20
Apr

Monday Morning – Let The Earnings Begin

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HAL, Front and Center With "In Line" Numbers; Further Weakness In The Outlook. 

  • Revenue of $3.9 B vs $4.0 B expected
  • EPS of $0.44 (excluding $0.02 of employee severance) vs $0.41 expected (range of $0.35 to $0.47). You can't call this a beat as earnings estimates have tumbled over the last month.
  • Managment quotes:
    • 1Q saw "significant volume reduction and margin compression due to the steep downturn in North America drilling activity sharply";
    • “International markets have remained more resilient in the first quarter compared to the domestic market. Outside North America, revenue grew 3% on a year-over-year basis"
    • “International projects are now being deferred". This statement will/should give analysts cause for pause, especially when they look at the Middle East and the rapid contraction in operating income there.
    • Industry prospects will continue to be weak in the coming quarters, and visibility to the ultimate depth and length of this cycle remains uncertain.
  • Guidance: None but no one really expected any.
  • Nutshell: An "as expected quarter, with some near term warnings and few details on cost cutting initiatives. Not a lot to get excited about. I saw "whisper numbers" as low as $0.37 for the quarter and while some may get excited that the quarter wasn't that bad the lack of visibiility on coming quarters and comments regardign the degradation of the internation segment, once seen as saving the day, should weigh on analyst's expectations.
  • Conference Call: Today, 9 am EST.

The Week Ahead: Busier for energy, less so on the economic data front.

  • Monday 4/20:  Leading indicators, IPAA OGIS
  • Tuesday 4/21: No eco data scheduled, IPAA OGIS, API crude oil inventories
  • Wednesday 4/22: Crude oil inventories, IPAA OGIS, home prices
  • Thursday 4/23: Natural gas inventories, initial jobless, existing home sales(last 4.72 mm, forecast 4.6 mm)
  • Friday 4/24: Durable goods, new home sales

In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Earnings Calendar - 1Q09
  4. Stuff We Care About Today - GMXR
  5. Odds & Ends

 

Holdings Watch: The wiki tab is updated and as you can see I'm entering May with only some HK calls and HAL puts.

Commodity Watch:

Crude oil fell nearly 4% last week to close at $50.33. Given that this was the upteenth week in a row of bigger than expected crude storage builds at every place in the U.S. aside from Cushing, Oklahoma, this was minor miracle. Seriously, the front  month contract continues to looks like a rounding bottom with its sites set on $60 in the medium term. I believe traders and hedge fund manager commodity owners are looking the trough of the recession and the peak of storage towards more normal times in the future and have successfully put a floor in on crude in the $40s. This morning crude is trading of nearly $3 on economically cautious comments out of Washington over the weekend and renewed strength in the dollar.

  • China Watch: Oil may be worried about the domestic economy today but China seems to be making a comeback. According to Reuters ~ Refined fuel inventories held by the country's oil duopoly fell 14.7% at the end of March from a month ago, and sales rose 21% in the same period, providing signs of improving fuel demand.

Natural gas rose 3.3% to close at $3.73 last week after Chesapeake announced an open ended gas production curtailment program that impacts both current and future production. Gas is simply too cheap to be economic given current service costs in a majority of U.S. basins. This morning gas is trading of five to ten cents.

  • Weather Watch: The Climate Predicition Center record HDDs of 101 vs an earlier forecast of 89 for last week. This week's HDD forecast is a paltry 57 (far less than the normal 77 for the week). We will have to start watching cooling degree days soon.
  • Rig Count Watch: Rigs continued to drop like flies last week.
    • The gas rig count fell by 30 to 790 vs 1,461 one year ago
    • The oil rig count rose by 1
    • The horizontal count fell 11 to 399 vs 502 one year ago
    • Oklahmoa rigs fell 11 to 91 vs 214 one year ago
    • Texas rigs were down 10 to 384 from 883
    • Louisiana was flat at 136 from the prior week as it remains the "go to" state for some.

Earnings Calendar 1Q09: Energy earnings start off with a little bit of everything with HAL leading the way in service but then  E&P, a major, solar, and more coal checking in. This table has also been added to the calendar tab.

Stuff We Care About Today

GMXR Announces 5 Haynesville Wells Ready To Complete

  • They announced 5 wells ready to near ready to be completed, all Haynesville horizontals with extended laterals (4,200 to 4,900 feet).
  • Boasted the completion of the five could double the company's production by June.
    • 4Q08 production was 36 MMcfepd
    • So five wells with initial production averaging just over 7 MMcfepd net could do that and it's not out of the realm of possiblities.
  • First, I'd rather see completed wells than in an annnouncement but they seem pressed to get news to market.
  • Second, I'd almost rather them talk about return on investment that production in the press release, as that growth will be fleeting as the wells decline, but again, I understand there desire to get some news out the door, and they do speak at IPAA tomorrow so they have a chance to flesh out the economics then.

IPAA Oil & Gas Investment Symposium - Monday through Wednesday complete schedule.

  • Names We Care About Speaking Today (all times eastern):
    • LINE - 10:30
    • GDP - 10:55
    • IOC - 11:20
    • CRK - 1:35
    • SWN - 2:25
    • WLL - 2:50 

KWK Borrowing Line Reaffirmed

  • $1.2 B borrowing line reaffirmed; can be expanded to $1.45 B with lender consent
  • $906 mm drawn as of end of March 2009
  • KWK in compliance with all debt covenants
  • They also cashed in some 2009 hedges for $55 mm but still have 75% of expected 09 gas production hedged at $8.60.
  • Nutshell: good news for a financially and gas leveraged mid cap E&P

XCO Reaffirms Borrowing Base

  • Reaffirmed at $2.475 B
  • Nutshell: ditto comment above

WFT Reports Slightly Weaker Quarter

  • Revenue of $2.26 mm vs $2.26 B expected
  • EPS of $0.27 (net of non cash loss) vs $0.29 expected (some of the miss is dollar related)
  • I always think of this company as a mini-SLB so listening to their conference call will be telling.
  • Conference call: today, 10:30 EST

Odds & Ends

Analyst Watch: (RDC) cut from Buy to Hold at Jesup, (SPWRA) price target reduced from $28 to $23 at FBR. 

