. – Current Well Costs: $10 mm or a little more (little more science in these wells, that’s a little higher than I thought)

    Boardwalk pipeline not flowing fully to its ultimate destination…could be a little cloud for SWN’s 1Q before that gets cleared up.

    Haynesville differentials – see slight premium to Nymex (1 to 3%) as they plan to move all their H.S. volumes to the east.

    Off-structure wells from Elm Grove doing very well, good rock, good completions. That 28 MMcfepd well announced a couple of months ago was off Elm Grove.

    Timberlands well – further south. Taking a look at the Bossier there but just perf the Haynesville. Could be a good chance to commingle here.

  52. 52
    zman Says:

    HK Q&A #5

    Jefferies ? – Production by area – don’t have it for now, most money goes to H.S., puts the rest obviously on decline.

    Haynesville – core acreage – all of their 300,000 acres are what you’d call core. I’ve discounted their acreage by a third to a half in my previous acreage X EUR calcs. As they have drilled along a long mileage line of the play they reducing the need to discount the acreage so much.

  53. 53
    zman Says:

    If market comes back to even on the day HK will top $19.

  54. 54
    zman Says:

    I should add the word likely to the above statement. Call going very well.

  55. 55
    BirdsofpreyRcool Says:

    FWIW, Head Trader thinks mrkt goes higher by EOD.

  56. 56
    zman Says:

    HK Q&A #6

    SEC Rule Change question: don’t yet know how it will be implied. (Nothing final yet, hey look, someone else waiting on the government to get its ….. together)

    Eagle Ford Shale: fracced 3rd well, ver encouraged, drilling 4th well now, bringing in second rig late 1Q. This is a change, adding the rig

  57. 57
    BirdsofpreyRcool Says:

    Caveat — “higher” assumes no negative headlines come out of the House Financial Services Committee grilling of Ben.

  58. 58
    BirdsofpreyRcool Says:

    good engineering question — higher EUR b/c longer laterals? or better completion?

  59. 59
    zman Says:

    Thanks BOP, appreciate that.

    The HK call going pretty darn well.

    HK Q&A #7

    Won’t let short term thinking drive the early stages of a multi-decade development. They are hedging like crazy where appropriate.

    The plot in the press release is for the wells drilled to date. So the 7.5 Bcfe number is based on those wells. Longer laterals would likely mean bigger wells.

    Lateral length: 4,500 foot lateral with 15 frac stages is still the current design.

  60. 60
    BirdsofpreyRcool Says:

    4,600 ft lateral with 15 fracs = no reason to change this. it works.

  61. 61
    BirdsofpreyRcool Says:

    both “4,500” and “4,600” were thrown out there. so, both right.

  62. 62
    zman Says:

    Circling back to 59, the laterals in the included set of wells were not all that long. So as they go forward think bigger.

  63. 63
    Sambone Says:

    By Brian Baskin

    NEW YORK (Dow Jones)–Crude oil futures traded higher Wednesday, but an
    initial rally on oil and product inventory data fizzled as falling equities
    rekindled concerns about the economy.
    Light, sweet crude for April delivery traded 24 cents, or 0.6%, higher at
    $40.20 a barrel on the New York Mercantile Exchange. April Brent crude on the
    ICE futures exchange traded 25 cents lower at $42.25 a barrel.
    Oil inventories at Cushing, Okla., fell 400,000 barrels from a record 34.9
    million barrels in the week ended Feb. 20, according to the U.S. Energy
    Information Administration. The draw indicated oil supplies are tightening
    after a steady rise that lasted nearly two months.
    Crude stockpiles rose nationwide by 700,000 barrels, though the gains were
    primarily in the West Coast, a market geographically isolated from the rest of
    the country. Analysts had given an average forecast of a 1.2 million-barrel
    build in a Dow Jones survey.
    Oil stocks fell despite a drop in refinery utilization to 81.4%, one of the
    lowest rates on record outside of hurricane season. Gasoline inventories also
    fell by 3.4 million barrels, where analysts had seen stocks unchanged, as
    demand rose by 1.7% from a year earlier. Distillate inventories, including
    heating oil and diesel, rose by 800,000 barrels, where analysts had anticipated
    a 1.2 million-barrel drop.
    But a steep drop in U.S. equities halted an initial rally on the inventory
    data. Declines in share indexes pointed to further economic turmoil down the
    road, which would potentially prevent oil demand from recovering. The Dow Jones
    Industrial Average was recently down 2.6% at 7,159.
    “The rally faltering … has a lot to do with the U.S. stock markets,” said
    Mike Zarembski, senior commodities analyst at optionsXpress, a brokerage in
    Chicago. “Crude oil was a bit higher yesterday with the turnaround in equities,
    and today’s declines are putting a damper on what normally would be fairly
    bullish (inventory data).”
    Front-month March reformulated gasoline blendstock, or RBOB, recently traded
    up 2.90 cents, or 2.7%, at $1.1127 a gallon. March heating oil traded 1.84
    cents, or 1.5%, lower at $1.1898 a gallon.

