Tuesday Morning – E&P Charts Plus More On PQ



In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Price Deck Watch - Tightening spread between the Street and the forward curve
  4. Stuff We Care About Today - Small, mid, and large cap E&P charts, PQ update.
  5. Odds & Ends

Holdings Watch: The wiki tab is updated.

  • HAL - $10KP- Added 10 more HAL April $15 Puts for $0.35 with the stock at $17.90, rallying with the broad market over Treasury’s new toxic asset plan.
  • SWN - $10KP - Sold the SWN $30 April Calls for $3.90, up 59%.
  • SWN - $10KP - Added (3) SWN $35 April Calls (SWNDG) for $1.30 with the stock at $33.25. Wanted to increase my leverage to a further rally by swapping to a higher strike.

Commodity Watch

Crude oil rallied $1.73 to close at $53.80 yesterday on the back of a broad equity market rally that at over 7% for the S&P500 was strongest day of 2009. This morning crude is trading off slightly with equity futures.

  • Volcano Watch: Mount Redoubt in Alaska is erupting for the first time in 20 years and has forced the closure of the 225,000 bopd capacity Drift River Terminal which receives crude from the western side of Cook Inlet.
  • Early Read On Wednesday's Inventory Report:
    • Crude: up 1.1 mm barrels
    • Gasoline: down 0.5 mm barrels
    • Distillates: down 0.5 mm barrels

Natural gas closed higher for the third straight day despite tropical warmth at the tale of the heating season, ending the day up $0.07 to close at $4.29. This morning gas is trading off slightly.


  • Imports Watch:
    • LNG fell back to 1.1 Bcfgpd last week from 1.4 Bcfgpd in the prior week. This is up from 0.7 Bcfgpd in the year ago week but is still depressed compared to "normal" for this time of year (see chart below). On a weekly basis, I get sent pieces on the coming LNG glut in the States. These same pieces were trotted out in late 2007 and early 2008 to no fruition. This year, I do expect a heightened global capacity for liquefaction and depressed industrial demand from Asia partially offset by increased demand from Europe (as they try to ween themselves from mother Russia's gas) to result in higher volumes coming to the States. Anyone who thinks they can pin that down to within 1 Bcfgpd (and I'm thinking 2.0 Bcfgpd average for 2009) is kidding themselves as there are too many moving pieces. One thing is certain however. If a tsunami of gas shows up early in the year, netbacks will flip and the flow of gas will be staunched. 
    • Meanwhile, Canadian volumes continue to look suspect, reaching the lowest level of the year to date at 7.4 Bcfgpd last week, down 1.3 Bcfgpd from the year ago week.  Looking at year to date volumes, gas coming down from Canada has 1.2 Bcfgpd light to last year, so this isn't a recent phenomenon. Drilling in Canada is down as is production. 

Price Deck Watch: Tightening Spreads Between Analysts and the Forward Curve.  The recent rally in oil and less so but also in natural gas has resulted in a tighter spread between the prices analysts use in their models and the current forward strip for 2009. For the first time since the early Fall of 2008, analyst price forecasts for 2009 are ahead of the forward crude curve. No such luck for natural gas which still remains near 20% below analyst thinking but before the recent rally this spread had approached 30% so the combination of the recent rally in natural gas and continually falling forecasts has meant that analysts may slow the rate of decent on their 2009 numbers soon. 

Stuff We Care About Today

PQ Provides Update: Whew!!!

  • Borrowing Base Redetermination:
    • Borrowing base lowered from $150 mm to $130 mm
    • Current outstanding: $130 mm so no near term cash payment needed to get back into line
    • This is much better than the concern reflected by the stock price
  • MMS Waiver Remains In Effect. No need to come up with additional bond money for abandonment liabilities in the Gulf of Mexico. Good news item #2.
  • Liquidity Update:
    • Cash on hand rose by $6 mm in the first 2 months of the year to $30 at the end of February. They continue to be cash flow positive at these low prices in part due to their low cost structure. 4Q08 cash operating expenses were just over $2.30 per Mcfe and as the company has trimmed its capital budget substantially this year it is able to generate cash even at 1Q09's low gas prices. 
    • Hedge value at end of February at $58 mm, should be a little less now as prices have risen but still a possible although unlikely avenue of additional funds.
  • Increasing 1Q09 Production Guidance:
    • Guidance inched up from 105 to 110 MMcfepd to a range of 110 to 112 MMcfepd.
    • 2009 Guidance remains unchanged at 90 to 100 MMcfepd. 
  • Hedges:
    • 67% of volumes expected for the remainder of 2009 hedged with average floors of $7.34 for gas and $100 for oil.
  • Nutshell: Well done press release. Redetermination of their bank line was modestly lower so no need to scramble to cover a short fall which has been a great weight on the stock. Their senior debt isn't due until 2012 and they are generating cash and are in compliance will all of the covenants governing the credit facility.  While I'm pleased with the performance of the stock since early March when I bought more shares (see charts next section) the valuation here remains exceedingly low. While this is often the case with the shorter reserve life names like PQ, the current 1.1x 2009 CFPS and  2.4x TEV / '09 EBITDA seem quite overdone.