101 Responses to “Monday Morning – Let The Earnings Begin”

  1. 1
    jat Says:

    Wow, so amazing that when you tell everyone your numbers are too high for 3-4 weeks that you “beat.” Look down, Z, there’s that lowered bar that one of them just stepped over. WFT had told one firm in late March that it was going to be $0.27, so no surprise for me there… (their analyst always has a good line into the CEO).

    BTW, if anyone has any questions for Comstock or Concho, I’m seeing them both at the IPAA so please let me know and I’ll be happy to pass along.

  2. 2
    zman Says:

    I hear ya Jat, HAL call just starting

    Oil getting hit hard, looks like an over reaction.

  3. 3
    zman Says:

    HAL CC #1

    North America

    Says 25% revenue drop is good perf with 30% drop in rigs.

    Canada to not return to pre Spring breakup levels later this year.

    They expect nat gas supply response before end of second quarter.

    They see further margin pressure this year…kind of open ended there as they led off with we have previously thought most margin compression would occur in the 1Q.

    International:
    Deepwater to remain resilient
    Russia and North Sea seeing weak activity due to cap markets (not news)

    They are taking a pretty sunny view of the results which is typical HAL. I think the Q&A will be key in examining whether analysts have pulled estimates down far enough.

  4. 4
    Bob Says:

    Note; NBR earnings Tuesday AMC, cc Wed 10:00 CT

    Also, RIG downgrade at Jeffries

  5. 5
    zman Says:

    Thanks much, Bob, will amend the table, just saw the Jefco, smart analyst there, he’s probably just getting out after the run to regroup. Note the estimates there are down now in 2010 vs 2009 which is odd for that part of the service group, may be looking at greener pastures in DO or ATW.

  6. 6
    elduque Says:

    BDI +55 1737

  7. 7
    PackMan Says:

    Z – let us know how you think HAL will trade from here … today and after today ….

    Thanks.

  8. 8
    zman Says:

    Eld – was looking at those over the weekend. Also at DRYS performance last week and the upgrade there.

    HAL comments on pricing:

    “extremely challenging in NAM”

    Says oil drilling exhibiting a bottom; three’s that sunny side up, glass half full attitude…I’d say check out where your revenue comes from, how many total wells are gas vs oil (about 4 to 1 right now) so if you want to be happy about something you need to try harder pal.

    On NAM – margins down 11% from peak; 4 to 6% more fall could be in the cards

    They don’t expect to see meaningful cost savings effort impact until the second half of the year.

  9. 9
    zman Says:

    Pack – re 7. That’s the billion dollar question, lol. They are spinning it pretty glass half full. My thought is it should trade lower as they are losing steam on the international side but I want to listen to the Q&A.

  10. 10
    zman Says:

    HAL went green. Listening to Q&A, they have not really said anything to justify this, it looks more like trading on the minute chart started running to the buyside and you get follow on buying with no real reasoning behind it. Listening to CEO now, the situation is a lot more fluid (precarious) than the stock is indicating. My best guess is that it will trade lower by end of day.

  11. 11
    bill Says:

    on kwk

    :00AM Quicksilver Resrcs receives affirmation of $1.2 billion borrowing base (KWK) 8.73 : The co announces that its bank group has affirmed the borrowing base on the co’s senior secured revolving credit facility at $1.2 billion, based upon oil and gas reserves as of December 31, 2008. JPMorgan Chase Bank, N.A. and Bank of America, N.A. led the group of 24 lenders. As of March 31, 2009, the co had approximately $906 million drawn on, and letters of credit of $11 million secured by, the senior secured revolving credit facility. The co also announces that on April 1, 2009, it received a tax refund of $41 million, which was used to reduce its senior secured revolving credit facility… Based on preliminary financial results for the first quarter of 2009, the company remains in compliance with all of its debt covenants. Quicksilver also announces that it executed early settlement of 40,000 million British thermal units (MMBtu) per day of its 2010 natural gas hedge positions, resulting in proceeds of approximately $55 million. The company still has hedges covering approximately 75% and 50% of its expected natural gas production for 2009 and 2010, respectively, at a weighted average floor price of approximately $8.60 per MMBtu for 2009 and approximately $8.17 per MMBtu for 2010.

  12. 12
    bill Says:

    bbep cut its divy to zero hurts stock and kwk

  13. 13
    zman Says:

    Still listening to HAL…

    CRK upped the number of authorized shares in their proxy. Stock getting dinged for 6+% on a weak market day. I’ll be long by earnings. If they do a stock deal I’ll eat a hat.

  14. 14
    zman Says:

    People not liking the GMXR non-news news described in the post.

    How much BBEP does KWK hold Bill?

  15. 15
    zman Says:

    Re that BBEP news, the MLP is down 31%…I have repeatedly avoided those guys, don’t really care how many Ivy league MBAs that have on their team….much prefer LINE (who speak at IPAA in a little under an hour).

  16. 16
    zman Says:

    Tristone cut WLL to mkt perf.

  17. 17
    zman Says:

    Pack – ok, I’ve listened to a number of comments from analysts that I would describe as somewhat dubious in terms of go forward optimism. I’m going to continue to hold my puts for now.