    -By Brian Baskin, Dow Jones Newswires
    Dow Jones Newswires
    02-25-09 1053ET

  64. 64
    BirdsofpreyRcool Says:

    little engineering joke… fell flat on the analyst…

    “the more hydrocarbons come out of the earth, the more money we will make.”

  65. 65
    zman Says:

    BOP – that’s the kind of glib stuff we hate to hear, just not helpful. Plus, the guy mumbled it which blows the joke’s rimshot punch.

  66. 66
    BirdsofpreyRcool Says:

    HK — this conf call explains why PetroHawk trades at a premium to its peer group. They really have made a great effort to cross Ts and dot Is… all the way down to thinking about where to sell the nat gas, for the highest basis differential.

    excellent business operators overlaying excellent engineering/geology. don’t find that very often in this biz.

  67. 67
    zman Says:

    FLSR – hmmmm

    HK looking to take a look at $19 soon. Again, very good guidance, call.

    BOP – I can think of about a dozen managements out of 100+ tickers in E&P I keep half an eye on.

  68. 68
    zman Says:

    re 67 and half of them are much bigger companies.

  69. 69
    BirdsofpreyRcool Says:

    z – yep. About 1 in 10… same odds as a wildcat being productive… in the old “structural” days, at least.

  70. 70
    BirdsofpreyRcool Says:

    z — great point about “larger.” Even more unusual in a company the size of HK.

  71. 71
    BirdsofpreyRcool Says:

    “very comfortable with pumping resin”… uh, oh, CRR…

  72. 72
    zman Says:

    They just said mostly resin coated sand, very little ceramic, no reason to pay for it. Wyoming’s thoughts exactly. Should be a knock on CRR at some point.

  73. 73
    zman Says:

    The reason to not run out and just buy puts on CRR or short it is their recent guidance of maxed out capacity…somebody likes the stuff as they keep growing the volumes … will do a little more research here.

    RCS long term risk question: They don’t see risk long term, from a pressure. Very comfortable with the RCS.

  74. 74
    zman Says:

    HK Q&A #8

    Chokeback pilot = abandoned. No reason to restrict the wells and flow them back slower to see if you get a higher ultimate recovery.

    This is probably a good piece of the ability to increase guidance without capex if you think about it.

  75. 75
    BirdsofpreyRcool Says:

    good geology questions…

  76. 76
    BirdsofpreyRcool Says:

    can’t shake these guys from their position that they beleive their acreage is underlain by “good rocks.” don’t need to drill in the thickest area of the shale formation.

  77. 77
    zman Says:

    BOP – from what I’ve seen on logs from a couple of other guys down here, the really thick wells have not correlated to a bigger IP or EUR. Some in the 450 foot thickness range I saw with IPs just over 10 MMcfepd with similar lateral length, fracs, choke size. So I’d agree with them, could be higher gas concentration in what they’ve drilled. That thicker stuff was over in E. Tx.

  78. 78
    zman Says:

    HK Q&A #10

    Rig dayrates are not quite off 50% from high.


  79. 79
    BirdsofpreyRcool Says:

    Both POTUS and Ben on CNBC at once… sound bite overload.

  80. 80
    BirdsofpreyRcool Says:

    z — i know you hate the banks (who doesn’t?)… but watch BAC. It will tell you which way the mrkt will close today. So far, trying to rally off the morning low.

    HK at $19 just doesn’t seem like much of a stretch today.

  81. 81
    zman Says:

    I don’t hate banks, I just don’t understand them. And I don’t understand those who invest in them. I do watch the XLF for signs of a turn however and will add BAC to my very small screen devoted to things not energy like Gold, the major indexes, etc.

  82. 82
    BirdsofpreyRcool Says:

    Ben on “anti-nationalization” of the banks… they do NOT want to “zero out” the private shareholders.

  83. 83
    BirdsofpreyRcool Says:

    z — sorry. Bit of hyperbole. Didn’t say it with a straight face… but, guess you didn’t see that part.

  84. 84
    zman Says:

    BOP – good going over the HK call with you. If I could have cloned myself would have listened to KWK which I have not looked at yet on the quarter and NBR which started 30 minutes later and looks to have gone well. Big rig tender out of Mexico is probably not hurting NBR either.