E&P's Quick Trip Deserves A Quick Look. Most of the charts on the E&P tab don't move with valuations but with new quarterly data so I won't update all of them.  At the end of each section I've added year to date performance and the rally since 3/9/09 which was pretty much the recent bottom. Since there was space in the charts of the large caps I also included performance for crude, natural gas and the S&P 500.  I'll swap these charts out for the ones on the E&P tab tomorrow, leaving the old ones on the E&P tab up today so you can toggle back and forth if desired.

The Large Caps:

The Mids & Smalls:

Odds & Ends

Analyst Watch:  Barclays cuts (HK) target from $38 to $35, maintains Outperform. (TS) cut from Buy to Hold at Citi.

116 Responses to “Tuesday Morning – E&P Charts Plus More On PQ”

  1. 1
    Sambone Says:

    By Nick Heath

    LONDON (Dow Jones)–Crude oil futures fell back Tuesday as traders paused to
    review Monday’s steep gains and as question marks surrounded the fundamental
    rationale for the recent moves higher.
    Recent supportive variables – namely a weaker dollar and stronger equities –
    also lost some of their potency with the dollar steady or stronger against
    major currencies Tuesday and equity bourses making only tentative gains.
    With the optimism surrounding Monday’s U.S. Treasury toxic asset plan fading
    slightly Tuesday, market participants were also looking ahead to weekly
    inventory numbers from the U.S. and the prospect of potential further builds in
    crude and products stockpiles.
    “The latest price rally was mainly the result of improved sentiment on
    financial markets and hopes that the current weak demand for oil will soon pick
    up again,” said Eugen Weinberg, senior commodities analyst at Commerzbank in
    Frankfurt. “But there is no real evidence of this yet in the form of hard data.
    Profit taking could therefore push oil prices back towards $50,” he said.
    At 1215 GMT, the front-month May Brent contract on London’s ICE futures
    exchange was down 51 cents at $52.96 a barrel.
    The front-month May light, sweet, crude contract on the New York Mercantile
    Exchange was trading 58 cents lower at $53.22/bbl.
    The ICE’s gasoil contract for April delivery was up $2.50 at $470.00 a metric
    ton, while Nymex gasoline for April delivery was down 11 points at 148.70 cents
    a gallon.
    “The Dollar Index has been relatively stable for the last three days now and
    there should be some repositioning today in front of the weekly API/DOE
    statistics,” said Olivier Jakob, managing director of Swiss consultancy
    A brace of U.S. oil inventory data releases is expected to allow the crude
    market to return some of its focus and subsequent direction to market
    American Petroleum Institute data are due 2030 GMT Tuesday, while the more
    closely watched U.S. Department of Energy’s stockpile readings are due
    An initial survey of analysts by Dow Jones Newswires indicates crude stocks
    are likely to have risen last week, anticipation of which triggered some doubts
    over the potential for further price gains. Meanwhile, despite repeated
    government stimulus packages unleashed in the U.S. and elsewhere, constrained
    demand remains an obstacle to sustained price advances.
    “Last week we had an across-the-board inventory build and I wouldn’t be
    surprised to see another one,” said Simon Wardell, analyst at Global Insight in
    London. “As the market stands today, we’ve really not got a supply issue out
    there. And when you take a step back, things don’t look good in the global
    economy,” he said.
    Meanwhile, the suspension of a possible Nigerian oil workers’ strike this week
    took some risk premium from crude prices Tuesday. Workers at Brazilian oil firm
    Petrobras remain on strike, although the company maintains that output hasn’t
    been affected by the action.
    -By Nick Heath; Dow Jones Newswires
    Dow Jones Newswires
    03-24-09 0833ET

  2. 2
    Dman Says:

    Z – your dictionary has expanded since I last looked, so it did help me with the BRY Q4 transcript I was trying to read. Just a few terms I still didn’t get:

    PV-10 (Some kind of present value calc?). Context:

    “Under our standardized measure calculation, our after tax PV-10, as of December 31, 2008, was $1.14 million. The price used in the year end 2008 measure was $30.92 per BOE, which did include a California differential of $14.05. If you were to adjust the California differential to something closer to $8 that standardized measure calculation would be roughly $1.4 billion.