  18. 18
    bill Says:

    kwk owns 14.4 m units and the units were paying 2 per yr so thats 30 m not coming in to kwk

    In 2007, the Company received common units of BBEP, a publicly traded limited partnership, as part of the BreitBurn Transaction, which is more fully described in Note 5. On June 17, 2008, BBEP announced that it had repurchased and retired 14.4 million units, which represented approximately 22% of the units previously outstanding. The resulting reduction in the number of BBEP common units outstanding increased the Company’s ownership from approximately 32% to approximately 41%.

    During the fourth quarter of 2008, the Company evaluated its investment in BBEP for impairment in response to decreases in both prevailing commodity prices and BBEP’s unit price. The Company considered numerous factors in evaluating whether this decline was other-than-temporary. In final reflection, the length of time at which BBEP traded below the Company’s net carrying value per unit, prevailing petroleum prices and broad limitations on available capital resulted in the determination that the decline in value was other-than-temporary. While the Company believes that the market forces that influence commodity and equity prices are under duress, the accounting rules that govern fair value assessments are rigid in their requirement to utilize the quoted market prices for determination of fair value. Accordingly, the impairment analysis utilized the December 31, 2008 price of $7.05 per BBEP unit. This resulted in an aggregate fair value of $150.5 million for the portion of BBEP units owned by the Company, which was then compared to the carrying value of $470.9 million. The difference of $320.4 million was recognized as an impairment charge during 2008.

  19. 19
    PackMan Says:

    Thanks Z. HAL has been a good short already !

  20. 20
    choices Says:

    VIX up over 9%, negative for general mkt, dollar up, can & aus $ weak against USD, not good sign for resource stks;

    gold up also-go figure

  21. 21
    zman Says:

    HAL sort of hedging on when they see price compression easing. The rally in the shares occurred when an earlier caller mentioned price pressure would ease in 2Q. Second questioner asked them to confirm they were ok with a 2Q price trough for NAM serivces and they basically said tell me when the rig count bottoms and I’ll tell you when prices trough. From my gleanings from E&Ps, the full effect of lower prices definitely not seen in Q1 results, look for that later in the year. So to me, it looks like maybe 2Q but maybe 2H.

    HAL also said the cost reduction programs they have in place will mitigate the price pressure in the second half but not necessarily reverse it.

    Not for me on this turn Pack! If the market recovers today’s slide they could be a $20. I think some of the analysts on the call were on the bubble as far as their opinion goes.

    HAL called ended. It will be interesting to watch the stock over the next 10 minutes to gauge what they say post call to their salesmen.

  22. 22
    zman Says:

    Thanks Bill, RBC cut their rating on KWK just now.

    Choices – yep, pretty wild. I still haven’t tracked down what caused the real sell down in crude this morning, dollar is up yes, but not soaring higher or anything. With the China comments in mind it would seem to be we are just seeing a little profit taking and technical selling.

  23. 23
    zman Says:

    HAL call ended with the stock at 18.80 for point of reference.

  24. 24
    zman Says:

    Doug Kass reporting the bank stress test results were leaked early… says 16 ot 19 big banks technically insolvent.

  25. 25
    bill Says:

    listening to mmr call

    they like their acreage–discussion over my head, but billybob says stuff is getting better day by day

    blackbeard, amazzo, flatrock, etc
    biggest news story in gom in 25 years
    only one on shelf drilling these wells

  26. 26
    zman Says:

    Listening to LINE presentation.

    Anything new at Blackbeard?

  27. 27
    zman Says:

    … oops, obviously not given the reaction to MMRs pr.

  28. 28
    zman Says:

    Watching action in HK this morning, again outperforming the group, quicker to rally. Operations update any day now, they speak at IPAA tomorrow.

  29. 29
    zman Says:

    ZTRADE:

    Added HK May $24 Calls (HKEO) for $0.85 with the stock at $21.75. I think they are going to have an operations update with new Haynesville and Eagle Ford Shale completions any day now. They speak at IPAA tomorrow.

  30. 30
    bill Says:

    can you give me link to line call ty

  31. 31
    zman Says:

    Presentation link here:

    http://phx.corporate-ir.net/phoenix.zhtml?c=179523&p=irol-presentations

    Call just ended.

  32. 32
    zman Says:

    Crude down $4.10 at $46.25; support $45, then $40.

    Considering oil bounce plays: EOG, SU, CLR, WLL (pricey options on those last 2)

  33. 33
    kyleandy Says:

    anything new on LINE call?

  34. 34
    zman Says:

    No, not really, just keeping on keeping on, 100% hedged on both commodities still. Did see borrowing base reaffirmed but I think I had just missed the PR. I plan to hold the LINE for quite some time.

  35. 35
    zman Says:

    The minute chart on HK is pretty interesting, looks like a yo-yo. Seems to rise without the broad markets doing so, have a gut+ feeling there.

  36. 36
    tater Says:

    Your #24, that is what is making this market so hard to trade. You’ve got the government giving insurance for every piece of junk debt out there (How cool is that? The govt as a market maker! What a fab idea Lenin! I’m pretty sure that he was convinced of the necessity as well, but I don’t think that story has a very happy ending).
    But how do you go short companies that now have the ff and credit of taxpayer’s wallet? …right, very carefully.

    Trading seems to have devolved into little more than gambling for the time being. GMXR and SD just getting pushed around. Volume on those two speaks to what’s going on. EOG seems to have broken the triangle to the downside.

    HK looks to have respected the area of its 20 EMA. Bullish, or at least neutral.
    $OSX dropping down, almost to support area at 136ish. Could be a bounce soon as the pullbacks apparently have to occur all in one day.
    This drop today seems so calculated it’s scary. I’m back to all cash now.

  37. 37
    zman Says:

    Tater – thanks, agreed. Cash is king. This is a market of opportunity trades only. Unless you can get a locked in yield play like a LINE it doesn’t make sense to get too attached to anything. I continue to study up on names as always but am less than gung ho on the broad market. What do you think are good levels on the SP500? If we’ve seen the rally for the 2Q and people go away in May, I can find a number of stretched valuations to short now.

