Relatively quiet on the energy front after a busy week. Earnings get much more busy and in key names for the E&P group next week (see the quick look table below); I'll have the full week's calendar out in the Monday post.


In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Natural Gas Storage Review
  4. Earnings Watch
  5. Other Stuff We Care About Today
  6. Odds & Ends


Holdings Watch:  The WIKi Holdings tab is updated.

  • Added 10 CLR May $25 Calls (CLREE) for $1.25 and with the stock trading flat on the day. Oily CLR reports 1Q09 results next week. Looking for more positive results out of the Three Forks Sanish in the Bakken play of the Williston Basin, its the unhedged oil name with oil firming and it should be interesting to see how much stretching of their capex will be possible as completion costs come down in the region.
  • Added another 10 CLR $25 calls on this market retrenchment for $0.75. Brings average cost to about a buck.


  • Added (10) RRC May $42.50 calls for $0.70 with the stock off 6+% at $40 on a broker downgrade the day after they reported a solid quarter. This one is gassy and highly hedged for 2009. See the Wednesday post for more thoughts here.


Commodity Watch:

Crude oil closed up $0.15 lower to close at $51.12 yesterday on a dearth of new fundamental data and the early morning pop in the equity markets.  This morning crude is trading up slightly with equity futures and a flat to down dollar.


Natural gas fell $0.03 to close at $3.37 yesterday after the EIA 914 came out, roughly in line with the Natural Gas Monthly and showing few signs of production growth weakness outside of Texas. Gas again appears to be trying to put in bottom at current levels. (See PVA's plan below regarding the current environment). Gas originally recovered from an opening loss after the EIA released an "in line" storage report. This morning gas is trading up 3 to 7 cents.

Natural Gas Storage Review

ZComment: We're going to get full, no shocker there, but this past week's number could have been worse given seasonally slack demand.  A look at the cumulative build in storage to date shows that we are not building gas at a phenomenally high pace despite the fact that we are starting from a higher than usual base. 


Comments For The Graphs Below

  • A) We're at the second highest level of storage for this time of year in history. Highest was this week back in 2006 (when NYMEX gas swapped hands at $7.50)
  • B) & C) We're noticeably flattening against year ago and five year average storage over the last 3 to 4 weeks. ----
  • D) Injection was in line with ones typically seen this time of year. No monster injection which would put us on a more worried footing about demand.


Earnings Watch

CVX Reports Beat

  • EPS of $0.92 vs $0.81 expected, still down 64% from 1Q08 on lower oil and gas prices but at least they know how to guide the Street compared to XOM's flub yesterday.
  • Outperformance appears to stem from asset sales on the refining side but margins did firm up here slightly
  • Nothing to get wild about here (pretty usual reaction for me on news from a Major other than COP), just good to keep track.
  • Conference call: Today, 11 EST.

CCJ Reports 1Q09 Results

  • EPS of $0.24 vs $0.33 expected
  • Guidance on uranium is slightly better than at last report
  • Conference Call at - today, 1PM EST
  • Just coming back up to speed on a story I used to follow more closely

Other Stuff We Care About Today

PVA Provides Operations Update:

  • Not one I track very closely so but a few items of interest:
  • Volume guidance unchanged.
    • Capex getting slashed - from a range of 210 to 220 mm to one of $130 to $140 mm
      • they spent $86 mm in 1Q
    • "we have decided to defer most of our drilling efforts until market conditions improve"
    • My sense is you are going to see more of this as we approach the end of E&P company's good hedge levels.

Names We Care About Reporting Next Week:



Odds & Ends

Analyst Watch: (GDP) initiated at Weisel at Underperform, Wunderlich takes (OII) target from $40 to $50.

214 Responses to “T.G.I.F.”

  1. 1
    zman Says:

    (BRY) cut from Buy to Hold at Tudor Pickering, says upside harder from here. In other words, stock has had a good run and we’re bailing out.

  2. 2
    zman Says:

    FBR ups RRC target from $45 to $47

  3. 3
    nifkin Says:

    any read on Capex from CVX? XOM call yesterday hit the OSX on the capex commentary- was wondering if we get the same action today.