    Our substantial hedge position, which is obviously excluded from these calculations, was valued at $315 million at the end of the year. Based on strip pricing in mid-February and a current California differential in the $8 range, our PV calculation after tax would approximately be $1.8 billion, our hedge value at strip would add another $200 million of value to that number.”

    PUD, PD. Context:

    “Michael Jacobs – Tutor, Pickering, Holt & Co.

    You touched on post-tax PV-10 and went through the K quickly. I didn’t see a pre-tax number. Could you give us the pre-tax PV-10 and perhaps segregate it by PUD versus PD?

    David D. Wolf

    I don’t have the PUD versus PD but the income tax was roughly $630 odd million. So you’d obviously add that back on to the 1.14. We’ll follow-up separately with your breakout question. ”

    D&M. Context:

    “The main revision in gas was East Texas and what we had is when we did our evaluation, particularly one of the shale was productive zones of the Travis Peak we had no completions in Travis Peak. The buyers reserve analyst gave them full credit for those reserves.

    But we don’t have a producing completion in the Travis Peak and D&M wasn’t comfortable giving us all that is proved reserves so that was the major revision, no a year-on-year issue, but more of an announcement. We think we can come back and get that. “

  3. 3
    jy Says:


    “D&M” likely is Degolyer and McNaughton an independent reserve analysis/ reserve auditing company.

  4. 4
    jy Says:

    “PUD” = “proved, undeveloped reserves” reserves that are allowed under SEC guidelines to be proved but the operator has to either drill or do some other capital intensive work to bring them to production.

    “PD” = “proved developed” reserves either currently producing or behind pipe in an existing wellbore.

  5. 5
    zman Says:

    PV10 = future cash flow stream of the reserves brought back to the present at 10% discount rate. A lot of times this will be referred to the PV10 or the SEC10, it is antiquated and due for a revamp in the pricing mechanism.

    PUD = proven undeveloped. For each successful well you drill (proven developed location) you may or may not be assigned PUDS (think of this as reserves that offset your proven location and can reasonably believed to be there but that you have not put a straw into yet).

    D&M = Degoyer-McGnotten (a reserve engineering firm whose name I’m sure to have just misspelled)

  6. 6
    jy Says:

    “PV10” = present value of reserves discounted at 10%

  7. 7
    zman Says:

    Thanks JY

  8. 8
    zman Says:

    Not in it right now but FSLR on the tape with another big deal.

  9. 9
    elduque Says:

    BDI -14 1758

    TED 101.52

  10. 10
    zman Says:

    Dollar recovering more ground, oil easing a buck plus now, Platts survey looking for 1.5 mm barrel crude inventory rise tomorrow.

  11. 11
    BirdsofpreyRcool Says:

    APA says it’s “looking for things to buy right now.”

  12. 12
    zman Says:

    BOP – did they say oil/gas? geography?

  13. 13
    zman Says:

    PQ at $3.10, watching. May take some calls there, should have room to run now, I don’t see last night’s news as BTRSTN (buy the rumor, sell the news)

  14. 14
    zman Says:

    ZTRADE: $10KP – Added PQ April $5 calls for $0.20 with the stock at $3.10. A bit of a stretch but it doesn’t have to get all the way there to be profitable. See today’s post for reasoning following their bank line redetermination last night.

  15. 15
    BirdsofpreyRcool Says:

    APA — just a headline that rolled by. Picking up comments from HW presentation.

  16. 16
    BirdsofpreyRcool Says:

    PQ was the target of a bear raid, ahead of it’s bank redetermination. Wonder if all the shorts covered? We get short-data after close tonight, right? Might still see some squeeze action going on.

  17. 17
    zman Says:

    Thanks BOP

    PQ speaks at Howard Weil this afternoon. Gotta love that conference from prompting press releases.

  18. 18
    BirdsofpreyRcool Says:

    More APA headlines from HW — “Apache says it looks to buy what others don’t find interesting…” and “it will probably be in US gas shale play.”