  85. 85
    zman Says:

    The internet can be very flat. Never apologize.

    Man that DJ writer Sam quoted missed the market on the oil price fizzle.

  86. 86
    zman Says:

    Kind of weird for a second day in a row to have Ben “save the market”.

  87. 87
    BirdsofpreyRcool Says:

    Ben is now the “one-eyed man”…

  88. 88
    BirdsofpreyRcool Says:

    … ie. it’s all “relative,” isn’t it.

  89. 89
    Dman Says:

    #85 that would be why he’s still a DJ writer, I guess

  90. 90
    zman Says:

    HK tops $19, I’ll send myself a hat.

    Is Ben saying anything interesting, the market got happy then requeezified?

  91. 91
    BirdsofpreyRcool Says:

    Ben is staying that they (the GGG) don’t want to nationalize Citi… that got the Animal Spirit’s attention.

  92. 92
    zman Says:

    Thanks Dman – I guess its a tough job reporting the news, as it stands, at that minute.

  93. 93
    choices Says:

    z-did you get any sense from the HK CC that they may need to raise cash at some point which would lead to a secondary?


  94. 94
    zman Says:

    Choices – That is an excellent question.

    The short answer is NO.

    The long answer is:

    1) they did the $600 mm senior ($535 mm net proceeds) a few weeks back to pay off the revolver.

    2) the revolver was $1.1 billion prior to the deal and was set at $950 post deal. Adding the senior debt reduces what people will let you borrow on a credit line. Note that it was not a dollar for dollar reduction. They added $600 mm senior but only saw the revolver shrink by $150.

    3) the revolver was up for redetermination in April but they went ahead and asked it be redetermined now, at the $950 level and it was approved at that level. That speaks to their claims on reserves.

    4) So, as far as we know, right now, they have $950 mm of borrowing capacity on the revolver.

    5) So with nothing to pay down on a credit line and no ability to swap high cost debt for lower cost debt due to the markets there is little need for more debt issuance just now.

    6) They plan to drill more wells for less $ as service costs come down but will stick to the overall previously released budget with about $700 mm going to the Haynesville.

    7) on the stock side, that could be another story. They NEVER hint about a stock deal because you do one after running the stock up on good news and doing so will preclude that run up.

    8) my sense is that they put out the very openly disclosed and a little bit hyped by management operations update in early April and then we get a secondary, or not, but not before.

    9) It’s going to depend a lot on where the stock is in early April. If its above $25 I’d say you have above a 50% chance of them floating 20 mm shares out the door. Note that its not impossible to get equity done as WLL proved the other day.

  95. 95
    choices Says:

    That nails the question, Z.

    thanks again.

  96. 96
    zman Says:

    Good. I’ll post the HK stuff with the notes from the Conference call a little cleaned up sometime after the close and will put it on the reports page. If you guys don’t use the reports page you are missing out. Wealth of information over there.

  97. 97
    zman Says:

    OT: Word to the wise, never purchase or gift anything made by Danby.

  98. 98
    BirdsofpreyRcool Says:

    Off-topic… but, great macro/global info. Debunks a lot of myths about Emerging Markets, poverty, income, health distributions that are hold-overs from the 1960s.


  99. 99
    elduque Says:

    Has anybody heard anything about GMXR. Underperfoming????

  100. 100
    ram Says:


  101. 101
    zman Says:

    El-d. I don’t see anything to warrant what has been such a bad period for them. I’ll dig a little more, have not seen when they report.

  102. 102
    zman Says:

    yep, they make wine fridges…that hold a nice 83 degrees.

  103. 103
    ram Says:

    ZMAN you need to keep the wines stored at 55 – 60 deg f. not 83.

  104. 104
    zman Says:

    That’s what the repair guy said. Told me it a refrigerator and it should be cooler than that. My response: really, thanks? I evacuated it before anything got cooked.

  105. 105
    BirdsofpreyRcool Says:

    z — you’re right… the internet is devoid of sarcasm.

  106. 106
    BirdsofpreyRcool Says:

    Head Trader still holding to his “higher close” call.

    z — re: HK… you got your hat!

  107. 107
    BirdsofpreyRcool Says:

    Reading that there is HF rotation into the energy sector. Watching the HK soar, I believe it.

  108. 108
    Garyinhou Says:

    Afternoon comrades…

    Z.. just emailed 3 new subsea positions I’m working..