  38. 38
    zman Says:

    Watching HAL, would be up $2 if it weren’t for this market, not on the results but on the incredible spin job there. Things stink but a light at the end of the tunnel which is probably not a train but may be one yada, yada, yada. SLB is likely to be less of a positive voice on Friday.

  39. 39
    zman Says:

    IEA saying reduced investment could reduce non-OPEC supply by 360,000 bopd in the next 18 months. Last I saw they were looking for flat this year. I think the flat is optimistic looking at Mexico, Norway (North Sea in general), Russia.

  40. 40
    reefguy Says:

    IOC- anyone in the room at IPAA?

  41. 41
    Paul in Kansas City Says:

    The stress test article is incorrect according to jim cramer; it has been pulled (although it doesn’t appear that way to me on the link). I personally think this is a non-issue; the govt. will allow forbearance or it won’t on an institution by institution basis. Bank lending in my opinion is not the problem; PIMCO has some great literature regarding “shadow banking” that is worth the read for all concerned about the state of lending.

  42. 42
    Paul in Kansas City Says:

    By the way Z; this site is the BEST resource around for intelligent commentary regarding the energy markets; to all posters you guys a re a phenomenal resource. Thanks!!

  43. 43
    tater Says:

    SP500 – I’ve read (and agree) that the level the bulls need to hold is right where we are now, around 840ish. That’s why I cashed my shorts, waiting for new direction indication. I think we bounce for a bit and then head down to at least 830ish. The pattern has been to go up for a couple days, then a strong pullback for one or two days, then go up a couple days…nothing to say that we are done with that pattern yet.

    Would LOVE to see your list of stretched valuations. Please, please.

  44. 44
    zman Says:

    Thanks Paul.

    Listening online, Jat is up there, might be able to attend breakout, dunno.

  45. 45
    zman Says:

    Tater – SLB, top of list service, speaks Friday. SWN, hate to admit but they are up there if market pulls back and gas does not rally soon….will compile a complete list for tomorrow. HK would be in there too but you know possible catalysts to be a problem for a short. Maybe you short the news release there.

  46. 46
    zman Says:

    Re 45. I don’t like to buy puts on best of quality stories in a play. As there is “cheap” and “cheap for a reason”, there is also “expensive” and “expensive for a reason”. For short periods though, those high beta names can really fall far and fast.

  47. 47
    zman Says:

    Add NFX to the list of oil names in #32 (yes its a gassier name but they are a bakken player now too), off $2 on now news, just oil down action, they announce later this week. Have missed a pretty good rally there, will be on conference call as usual, may or may not own calls by then.

  48. 48
    bill Says:

    dman

    ice ice baby

    http://www.theaustralian.news.com.au/story/0,25197,25349683-601,00.html

  49. 49
    tater Says:

    Thanks. My fingers are still a bit charred from my last play with SLB, folded my hand one day too soon. Maybe it’s time to trade angry! That’ll be my new strategy, I’ll write a book, Trading Angry With Tater, How to Piss Up a Rope in 5 Easy Lessons.

    Somebody kick Wyoming. I need a pep talk.

  50. 50
    zman Says:

    IOC talking up the support given by Papua New Guinea. Says they will be tripling the country’s GDP by 2014. Reef has stuck with this name, and I should have. Despite some longer than expected timelines they have done everything they said they would and we are looking at oil and not just an LNG opportunity here.

  51. 51
    zman Says:

    Paul – just saw 42. Thanks much, I think it is a testament to the participants here more than it is to me. I’m not a creative guy so I need questions to come up with ideas to talk through. We have a good gang and a wealth of actual drilling experience to bounce questions and ideas off of as well as TA talent, etc. Participation is key.

  52. 52
    zman Says:

    Tater – don’t trade angry is one of my rules, lol. Speaking of my rules, I’m still planning on publishing them, got sidetracked with soccer over the weekend, then the weather turned nice, yada, yada.

    CRK speaks at IPAA after the lunch break, 1:35 EST. Will be listening to that, the Core Labs (CLB), then SWN.

  53. 53
    zman Says:

    HAL wants to go higher. Holding my puts through SLB Friday, not adding. Not really re-thinking position, just telling you what it seems to be doing. Confounding? Yes. Surprising. Not really, not given the first 4 months of performance here. Do estimates come down more? Probably but more slowly than they have been. One result of the call may be that the stock begins to mark rig counts both in NAM and the international scene a little more closely now. They basically tied the trough in margin compression to the rig count on the call, so continued rig declines will mean further deterioration. 2Q EPS is $0.31 vs this $0.42 performance so the pressure to cut for the next month at least is probably off.

  54. 54
    zman Says:

    BJS and NBR report tomorrow. BJS should see a much worse 2Q as weak prices hit the whole quarter. NBR should have weaker margins as they’ve been taking some low priced bids for international work. Probably going to avoid puts on both for now as the sentiment on oil service seems to be, yep earnings stink, so what.

  55. 55
    elduque Says:

    When does July become the active month in crude futures?

    Thank you

  56. 56
    zman Says:

    Eld – on Wednesday.

    You can always check those dates on the bar chart site (or ask me):

    Top corner of the graph:

    http://charts3.barchart.com/chart.asp?sym=CLK9&data=A&jav=adv&vol=Y&divd=Y&evnt=adv&grid=Y&code=BSTK&org=stk&fix=

  57. 57
    zman Says:

    Wyoming is otherwise detained today but did send this regarding the President’s new simpler tax plan.

    http://jessefelder.posterous.com/president-obama-calls-for-a-simpler-tax-code

  58. 58
    zman Says:

    Nicky having trouble getting on the site:

    Sent this via email:

    Broader market – looks to have topped and now we correct (didn’t quite get to my 880 target on spx). That said an early week sell off is often bullish so I can’t discount one more move to the upside which would really have those bears on the back foot as they are now of course screaming top is in as we break down out of the channel.