    Those two comments don’t seem to mesh.

  19. 19
    zman Says:

    That is odd, wonder what they are on about with that comment? Maybe they found a shale in Alaska.

  20. 20
    Dman Says:

    Z, jy, thanks for the translations.

  21. 21
    BirdsofpreyRcool Says:

    House Price Index positive! come in UP 1.7% for Jan (MoM) vs expected down 0.9%.

    Sending financials scooting.

  22. 22
    zman Says:

    Thanks for staying on top of the eco data, seems like the markets need a breather, this has been one whale of a bear market rally.

  23. 23
    zman Says:

    Wells Fargo on the tape saying it has financed 125 commercial scale solar projects since Fall 2007 and continues to finance projects now.

  24. 24
    BirdsofpreyRcool Says:

    Geithner on TV.

  25. 25
    zman Says:

    Service remains more bouyant than I’d have thought, pretty severe conditions for most of the group but no one wants to sell as they’ve been beat down. Estimates will fall further, just about guaranteed. Hmmm.

  26. 26
    BirdsofpreyRcool Says:

    Bernanke on TV, attempting to calmly and intellegently explain why preventing AIG from failing was important. About time.

  27. 27
    cargocult Says:

    ZMAN-Just thought I would mention that your graphs are truly amazing. And every day! I just wish I knew what to do with all this information.

    Do you have any thoughts re longer term options at this time?

  28. 28
    zman Says:

    Cargo – I meant to add – key takeaways to those but ran out of time (kiddo is on Spring Break so bouncing around the office point out how green the screen was yesterday and how red it is today). Will put those key takeaways in tomorrow’s post along with some longer term option thoughts.

  29. 29
    BirdsofpreyRcool Says:

    Interesting headlines — On 4th quarter conf call, Wms Sonoma CFO saying company is “seeing sales stability.”

  30. 30
    zman Says:

    BOP – I think APA is referring to the Eagle Ford shale.


    page 76 of that presentation, 450K acres; they had been looking at the oil potential (one of the two counties there ins southwest Tx is oily, the other gassier). Maybe they take out HK for it, the Haynseville, the Woodford etc but I’d guess that’s more than they want to bit off on. More like an APC move that but APC probably has too much leverage to pull it off.

  31. 31
    zman Says:

    We have a new Williams Sonoma; you could fire a canon ball through there and not hurt a flea anytime I’ve been up there this year.

  32. 32
    BirdsofpreyRcool Says:

    z — good find, re APA. Makes sense. Other than HK, who cares about the EF shale? I recall one other player there…. but can’t recall who right now.

  33. 33
    BirdsofpreyRcool Says:

    z — that’s why i found the WMS CFO comments astonishing. Who is buying $50 trivets these days?

  34. 34
    zman Says:

    re 32. COP, TXCO.

    re 33. or $100 tea kettles?

  35. 35
    BirdsofpreyRcool Says:

    z — funny you mention $100 tea kettles… i have a story about exactly that! Which is why I avoid WMS.

    TXCO… good memory. That is who I was trying to think of.

  36. 36
    zman Says:

    We have one … and it rusted.

  37. 37
    choices Says:

    Z, I certainly second cargocults comments in #27-will look tomorrow for key takeaways-unless I completely mis-interpreted, APA seems to be in fairly decent position, comparitively.

    On another note, bulk carriers seem to be firming up, strong yesterday w/overall mkt, some up today, this with BDI down over past several days.

  38. 38
    zman Says:

    Choices – will do.

    HAL and especially SLB resilience after yesterday’s performance is a head scratcher.

  39. 39
    zman Says:

    TOT on the tape saying first LNG shipment from Nigeria to Sabine Pass (LNG the company’s new regas facility in Louisiana) set for April. They also are saying that Indian demand for their Nigerian LNG will be robust.

  40. 40
    zman Says:

    Interesting to see quite a few pockets of energy green today including CHK, COG, PQ (redetermination news), KWK and BEXP (both improved perception over redetermination if I had to venture a guess)

  41. 41
    Dman Says:

    #40 Love to know what India is paying versus the $4 they’ll get in Lousiana.

    Come to think of it, with India’s car fleet still very much under construction, they are a natural fit for CNG etc. Maybe that is already happening there, as in China.

    #25 SLB, HAL at late 2004 valuations. How will the trough earnings that you envisage compare with their earnings 4-5 years ago?