  109. 109
    BirdsofpreyRcool Says:

    follow up to 106 — it’s not an “across-the-board” move into energy. It’s picking and chosing. Plain-vanilla funds continue to sell the services sector (seems somewhat late to me, but, oh well). HFs shorting some E&Ps with weak earnings. But, appear to be buying stronger names.

  110. 110
    zman Says:

    Gary, I’ve added them to last week’s wrap:


  111. 111
    Garyinhou Says:


    Z – with clr’s upcoming earnings and the bakken economics.. might they suffer a 7-10% hickey like whiting??

  112. 112
    zman Says:

    Yep, easily. I may buy those unhedged dude post release though.

  113. 113
    Garyinhou Says:

    Z -.. on the flip side.. what could happen that might send them up 10% ?

    I’m long and may want to write some calls

  114. 114
    BirdsofpreyRcool Says:

    BAC CEO on BTV making some pretty stong, positive statements… like “Revenues will be north of $100B this year” and “Merrill and Countrywide are ‘stars’ “…. of course, revenues and book values are two very different things.

    But, without revenues, you don’t have anything.

  115. 115
    BirdsofpreyRcool Says:

    TIMMEH… on the other end of the spectrum… is doing his best to kill the private banking sector. His new plan to to “require weak banks to raise equity capital within 6 months.” What if they can’t? We already know this Treasury can’t keep it’s own rule straight… who believes anything they say now? Just more confusion, thrown on the fire…

    U.S. Sets a 6-Month Deadline for New Bank Capital (Update1)
    2009-02-25 19:06:09.3 GMT

    By Rebecca Christie and Robert Schmidt
    Feb. 25 (Bloomberg) — Regulators set a six-month deadline for the biggest 19 U.S. banks to raise any new capital deemed necessary after a review of their balance sheets.
    The regulators will complete their so-called stress tests by the end of next month, the Treasury said in a statement in Washington.
    “While the vast majority of U.S. banking organizations have capital in excess of the amounts required to be considered well capitalized, the uncertain economic environment has eroded confidence in the amount and quality of capital held by some,”
    the Treasury said, announcing guidelines for new bank reviews.
    The Treasury said banks will have a choice of raising private capital or accepting taxpayer funds from the Treasury.
    Any new government money will come in the form of convertible preferred securities, which would acquire voting rights if converted into common stock.
    The Treasury said it would release guidelines on how it will handle those voting rights before completing any transactions. The shares would convert either at a bank’s request or at the end of a seven-year period.

  116. 116
    BirdsofpreyRcool Says:

    A wise follower of this board, who doesn’t post, thinks the Treasury’s new plan is to secretly short bank stocks to balance the budget.

    To which i say, “Good Job, Timmy!!” You’re off to a great start to that plan already!!

  117. 117
    zman Says:

    RE CLR 10% pop potential

    1) oil higher would be #1, 10% pretty easy on that.
    2) a 1,500 bopd IP in the Three Forks Sanish and more talk about the extent of TFS under their acreage. I know they are going to talk about it, just don’t know how much and how positive they are. Wondering if they can drill a middle Bakken and in a highly vertically faulted area also drain the underlying TFS in the same borehole. That would be a nice trick and I know they are getting tricky some of their wells now.
    3) that they actually take on a big slug of hedges in 2010. I won’t believe it until I read it and I bet they won’t but the strip is still decent
    4) dropping activity to 0 rigs in the Woodford would help.
    5) a farmout to a bigger player in either the Bakken or the Woodford.

  118. 118
    zman Says:

    Natural gas getting drilled. Hmmm.

  119. 119
    zman Says:

    Tater – when you see this would you mind taking a stab at FSLR post the fall? Thanks.

  120. 120
    Garyinhou Says:

    Thanks Z

  121. 121
    zman Says:

    Wow KWK. Did not listen at it overlapped. Up 18%. Need to check and see if this prominent Barnett Shale producer’s comments are what is hurting natural gas today.

  122. 122
    elduque Says:

    Second day in a row that Crude has finished the day near the high.

  123. 123
    Sambone Says:

    BOP #113 – Isn’t that what Steel said on Cramer, just before WB became WFC? Article today in the Charlotte “O” from Hugh McCall saying “KL is their man, if he can’t do it, nobody can”. Take anything these bankers say with a grain of salt.

  124. 124
    zman Says:

    Eld – yep, lack of imports may mean OPEC cuts are starting to have an impact. If we get another fall in imports and lower than expected build in crude next week we probably get $45 and then sideways with some volatility around the OPEC rumor mill March 15 meeting.