    If the top is in then likely we are getting near the end of wave 1 down with a wave to bounce to come which is likely to take us back towards 860 on spx.

    Oil is following the indices pretty much and I had said last week I was concerned it wasn’t moving higher even as the broader market did. I think we trade down to maybe early 40’s before moving higher again. That is big picture. Short term like the indices we are probably setting up for a bounce shortly.

    Nicky

  59. 59
    zman Says:

    Merrill talking about multiple expansion setting in this week for the big service names (Um, it already has but I guess they mean more). They also see a pull back once this week is over or the potential for a pullback. I can see what they mean as we’ve had some very big ups like NBR from sub $10 to over $15 and then pulling back $2 today on no news but earnings tomorrow.

  60. 60
    zman Says:

    Natural gas imports watch:

    LNG at 1.4 Bcfgpd, that’s the highest we’ve seen in over a year, up from 1.1 last week. This does not really seem to be impact gas much today as oil is off 8% vs NG off 4%. Still, it may be the beginning of the expected ramp in LNG imports.

  61. 61
    zman Says:

    OIH off 5.8%; HAL up 2.8%. Not exactly what I was looking for.

  62. 62
    Nicky Says:

    Hi Z I am on now – obviously!

  63. 63
    Nicky Says:

    Agree re Tater’s 840 level, then 830, then 816.

  64. 64
    zman Says:

    Thanks Nicky. On natural gas I think we trying to put in a bottom here to $3.50. Could see $3 but only briefly and I starting to doubt we have that much downside more and more.

  65. 65
    zman Says:

    Just had trouble getting through to the site myself briefly, apologies for the server delays, beyond my control, am checking into more solid state solutions.

  66. 66
    Denise Says:

    Good afternoon everyone-here is the stress test leaking/news rumor
    http://turnerradionetwork.blogspot.com/
    Pappa K saying that he is expecting a 5 to 6% decline(overall market)
    But on a better note he mentions energy
    being a 14% (vesus 16 S&P) weighting in his portfolio because he feels it is cheap vs the commodity
    Sharing his thoughts on weighting sectors is a new from him.
    I can post if anyone is interested-he will be sharing his thoughts monthly

  67. 67
    zman Says:

    Glad to see HAL put in a new mid day high and failed back away from it.

    Thanks for the Kass update. Glad to see he’s noticing energy in here. Especially on the NG side, it has underperformed and is setting up for a big potential pop on increased electricity market share, recovering economy, and, dare I say it, hurricane season.

  68. 68
    ram Says:

    HK looks like it fell off a cliff – any news?

  69. 69
    Denise Says:

    On Friday I read 3 different articles by technicians about NG bottoming-
    Good sign and two were buying

  70. 70
    zman Says:

    Parent teacher conference, back in an hour.

  71. 71
    Paul in Kansas City Says:

    I know not everyone is a fan of Realmoney but the writers there are very knowledgable. I am a very satisfied subscriber and have made money (and more importantly not gotten killed) as a reader. One man’s opinion.

  72. 72
    Garyinhou Says:

    I’m thinking normal, perhaps even overdue correction for oil and related names.. funny how conveniently the correction comes Monday after expiration

  73. 73
    cargocult Says:

    Any idea as to ex-dividend date for LINE?

  74. 74
    tater Says:

    Throwing my 2 cents in on the NG levels. Posted a long term chart at (2nd chart on the list)

    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2933882

    Ram,
    For HK, it sure appears that the 20 EMA has held as support for a month or so. I’m playing that now with trade failure seen as a break of the 20 EMA.

    I know that a bearish outlook for NG and a bullish outlook for HK is not congruent, but that’s for Z to explain. That stuff is way beyond me. Good luck

  75. 75
    bill Says:

    ipaa

    links to webcasts

    http://www.vcall.com/CustomEvent/conferences/IPAA/20090420/agenda.html

  76. 76
    ram Says:

    Thank you Tater. It just seemed that there might be a leak that there is no update and people just left HK abruptly.

  77. 77
    kiaora Says:

    Hey Denise— Always interested in what Mr K says.

  78. 78
    john11 Says:

    re 33 LINE ex-div not announced yet but probably first few days in May.

  79. 79
    jy Says:

    RE #26 (McMoRan @ Blackbeard prospect)from their 1Q release this AM.
    “..McMoRan and its partners are continuing engineering planning for the completion and testing of the Blackbeard West ultra-deep exploratory well on South Timbalier Block 168, which is temporarily abandoned and not yet fully evaluated…..”

    So no mention of timing for testing the well.

    From previous experience, I’d suspect that Mr. Moffatt will talk about the POTENTIAL of the Blackbeard Prospect for as long as possible and that there will be numerous delays in actually testing the well from the section below 30,000′ owing to high temperatures and pressures that will cause multiple testing failures.

    Just a prediction.

  80. 80
    zman Says:

    Back in, didn’t miss much. Does look like a bit of extended profit taking.

    No news on HK. It’s moved to trading more in line with most of its peers today on a % basis, doubtful there’s a leak as there is no promise of an update. If they don’t have new news with IPAA tomorrow it will be an uncommonly long stretch as they have well information to share and did not at Weil early in the month. If they don’t do it tomorrow I’d guess they wait until earnings (date not out yet but should be covered by the May calls).

  81. 81
    zman Says:

    jy – yep, that sounds like Jim Bob. I will go back and listen to the call, heard he was characterizing flat rock to blackbeard as one big super structure. Normally you hear him say things like that or that blackbeard is a Tahiti deepwater lookalike in the shallow water. Anyway, pretty interesting as a call option on the potential reserves with no expiration. Got to get hands around that balance sheet before I’d jump.