  42. 42
    Dman Says:

    #41 I meant “late 2004 prices”. Asking about valuations.

  43. 43
    zman Says:

    Dman – good question.

    Last summer, just after the peak of everything (oil, gas, rigs, sp500, everything) analysts had HAL’s 2009 EPS at $3.69 with the stock at $42 (11.6x fwd numbers)

    By early December that number had fallen to $2.69 and the stock was about $15. (5.7x)

    Now the Street has them at $1.53, and the stock is $18. So back to 11.8x, that’s pretty peaky valuation to me since I expect further deterioration in their numbers to occur. 2010 numbers are at $1.59 by the way so if you want to look at to 0% growth and a 12x multiple with downward earnings momentum that’s fine but it strikes me as odd.

  44. 44
    zman Says:

    Not the move from $42 to $18 is down 58%

    The move on EPS from 3.69 to 1.53 is 57%

  45. 45
    zman Says:

    Probably a good thing as we try to focus on what is important and what’s not.


  46. 46
    zman Says:

    My gmail is having difficulties, can tell I’m getting emails, can’t open them so if you have something you want to tell me please send a headsup here.

  47. 47
    VTZ Says:

    Z – I haven’t been following GMXR. Why has it been so pummeled?

  48. 48
    zman Says:

    V – In a nutshell. They went from 96% growth expectations for 2009 vs 2008 to low teens %. Cut their budget twice and hacked back their 2010 growth to just about flat. The concern is their bank debt. Wells in E. Texas targeting the Haynesville / Bossier came in high single digits IP, expectations on the Street were for more despite the fact that this is a lower pressure area. They still argue the reserves are equivalent to the prevailing 6.5 Bcfe per well gross thoughts of most of the industry. The results were better (as to initial production) than the first 3 CHK wells over in NW Louisiana (the Haynesville side). They will have a redetermination of their bank line soon which I think will not be as bad as people think and then they will have results from 4 more Haynesville / Bossier horizontals soon (3 late April, 1 in May).

  49. 49
    zman Says:

    If anyone sees a PQ broker comment this morning I’d love to see it. Thanks.

  50. 50
    zman Says:

    UBS and Southcoast out with buys reiterations and $6.50 price targets on PQ today, thanks for sending BOP.

  51. 51
    tbone Says:

    BOP, any updated IG numbers? I find them valuable. They’re especially interesting after the “powers that be” hold press conferences.

  52. 52
    BirdsofpreyRcool Says:

    hey, tbone…. figured i was boring everyone with those. but, would love to fill you in. thanks for asking. Let me get a summary together for you.

  53. 53
    reefguy Says:

    Eagleford Shale- TXCO is in joint ventures with ECA, APC and SM. Each of those is a candidate to take txco away from bk. Pioneer has about 300k acres between HK and APA/COP. EVEP has a big legacy chalk position in harms way of Eagleford as well.

  54. 54
    zman Says:

    Tim + Ben rally continues, Dow green, SP flat.

  55. 55
    occam Says:

    BOP – I second the request for an occasional posting of the IG number.

  56. 56
    BirdsofpreyRcool Says:

    There’s been a little complicating factor on reporting the Investment Grade Index Bond CDS spreads… we have rolled into a new contract and the index members changed. So, we have to recalibrate our mental models. While IG11 is still quoted and traded, IG12 is the new “on the run” index. There is about a 40 basis point difference between the old index and the new. So, got to keep that in mind when looking at the absolute levels.

    Here they are, side-by-side —

    IG11 230 bps (this is the one we are used to watching)

    IG12 190 bps (so the “roll” is -40bps to go from the old index to the new).

    I will quote them both, until we get a little more comfortable with the new levels.

    Basically, the credit market bought into the viability of the Treasury’s PPIP program announced yesterday. But I would like to see the IG12 index tighten to 160 bps before I am feeling more comfortable with the liquidity of the credit market.

    Speaking of liquidity… Oddly, much of the risk premium in corporate bonds is NOT due to “credit, or default” risk… but to “liquidty” risk. i.e. it’s not that investors fear bankruptcy, they just fear not being able to sell a bond, once they have bought it. This means, if you are a buy-and-hold bond investor, you are happy as porkers in poop right now.

  57. 57
    zman Says:

    Thanks BOP, I find it interesting to monitor as well.

  58. 58
    BirdsofpreyRcool Says:

    The IG12 index closed around +185 bps yesterday, so it is wider today, with the stock market down.