  4. 4
    BirdsofpreyRcool Says:

    Credit Market opened a tad stronger to yesterday’s close, but couldn’t hold the meager gains. Off a bit now. Still, have come very far, very fast. Taking a breather to figure out which way to go from here. But, credit has been leading stocks lately, not the other way around. This is a shift from the last 2 months. High Yield had the best month (ever?). Up something like 8% for April alone. Thing is, there is a lot more to go in credit. For investors who lock in at the right price, bonds will provide equity-like returns for several years. I would look for low coupon, low bond price bonds, as these will not be called by the company, at the first possible call date.

    IG 166 +2.5 bps from yesterday’s close

    HY 79.25 unch’d

  5. 5
    zman Says:

    Nifken – saw they spent $6.5 b in 1Q up from $5.1 year ago (going on memory but should be close), there was a concession extension in this quarter which inflates Capex. I don’t recall if that is up down or sideways to last quarter comments, will check. I did not see a mention of rest of year though so I’d guess we have to wait on the call to see if they are pulling back or not.

  6. 6
    BirdsofpreyRcool Says:

    Credit market moving another tad wider, as measured by the investment grade CDX index

    IG 166.5 +3bps now

  7. 7
    zman Says:

    BOP – thanks, good comments re bonds. Now I’ve just got to find some for the kid’s accounts.

    Any comments from HT or TT on the day’s outlook?

  8. 8
    BirdsofpreyRcool Says:

    By the way, both Head Trader and Tech Trader are out today and monday. Even avid, professional Screen Jockeys occassionally take time off to go golfing in Florida. So, flying without the benefit of HT’s gut feelings or TT tea leaves (and moon cycles) for a while.

  9. 9
    zman Says:

    BOP – can you check to see if Gheit is the covering analyst at FBR on RRC?

  10. 10
    BirdsofpreyRcool Says:

    FBR RRC analyst listed as Rehan Rashid on BB.

  11. 11
    BirdsofpreyRcool Says:

    I get the feeling that the mrkt is going to wait to take its cue from the eco data, released at 10am. U of Mich Consumer Confidence (exp’d 61.9), Factory Orders (-0.6%), and ISM (38.4). Also, get domestic vehichle sales reported throughout the day.

  12. 12
    BirdsofpreyRcool Says:

    Rats. The credit inch wider continues.

    IG 167

  13. 13
    BirdsofpreyRcool Says:

    The thing that was incredibly disturbing about the Gov’ts “offer” to Chrysler bondholders is that it had no respect for the rule of law. The lenders in this case are senior SECURED lenders. Both the UAW claims and the Govt loans are unsecured, and therefore come AFTER the bondholders are repaid. However, the gov’t “proposal” not only turned that legal order of priority claims on its head, but it gave an enormous preferential treatment to the UAW. You can say “no surprise.” But it is the blatant disregard for contract law and private market legal claims that is unsettling.

    The TARP-Banks all “agreed” to this settlement, of course. The Non-TARP bondholders are being labled as greedy bastards by the govt. Wow. Nasty, stuff. If they succeed in strong-arming the “hold-outs” to swallow the blatantly unrealistic “offer,” then any company with a unionized workforce will end up paying a LOT more to borrow from the private market.

    Just a few comments from the bond-side of the market.

  14. 14
    Dman Says:

    Interesting short candidate: XRT (retail ETF)

    (mentioned at Minyanville)

  15. 15
    BirdsofpreyRcool Says:

    High Yield Index giving back a little of its gains now. Thing is, I think trading is kind of meaningless, until we get the eco-reports at 10am. Market wants to take its cue from something. So, will be watching the bond market closely to see what direction they decide to take it.

    HY 78.625 -.625

    IG 169

  16. 16
    zman Says:

    Re 13 – agreed. When a company is between a rock and hard place, the senior debt holders are supposed to be that hard place. Really would like to see this get past us, hard to invest when there is so much attention on the bailout recipients and bankruptcies for the admin to go after with Wallstreet bashing comments.