  82. 82
    zman Says:

    Listening to SWN at IPAA, nothing really new so far.

  83. 83
    zman Says:

    SWN – flipped through slideshow, nothing on the timing of the 2 Haynesville wells there.

  84. 84
    zman Says:

    SWN – first well completed for 7 mm/d, second well about to be completed.

  85. 85
    isleworth Says:

    Z -noted Tater’s NG chart and expectation of $2.50 gas in #74…….what is average breakeven these days for most NG producers?

    Also at what price level would you expect the electric utilities make a switch to NG?

  86. 86
    zman Says:

    Just saw Johnson Rice call the HAL quarter “better than expected”. Wow.

  87. 87
    Popeye Says:

    HAL now green.

  88. 88
    zman Says:

    Popeye – yes, has been much of the day to my dismay, after it “beat” sharply lower expectations. The call was as upbeat as you can be while warning that things continue to get worse. SLB, which should be more insulated than HAL from the current decline in NAM activity is down over 5%. Perhaps they will add a touch of reality to the service landscape when they present their quarter on Friday. I do think the stock price in HAL is a house of cards and if it can break 18.75, is in for a tumble towards the LOD. Then will move with the market. Analysts in the space seem to be mixed but I’m seeing several say they are thinking we see multiple expansion from here (meaning EPS falls and price rises).

  89. 89
    zman Says:

    Ram – ok, now it does look like HK is “off a cliff”; still no news, looks technical, which I defer to Tater. The stock snapped the 20 moving average and is now eying $20 even.

  90. 90
    zman Says:

    Added a few more of the HK April $24 calls for $0.50.

  91. 91
    choices Says:

    This from a Zack’s analyst on Seeking Alpha:

    “Companies That Could Issue Negative Earnings Surprises

    Schlumberger (SLB) has missed expectations during 3 out of the last 4 quarters. Ahead of the company’s first-quarter earnings release, nearly half of the covering brokerage analysts have lowered their forecasts. This has resulted in the consensus estimate falling 6 cents to 77 cents per share. The most accurate estimate is even more bearish at 73 cents per share. Schlumberger is scheduled to report on Friday, Apr 24, before the start of trading.”

  92. 92
    zman Says:

    Merrill keeping estimates unchanged at HAL, maintains buy. Basically they think the storm is over, trough in activity this quarter. They see cost cutting helping out in the second half which is what the company said.

    My nutshell on the name: I think we see further slowing in the international markets which hurt them and I think we see continued weak and weaker activity in the U.S. as prices afar and near are less than inspirational. I think the Street will wait awhile before making further cuts to estimates but that later in the quarter estimates will again get trimmed for 3Q and 4Q.

  93. 93
    zman Says:

    Thanks choices.

    Ugh, declaring beerthirty five minutes early.

  94. 94
    Denise Says:

    Anyone know any
    news about KOG? Up 19%

  95. 95
    zman Says:

    Denise – BOP had updated us on them last week, they should not have completion info available yet on their two wells in the Bakken. They do speak tomorrow at IPAA so maybe they are leaking something. Saw it up 2 cents all day long and seems to have just been some piling in action.

    HAL closed flat on the day.

  96. 96
    Denise Says:

    Thank you

  97. 97
    zman Says:

    I’ve got an email with BOP who I think is traveling today.

  98. 98
    tater Says:

    Left to pick up a few things at Costco. Couldn’t resist the ShamWow! for ONLY $27. I’m such a loser.

    HK
    Sitting at the 200 EMA after today. As the price was unable to clear the 22.65 line (won’t bore everybody with why that level is significant, but technically I really think it has proven to be so) it could mean that price might get stuck in a trading range for the time being. I don’t have much more to go on other than that. Rough day for many names, it’s fairly obvious that the pullback was across the board with the smaller names getting crushed harder (as they had been pushed up higher on the recent bull run).

    Wonder if the sell in May ’09 idea is going to turn out to be the trade of the decade.

  99. 99
    zman Says:

    Tater – just got my copy of “Coaching The Mental Game”, thanks for the tip.

  100. 100
    tater Says:

    Let me know how you like it. I actually try to flip through it before a practice and see if I can’t remember to try to work through one of the lessons each practice in addition to the normal skill development for the day.
    I love his constant message of attempting to focus and work on only those things that are within your control. “Winning” is not within your control, so it’s not something to worry about, while focus, effort, preparation are. Great stuff. Makes goals accomplishable.

  101. 101
    nifkin Says:

    HISTORICAL NEWS

    Petrohawk Energy Corporation Provides First Quarter 2009 Operational Update

    First Quarter Production Averages 412 Mmcfe/d, Up 14% Quarter Over Quarter

    Company Raises Eagle Ford Shale EUR Estimates to 5.5 Bcfe Per Well Based on Core Analysis and Positive Drilling Results

    HOUSTON, April 21 /PRNewswire-FirstCall/ — Petrohawk Energy Corporation (“Petrohawk” or the “Company”) (NYSE: HK) today announced its first quarter 2009 operational results, including updated drilling results from the Haynesville Shale, and the results of core analysis and recent wells completed in the Eagle Ford Shale.

    Production for the quarter was approximately 412 million cubic feet of natural gas equivalent per day (Mmcfe/d), a 14% quarter over quarter increase and a 58% increase over first quarter 2008. During the quarter, Petrohawk drilled 165 gross wells, of which 34 were operated, with a success rate of 99%.