  59. 59
    zman Says:

    CHK headlines from H.W. conference:

    * Likely do a debt debt to term out bank line.

    * actively pursuing JVs with foreign firms in U.S. shales. (rumors have been another deal with BP or China)

    * sees S. Texas production deal closing soon.

    * sees improving gas demand, sees balanced market by 3Q09.

  60. 60
    zman Says:

    Movie quote time (yes, it’s Tuesday but its also Spring Break slow)

    “If I’m right about this, eighths and quarters won’t matter”

    This is appropriate for one of you who just me an email re PQ, lol.

  61. 61
    BirdsofpreyRcool Says:

    btw, George Soros has a column on the OpEd section of the WSJ today, speaking out on what to do with the CDS market. He comes out in favor of limiting CDS to those who own the underlying bonds and writes that “bear raids on financial institutions can be self-validating.”

    While i don’t agree with George’s politics, his take on the markets and recommendations are smack dead on. The CDS are WMDs in the hands of the Credit Bears. And it is hurting ALL of us.

  62. 62
    gaamblor Says:

    Z, didn’t see gasoline imports last week, how has that been trending?

  63. 63
    BirdsofpreyRcool Says:

    z — i get the point…. joined you in PQ at 3.06. so, expect it to head south for a while now. But, like the reserves there, like the bank outcome, and will be watching for tomorrow’s reaction to their HW presentation at 4:05 EDT today.

  64. 64
    BirdsofpreyRcool Says:

    IG12 just tightened 5 bps… to 185 now. Nice move.

  65. 65
    zman Says:

    Re 62 – Gaam, pretty random walk, a bit high to last year last week but not really out of whack for the season. Might be able to point to higher prices over the last couple of months as they’ve rebounded and find a small linkage but it would be a bit of a force fit I think.

    BOP – 63. I’m LOL.

  66. 66
    zman Says:

    Eagle Ford shale is source for Austin Chalk, right?

  67. 67
    zman Says:

    Wyoming making a good point about low margin pressure pumping business SLB is holding on to now and I’d add cut rate international deals as well. So the revenue fall may not be as bad as the hit to the bottom line.

  68. 68
    reefguy Says:

    66- that is the belief…

  69. 69
    reefguy Says:

    z-Geo question of the day. What shale encases the Woodbine sand(East Texas Oil Field)?

  70. 70
    BirdsofpreyRcool Says:

    U.S. halts hundreds of coal mining permits – Globe and Mail
    2009-03-24 18:23:57.566 GMT

    [ Live In Play]

    U.S. halts hundreds of coal mining permits – Globe and Mail

    Globe and Mail reports the EPA is putting on hold hundreds of mountaintop coal-mining permits until it can evaluate the projects’ impacts on streams and wetlands. The decision was announced Tuesday by EPA administrator Lisa Jackson. It targets a controversial practice by coal mining companies that dump waste from mountaintop mining into streams and wetlands. It could delay more than a hundred permits being sought by companies wanting to begin blasting mountaintops to access coal. The EPA also denied two permits the Army Corps of Engineers was planning to issue that would allow companies to fill thousands of feet of streams with mining waste in West Virginia and Kentucky.
    The agency says the projects could damage aquatic resources.

  71. 71
    zman Says:

    Eagle Ford. I don’t have a good map showing the aerial. You’d think CHK would be involved then, as they’re the original kings of the chalk, different part of Texas, than where TXCO and HK are hunting I’ll grant you but the Eagle Ford extends that far east.

  72. 72
    ram Says:

    Re 67 ZMAN – Does that affect HAL or NBR?

  73. 73
    zman Says:

    70 – Tough times for MEE, that’s their bread and butter type of operation.

  74. 74
    zman Says:

    Oil going green into the close of NYMEX.

  75. 75
    reefguy Says:

    CHK- disposed of their chalk when they almost went bk last bust(or was it two busts ago?). In an arc from west to east:

  76. 76
    zman Says:

    Ram – one would think so. Nothing doing yet. I wonder if that Citi analyst who wrote the whole “look out for warnings soon” last week has any comment this week.

  77. 77
    zman Says:

    Thanks much Reef. Wonder if tiny GST is in the way of it.

  78. 78
    zman Says:

    BOP – good luck on the PQ.