  125. 125
    zman Says:

    The XLF has gone even, DJIA off 40, S&P off 4

    Oil up $2.76 on the day now at $42.70

  126. 126
    choices Says:

    Whatever BAC CEO said, BAC up now 12%

  127. 127
    BirdsofpreyRcool Says:

    Sam #122. Agreed.

    Funny thing about banking, tho… once you lose your reputation and the confidence of your depositors, you have nothing left. So, they sort of have to walk a thin line between not sounding like they are in trouble, while at the same time dealing with reality. In the final analysis, the entire Financial Market is built around “confidence.” So, unless we can get past questioning the honesty of EVERYthing, we have no real market.

    At the end of the day, as investors, we only really know what a company is willing to tell us. That, and some due diligence, where we can. But, what we know as investors is, at the most, just the tip of the iceberg of what is really going on.

    Of course, those CEOs (and govt officials) who come out and actually SAY things, have to live up to them. So, I definitely get where you’re coming from.

  128. 128
    choices Says:

    This casino is insane, stks and mkt driven by sound bites.

  129. 129
    elduque Says:

    BOP Trader still think we end up at the HOD???

  130. 130
    choices Says:

    Gold futures hammered today, down below alleged support at $950

  131. 131
    zman Says:


    $10KP – Added (10) LINE March $15 Calls (QGJCC) for $0.40 (bid was $0.30 x ask of $0.45) with the stock at $14.20 and earnings tomorrow.

  132. 132
    BirdsofpreyRcool Says:

    elduque — he confirmed it about an hour ago. I don’t think he has changed his mind.

    That said, it’s an imperfect “science” at best, in these headline driven days.

    If you bought something, and it’s up, and you’re worried, sell it. No shame in taking profits!

  133. 133
    zman Says:

    Choices – I was speaking with a good friend, long time sellside both stocks and bonds yesterday and he agrees, this market is not investable but is tradeable. It’s become occasionally reactive to news like the HK today but it lacks anything but short term memory. I said, if you were an equity fund manager and had the big inflows of cash we saw in January would you be buying stocks. We both said a resounding no together. Is it tradeable? Yes, if you’re fast. This will pass but it’s where we are now.

  134. 134
    choices Says:

    understand, Z. need to work on my speed (and patience).

  135. 135
    reefguy Says:

    KWK cc: have 90-100 barnett wells drilled and cased, waiting on frac. Using it as rolling inventory to keep production flat in 2009 or 2010 by not drilling new wells and just completing what they have.

  136. 136
    BirdsofpreyRcool Says:

    reefguy — talking to an old-timer, e&p sellsider a few ago… he thought KWK move today was mainly short-covering. I didn’t listen to the conf call. Does that statement make any sense to you?

  137. 137
    reefguy Says:

    Yes, given that they are hedged well into 2010, can stop drilling and complete what they have to keep volumes flat through 2010.

  138. 138
    zman Says:

    Thanks for the color there. That kind of thing might make me want to cover but not really go long. The analysts will soon move from low capex, maintenance program to “hey, you’re missing out on the cheap rigs, service cost reductions…you just spent money drilling at the higher rates and now your going to trickle out the production…seems a little backwards” .

  139. 139
    zman Says:

    GDP reports for tomorrow; not going to play.

  140. 140
    BirdsofpreyRcool Says:

    z — why are you playing the LINE earnings report again? I’m just not familiar with the situation there. thx!

  141. 141
    zman Says:

    I think they’ll show a strong distributable payout coverage ratio compared with their peers (maybe just under 1x), they’re 100% hedged next 3 years and will grow production in 2009 before rolling over a bit in 2010 if prices don’t advance by then. I don’t see them cutting the guidance on distributions.

  142. 142
    zman Says:

    Wow, not so fun of a close. Beerthirty.

  143. 143
    BirdsofpreyRcool Says:

    Head Trader just said — ppppppppppfffftttttttttt

    Market just ran outta steam. Not paid to take risk overnight, it seems.

  144. 144
    BirdsofpreyRcool Says:

    z — thanks for the recap on LINE.

  145. 145
    ram Says:

    Sorry ZMAN.

  146. 146
    tater Says:

    I get very little out of the FSLR daily chart. So little that it is not even worthwhile to post the chart. I do see the following unresolved issues:
    a. Was the volume so high today as to lead to the short term trade idea that everybody who wanted to sell already did so? If so, a pop back up to close the gap would be an idea.
    b. Sell the news idea. I wonder if everybody already had their computers programed to sell FSLR after the speech in Washington last night, might not have even been their own news that worked the non-magic.

    FSLR is not trending, short or long term view. There have to be easier names to play.

  147. 147
    zman Says:

    Hear ya T, thanks.

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