    Haynesville Shale

    Petrohawk utilized eight horizontal rigs on average in the Haynesville Shale during the first quarter, not including spudder rigs. A total of 15 operated and 16 non-operated wells were drilled. Of the operated wells, 11 were on production at the end of the quarter. Additionally, five operated wells drilled in late 2008 were put on production, bringing the total number of Haynesville Shale wells completed by the end of first quarter to 28. The average initial production rate for operated wells completed during the quarter ranged from 3.3 Mmcfe/d to 24.8 Mmcfe/d, averaging 17.1 Mmcfe/d. The average initial production rate for all operated Haynesville Shale completions to date, excluding two previously reported wells that were mechanically compromised, is approximately 18.0 Mmcfe/d.

    Spud to spud times are currently averaging 60 days, with total spud to first production times averaging 80 days. Drilling efficiencies are being gained by increasing the size of the intermediate casing used, from 7 to 7 5/8 inch. This has allowed for a larger hole size while drilling the lateral, which in turn has resulted in significantly higher rates of penetration. The Company has also undertaken more progressive angle-building in the curve, and thicker geosteering targets, which have also contributed to decreased drilling days. Drilling and completion costs are currently ranging between $9.0 million and $10.5 million per well, based on average lateral lengths of 4,300 feet with 12 to 14 fracture stimulation stages per well. The Company is targeting development well costs between $8.5 and $9.5 million per well.

    Petrohawk continues to employ the same basic completion procedures utilized in 2008, with some refinements. Lateral lengths are targeted at between 4,300 and 4,600 feet, with frac stages spaced approximately 325 feet apart. Each stage is comprised of four perforation clusters, two feet in length, and spaced approximately 80 to 85 feet apart. The Company utilizes a slickwater technique as well as either ceramic and resin-coated proppant, preceded by 100 mesh sand. The longest lateral length drilled to date has been approximately 4,700 feet with 14 stages of fracture stimulation. Even though these procedures have delivered outstanding well performance, Petrohawk continues to evaluate these procedures and plans to test variations on these methods to maximize well economics.

    Recently drilled wells have tested several new development areas away from Elm Grove Field. The Company will conduct its 2009 program on locations in excess of 40 miles apart in both north-south and east-west directions, including portions of Caddo, Bossier, Red River and DeSoto parishes. East Texas development will primarily be directed through a joint venture partnership with EOG Resources, which expects to increase the drilling activity in the joint venture area during the year.

    In addition to its existing infrastructure from operations in Elm Grove Field of northwest Louisiana, Petrohawk has completed construction on more than 50 miles of 16 inch gathering lines as well as approximately 330 Mmcf/d of treating capacity to service new production from the Haynesville Shale. The Company expects to construct an additional 112 miles of gathering pipeline and an additional 420 Mmcf/d of Company-owned treating capacity by the end of 2009.

    Additionally, Petrohawk has finalized an agreement with Regency Energy Partners to secure space on Regency’s Haynesville Expansion Project to transport 400 Mmcf/d from the area. The Haynesville Expansion Project is expected to be completed by year-end 2009. Not including the incremental transportation space added by the Regency Energy Partners project, Petrohawk’s total takeaway capacity builds to 850 Mmcfe/d during 2009, with additional takeaway capacity available on a non-contracted basis. Additionally, the Company has acquired firm transportation on other pipelines that it expects will provide sufficient take-away capacity for future Haynesville Shale production.

    Eagle Ford Shale

    In South Texas, Petrohawk has leased approximately 160,000 contiguous net acres prospective for the Eagle Ford Shale in LaSalle and McMullen counties. This area has been recognized by the Texas Railroad Commission as “Hawkville Field.” During the first quarter, Petrohawk operated one horizontal rig in the play and recently added a second rig. Three wells were drilled and two were completed during the quarter. The Donnell #1H was completed on February 20th at a rate of 3.6 Mmcf/d and 395 barrels of condensate per day (Bc/d), or 6.1 Mmcfe/d, on a 19/64″ choke with 3585# flowing casing pressure. The Brown Trust #1H was completed on March 26th at a rate of 8.1 Mmcf/d and 200 Bc/d (9.3 Mmcfe/d) on a 24/64″ choke with 4210# flowing casing pressure. Production data from the four wells completed to date indicates lower initial annual decline rates, and a flatter hyperbolic decline, than those observed in other shale plays.

    Petrohawk is encouraged by analysis of core samples from two of the wells drilled to date. The Company recognizes a trend across the field from southwest to northeast of increasing condensate yield, from no condensate production from the Dora Martin #1H to a yield of approximately 110 barrels per million cubic feet of gas from the Donnell #1H, with a distance of approximately 30 miles between the two wells. The Eagle Ford Shale has been encountered in all five wells from between approximately 11,000′ and 11,700′ true vertical depth.

    Other encouraging aspects of the core analysis of these two wells include the following: average total organic content (TOC) between 4.4% and 4.7%; total porosity ranges between 9.4% and 10.7% average permeability ranges between 1,110 and 1,280 nanodarcies; gas saturation ranges between 83% and 85%; and estimated free gas in place per section between 180 and 210 Bcf. These measurements, as they relate to other shale plays, suggest that the Eagle Ford Shale in this particular area is one of the highest quality shale reservoirs discovered to date in the United States.

    Based on gas in place data derived from the core analysis, along with the performance of wells completed to date, Petrohawk is raising its internally estimated ultimate recovery assumption for wells in this play to a midpoint of 5.5 Bcfe per well, with a range of 4 to 7 Bcfe/well.

    Drilling efficiencies already achieved in the play highlight the economic potential of the Eagle Ford Shale, relative even to other efficient properties in the Company’s portfolio, such as the Haynesville Shale. Drilling and completion costs have been reduced by approximately 60% from the first well drilled to the most recent well completed. The first three wells drilled in the play, which were all drilled with pilot holes, whole cores and intermediate casing set, averaged 53 days from spud to rig release. The fourth well, which did not have a pilot hole drilled but did set intermediate casing, was drilled to total depth in 32 days. The fifth well, which also did not require a pilot hole but did not have intermediate casing set, was drilled to total depth in 22 days. An improvement in well design has eliminated the need for intermediate casing going forward. Average drilling and completion costs for Eagle Ford Shale wells in Hawkville Field are currently ranging from $4.5 million to $5.5 million.