  79. 79
    reefguy Says:

    Nope. I think they are too far north

  80. 80
    zman Says:

    Re GST, thanks. Wonder how many deep tight gas sand wells they will drill this year. 1 or 2? Had another E&P president yell at me (in email but all caps) last Spring that exploration was not dead (I had not said it was), just wondered if they would get some shale acreage to establish some base line cash flow.

  81. 81
    zman Says:

    BEXP seems to be coat tailing PQ. I think the two are quite different when it comes to looking at their debt and BEXP will be forced to sell some 100 to 200K acres of Williston basin (Bakken) acreage to get itself better positioned. Just a thought from someone who watched and missed that ride.

  82. 82
    reefguy Says:

    z- Exploration is frozen in the glacier of debt

  83. 83
    BirdsofpreyRcool Says:

    BEXP — too much debt. too many PUDs. core areas non-economic at current prices. will have to sell assets (in the process of collecting bids). Now is not the time to be a seller. May not like the price, might have to sell too much of the good stuff. PQ in a different place. They have cash, don’t have to sell assets, can dial back on spending, and still replace reserves this year.

    Banks will not let BEXP off the hook, I think.

  84. 84
    zman Says:

    BOP – my thoughts exactly. Have moved down the I Will Survive (or will I?) list to SD and GMXR.

  85. 85
    Wyoming Says:


    67, my apologies, need to think more before I type. Pressure Pumping provides high $ volumes with a low Net Income during GOOD times. During bad times not only do you have high revenue numbers falling like a brick, but you have huge fleets (capital/fixed costs) sitting idle and the staff to boot. Only saving grace is that variable expenses will be low (proppants, diesel and gel).(Q1 will be BAD – remember that everyone was blowing the remaining budgets in Q4 so Q4 looks good).

    Ram HAL – yes, NBR no correlation on the business fundamentals to HAL and SLB. My blockhead moment is that I don’t think like Wall ST. so: I see no differentiation to the two from Wall St.

    NBR is light blue, HAL is the normal line:


  86. 86
    BirdsofpreyRcool Says:

    z — “I Will Survive…” Isn’t that from the “Pricilla, Queen of the Desert” soundtrack? Quite the visual !!

  87. 87
    zman Says:

    Wyoming – gotcha. I was think you meant N. American business would fall apart and I was trying to add that international bids out of WFT and SLB had been very low ball of late.

    Re NBR, I was thinking they suffer due to lower rig activity, low rig prices, so correlated in that sense with the others.

    BOP – I was thinking of Gloria Gainer (sp?) and then the Cake remake which is pretty funny.

  88. 88
    BirdsofpreyRcool Says:


  89. 89
    Wyoming Says:


    Off the March 6 lows, Why would a vendor to a drilling contractor get ahead? Do you or anyone have a take on NOV?


  90. 90
    zman Says:

    Wyoming – it seems that while Capex declines have slowed for the E&Ps there are an increasing number of “rig-less” E&P ops out there now. Don’t know about workovers except what I read with some operators slowing way down on that business as well. Do you have access to smithbits?

  91. 91
    Wyoming Says:

    In case someone does not try it. You can click on the graph to enlarge, then click to zoom again to see blow ups.

  92. 92
    reefguy Says:

    83- good summary. Add: Big price differential in Williston kills all puds

  93. 93
    zman Says:

    Wyoming – not a huge delta there. But I hear ya, no reason for it I know of. Could be balance sheet but I haven’t looked at NOV. NBR is pretty wide spread and also has an E&P sub so maybe that’s why they underperformed in that period. Not that that makes sense as I had expected E&P to outperform service in general but that didn’t happen either.

  94. 94
    zman Says:

    BOP – re the MEE comment. They’ve been in trouble with that kind of thing off and on it seems forever.

  95. 95
    Wyoming Says:

    Re 90, yes but head to NOV.com. Majority of their supplies is drilling related. Last I heard, drilling rig count was dropping. anyone buying top drives? Handling Systems?

    On the rigless ops, everyone (Op and vendor) will make sure their expense line is as low as possible, ie. ride that Coiled Tubing as long as possible before replacing it. Duct tape, bubble gum, bailing wire, JB weld …

    Water hauling was thought to be low @ $1.50. I heard that it is now being offered in the $1.3 range. Breakeven is now at a slight loss. Thnk a dented fender will get fixed?

    I’m just saying, not trying to be abrasive.

  96. 96
    zman Says:

    ZTRADE: $10KP – Adding (5) HK $22.50 April calls (HKDX) for $0.60.