    Dman – yeps, stores next to empty around these parts, more employees than shoppers at Best Buy, TGT, and Home Depot on week days, week nights. Weekend not so bad but I get one notice every two weeks or so reducing my line on unused credit cards so that can’t be good for Joe Consumer who needs that line to buy stuff he doesn’t need.

  17. 17
    BirdsofpreyRcool Says:

    IG 169.5 +7bps

    Big moves… but no real flows yet. So not a lot of meaning behind the weakness.

  18. 18
    zman Says:

    Raser Tech on CNBC touting a 100 MPG Hummer, that meets the new 40 mile all electric standard.

    If we all go to electric or electric hybrid, I wonder how our electric grid which is worn and stretched to capacity much of the year in a normal economy is suddenly going to charge all of our cars overnight without a big surge in natural gas fired generation.

  19. 19
    BirdsofpreyRcool Says:

    OK. Someone decided to take a stance. A Bull just raised his head above the foxhole.

    IG 168… keep in mind, lower is better for investment grade (and higher is better for high yield)

  20. 20
    zman Says:

    18 – ticker RZ

    Stock exploding on the free press from CNBC

  21. 21
    BirdsofpreyRcool Says:

    A second Bull saw the first one didn’t get shot.

    IG 167.5

  22. 22
    BirdsofpreyRcool Says:

    Consumer Sentiment at 65.1. Much better than expected.

    Happy credit bulls.

  23. 23
    zman Says:

    CLNE catching some happy shrapnel from the move in RZ. RZ apparently does geothermal electric as well.

    RZ’s website just crashed, lol.

  24. 24
    zman Says:

    Almost entirely green screen energy

  25. 25
    BirdsofpreyRcool Says:

    hmmmm… the U of Mich sentiment index reported early. Still have a few minutes to go for the other reports.

  26. 26
    Dman Says:

    Z – in the spirit of those who debate how many angels can dance on a pin, I ask a question about “consumers” (formerly known, in the distant past, as “people”):

    Which is more important: the fact that they don’t need the stuff or the fact that Mr Visa won’t let them buy it?

    Just a rhetorical question, no need to wrestle with it.

    On a more practical note: what do you think is the immediate driver/catalyst for GMXR here?

  27. 27
    BirdsofpreyRcool Says:

    Factory Orders -0.9% (vs -0.6% exp’d)

    ISM Manufacturing 40.1 (vs 38.4 exp’d) – wow!!

  28. 28
    zman Says:

    ISM = good for industrial gas demand. Interesting to note the lack of further deterioration in industrial gas demand shown way back in February. A lot of manufacturers whose key cost is NG are getting a bargain in here. I’ll start tracking the commercial types (non-speculators) in the CFTC’s NG report to see if they start to lock in more gas at these levels, generally = turn time.

  29. 29
    AAA Says:


    I was out yesterday. Could you bottom line the FSLR CC please?

  30. 30
    BirdsofpreyRcool Says:

    IG 166

    Credit market liked the eco-numbers and has picked a direction, tighter. Supports a higher stock market here.

  31. 31
    tater Says:

    As the financials have much to do with the general market and therefore everything else, do you have an opinion on the delay of the stress test info?

  32. 32
    bill Says:

    bot my first service company

    dwsn no debt, conservatively run

    Dawson Geophysical Company provides onshore seismic data acquisition services

    just because ep are not drilling doesnt mean they arent looking

    BP hired them recently

  33. 33
    Dman Says:

    Z – #18 yeah I was thinking that the other day when I read a post over at Jim Kingsdale’s blog. He was discussing new testing results from EEStor (they are working on a new ultracapacitor that would revolutionize electric cars). He mentioned it as a (speculative) intermediate-term threat to oil prices. They are backed by Kleiner-Perkins, so it is serious technolgy, but still in development.

    However, if it worked (or something similar worked) it would be a complete game-changer for NG, since all that “E-power” has to come from somewhere. NG would be the new oil & today’s prices would be a distant memory.