    Fayetteville Shale

    Petrohawk averaged two operated horizontal rigs in the Fayetteville Shale during the quarter. A total of 14 operated wells and 95 non-operated wells were drilled during the quarter. As a consequence of the delay of the completion of a new third-party pipeline system, the Company had an inventory of 27 operated wells that had not been fractured stimulated by late in the quarter. Once the pipeline was put into service, Petrohawk initiated a frac program to take advantage of new market dynamics; the Company has so far realized an approximate 60% reduction in fracture stimulation costs. Petrohawk expects to have this inventory of wells completed and on production within the next several months.

    Petrohawk continued to experience lower gas price realizations during the first quarter due to pipeline construction delays in the region but expect this situation to be normalized during second half of 2009.

    2009 Capital Budget and Second Quarter 2009 Production Forecast

    Petrohawk is maintaining its previously stated $1 billion capital budget for 2009. Within the drilling portion of the budget, the Company expects to leverage service cost reductions and other efficiencies to allow for increased activity levels in the Eagle Ford Shale and other areas during the year. The Company does not expect these additions will result in an overall increase in the drilling and completion component of the budget.

    The Company reiterates its full year production guidance of 40% year over year growth for 2009. Second quarter 2009 production is expected to average between 420 and 430 Mmcfe/d.

    Petrohawk First Quarter 2009 Operational Update Conference Call

    Petrohawk has scheduled a conference call for today, Tuesday, April 21, 2009, at 7:00 a.m. CDT (8:00 a.m. EDT) to discuss the recent operational update. To access, dial 800-644-8607 five to ten minutes before the call begins. Please reference Petrohawk Energy Conference ID 95699880. International callers may also participate by dialing 706-679-8184. A replay of the call will be available approximately two hours after the live broadcast ends and will be accessible until May 5, 2009. To access the replay, please dial 800-642-1687 and reference conference ID 95699880. International callers may listen to a playback by dialing 706-645-9291. In addition, the call will be webcast live on Petrohawk’s website at http://www.petrohawk.com. A replay of the call will be available at that site through May 5, 2009.

    Petrohawk First Quarter 2009 Earnings Conference Call Scheduled

    Petrohawk has scheduled a conference call for Wednesday, May 6, 2009 at 9:30 a.m. CDT (10:30 a.m. EDT) to discuss first quarter 2009 financial and operating results. To access, dial 800-644-8607 five to ten minutes before the call begins. Please reference Petrohawk Energy Conference ID 95924536. International callers may also participate by dialing 706-679-8184. A replay of the call will be available approximately two hours after the live broadcast ends and will be accessible until May 20, 2009. To access the replay, please dial 800-642-1687 and reference conference ID 95924536. International callers may listen to a playback by dialing 706-645-9291. In addition, the call will be webcast live on Petrohawk’s website at http://www.petrohawk.com. A replay of the call will be available at that site through May 20, 2009.

    Petrohawk Energy Corporation is an independent energy company engaged in the acquisition, production, exploration and development of natural gas and oil with properties concentrated in North Louisiana, Arkansas, South Texas, East Texas, Oklahoma and the Permian basin.

    For more information contact Joan Dunlap, Vice President – Investor Relations, at 832-204-2737 or jdunlap@petrohawk.com. For additional information about Petrohawk, please visit our website at http://www.petrohawk.com.

    Additional Information for Investors

    This press release contains forward-looking information regarding Petrohawk that is intended to be covered by the safe harbor “forward-looking statements” provided by of the Private Securities Litigation Reform Act of 1995, based on Petrohawk’s current expectations and includes statements regarding acquisitions and divestitures, estimates of future production, future results of operations, quality and nature of the asset base, the assumptions upon which estimates are based and other expectations, beliefs, plans, objectives, assumptions, strategies or statements about future events or performance (often, but not always, using words such as “expects”, “anticipates”, “plans”, “estimates”, “potential”, “possible”, “probable”, or “intends”, or stating that certain actions, events or results “may”, “will”, “should”, or “could” be taken, occur or be achieved). Statements concerning oil and gas reserves also may be deemed to be forward-looking statements in that they reflect estimates based on certain assumptions that the resources involved can be economically exploited. Forward-looking statements are based on current expectations, estimates and projections that involve a number of risks and uncertainties, which could cause actual results to differ materially from those reflected in the statements. These risks include, but are not limited to: the risks of the oil and gas industry (for example, operational risks in exploring for, developing and producing crude oil and natural gas; risks and uncertainties involving geology of oil and gas deposits; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to future production, costs and expenses; potential delays or changes in plans with respect to exploration or development projects or capital expenditures; health, safety and environmental risks and risks related to weather such as hurricanes and other natural disasters); uncertainties as to the availability and cost of financing; fluctuations in oil and gas prices; risks associated with derivative positions; inability to realize expected value from acquisitions, inability of our management team to execute its plans to meet its goals, shortages of drilling equipment, oil field personnel and services, unavailability of gathering systems, pipelines and processing facilities and the possibility that government policies may change or governmental approvals may be delayed or withheld. Additional information on these and other factors which could affect Petrohawk’s operations or financial results are included in Petrohawk’s reports on file with the SEC. Investors are cautioned that any forward-looking statements are not guarantees of future performance and actual results or developments may differ materially from the projections in the forward-looking statements. Forward-looking statements are based on the estimates and opinions of management at the time the statements are made. Petrohawk does not assume any obligation to update forward-looking statements should circumstances or management’s estimates or opinions change.

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