  97. 97
    zman Says:

    Wyoming – thanks for the color man, having met you you know I have no option but to be abrasive myself, lol. Do you have a source for workover rig activity (BHI quit publishing it)?

  98. 98
    Wyoming Says:

    No, but I can tell you that we can get as many as we want right now. And the best crews, mammals have been released (those who were hired to fill a spot).

    Coiled tubing costs are cut in over half from my latest pricing survey. Another thing is that where services were separated out. 1 company provides the CT unit, another provides the downhole tools etc.. are now being bundled together for a further cost reduction.

  99. 99
    jat Says:

    NOV has a pristine balance sheet, is net cash and should have at least $1.5bln in FCF in 2009. Their backlog in Rig Tech to a large extent protects earnings, though the land based NAM biz (PSS, Distribution) will suffer and accounts for most of the drop in consensus estimates from 08-09. I would view their outperformance relative to the group in part because the lion’s share of the new orders is levered to floaters and jackups, and as the credit markets have improved the financing risks (which brought this stock below $20.00, with a tangible book of $16.00 at the time in late November) have lessened. The debate over NOV is always whether the new orders will entirely zero out and mgmt answered that at the last quarterly call, where they guided to 3-4bln in new orders in 2009, the first time they’ve ever guided on orders. Another big debate is who they buy and when; it’s an acquisition company. I met with the CFO last night, so you can probably consider me biased… I was a shareholder for a long time in NOV and will be again if the stock gets cheaper due to its traditional high beta… I’m not really chasing anything in the OSX right now.

  100. 100
    zman Says:

    Thanks Wyo. So, um, why are the OIH mainstream companies holding up so well year to date? Still scratching head.

  101. 101
    jat Says:

    btw, wyoming, I’m not disagreeing with anything you said on the current outlook for capital equipment in NAM (just read your details). It seems all but certain to me. Just offering a take on why NOV has done well, and why I’ve been kicking myself for the last little rally for taking profits too early.

  102. 102
    Wyoming Says:

    Jat, thanks, exactly what I was looking for. My logic almost never makes sense … I would fade me….

  103. 103
    zman Says:

    Thanks much Jat, NOV not one of my close names obviously. Wondering if you think OII may be overheated at this point.

    By the way, I’ve been sent the C.S. piece on HK today (Hold recommendation) a couple of times now and I find it to be lacking with regard to reasoning for the lack of enthusiasm.

  104. 104
    jat Says:

    I do think the OIH is overextended but I’ve been wrong since Monday (I laid small shorts on Thurs so am slightly down on the trade). I feel like everyone is grasping at positive data points since last Thursday morning and is ignoring what’s coming in Q1/Q2/Q3. The obvious counterargument is that with oil getting healthier and a potential bottoming of the rig count quite soon (which some are calling for down here in NOLA) everyone looks through this whole year. Estimates always do bottom well after the stocks which bottom before the rig count. I just feel, though, that a lot of people will suddenly remember these facts with any broader market correction, and then we can all get back in the OIH a lot cheaper.

  105. 105
    zman Says:

    Jat thanks for the thoughts, was actually asking about OII, Oceaneering, they spoke earlier today and have had a strong run.

  106. 106
    Wyoming Says:

    OII? Didn’t the Obama administration get rid of all things offshore?

    Pot shot on politics post close.

  107. 107
    zman Says:

    Wyoming … just the hydrocarbon related offshore stuff. The ROV’s can always be retooled to work on this:


  108. 108
    sane Says:


    Crude Up 4.6MMbls
    Gasoline Down 805Mbls
    Distillates Down 1.6MMbls

  109. 109
    zman Says:

    Youch, thanks Sane. Any imports and/or utilization numbers included?

  110. 110
    sane Says:

    imports up 634Mbls/day
    refinery runs down 70Mbls/day

  111. 111
    sane Says:


    Crude 354.5 MMbls
    Gasoline 216 MMbls
    Distillates 142.7 MMbls

  112. 112
    Wyoming Says:


    Should put that in the Cook Inlet, largest tide in the world 35 feet I believe. Only problem is the occasional Volcano.

  113. 113
    zman Says:

    That’s the kind of innovative thinking the Dept of the Interior needs.

  114. 114
    Wyoming Says:

    I had 3 different replies to 113, this is the best I will submit.

  115. 115
    zman Says:

    Another try at cold fusion:


  116. 116
    automobile Says:


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