  34. 34
    zman Says:

    AAA re FSLR


    * Much better than expected numbers
    * Cost per watt dropped hard to $0.93 – looks like it drops further all year (grid parity holy grail has always been $1.00)
    * Guidance reaffirmed for the year on revenues.
    * the 10 to 15% of “floating” backlog remains at that level
    * they added $470 mm in new backlog during the quarter.
    * slight lower margins for quarter 2 to 4
    * they provided a good look at their margins vs traditional PV silicon margins in the slide show, highly recommend viewing that show from their website if you are into solar names or want to be.
    * seeing some signs of life from German lending. Rest of Europe (Spain) still more uncertain.
    * encouraged by activity in U.S. utility market
    * stock ran hard, I pulled the plug at $189 and am watching for a re-entry, unlikely to do that today but it depends how far it falls.

  35. 35
    BirdsofpreyRcool Says:

    tater — i have an opinion on the “Stress Test” in general… but, you weren’t asking that.

    The delay is probably a combo of the Treasury biting off more than it can chew + some Banks saying “WTF” and debating the results + still some confusion about how to releast the “results” without creating a run on some banks.

    The Treasury put itself between a rock and a hard place on this. No graceful way to handle it, at this point. If the “results” tank the financial sector, I would be a buyer. If the results breath a sigh of relief through the financials, I would be a seller and move on. Personally, I think the financial sector is “old news” at this point. Not that everything is hunky-dory from here. But, the financials will no longer drive the market psychology as much, from here. Look to the consumer to take over the steering wheel.

    JMO… and worth what you pay for it.

  36. 36
    BirdsofpreyRcool Says:

    tater — back atcha. What do you think??

  37. 37
    tater Says:

    Thanks much. I appreciate your ideas.

  38. 38
    zman Says:

    Bill – not on board with the concept of seismic additions to libraries at this time. I guess it depends how far the stocks have already fallen but the comments on Western Geco by SLB were not very jump up and down to me. The estimates on DWSN foretell tough times too with EPS of $1.97 for 2009, falling to $1.04 in 2010. What’s up with that I wonder.

  39. 39
    zman Says:

    NG getting a good bounce this morning. I don’t think its a dead cat, I do think its part of the bottoming process and I do think the actions of PVA today will not be unique.

    Tater – all of the oil service charts look the same to me. One of my favorite formation for going long, the scoop chart. Any thoughts on that, some will do fine through this some will suffer much more pain but all the charts look the same.

    DWSN very nice scoop chart, would buy just on technicals if I liked the fundies at all.

  40. 40
    tater Says:

    Sorry, 867 is a battleground and I’ve got my guns blazing since yesterday.
    Summary of my thoughts is that this market has been artificially manipulated higher. I’m not getting all wacko, it has happened since markets existed. This is no different. Just the nature of of the beast. As such, the higher it gets pushed, the harder and quicker the inevitable fall will be. (No news there).

    As for financials, having been a lawyer, I find it comforting to know that there may actually be a lower form of mammal lurking around the planet.

  41. 41
    zman Says:

    Notes from an interview with a land lawyer friend in the Fayetteville:

    1) How many wells to get a section into HBP? In the Haynesville they’ve been going with 1 but I’d bet its more in Arkansas, guess is 2 to 4

    2) What’s the typical lease term?

    One producing well will hold a unit/section. However, there’s an implied covenant to continue developing (drilling) as long as it is economically viable to do so under a “reasonably prudent operator” standard. Both three and five year primary terms are common now with most knowledgeable landowners demanding three year terms.

    More Questions from me: So one well technically could hold 640 acres? What’s the average royalty rate going for now, and would you happen to know what acreage is going for? Also, to get acreage into HBP in Ark, you actually have to complete it, right, can’t just drill and wait for higher prices and lower frac costs?

    More Answers: Competitive royalty rates now are anywhere from $750 to $1500 depending on location. Land prices have dipped some and I’m not sure about that buy I’ll ask around.

    To hold by production you have to maintain continuous drilling operations through completion. You can then hold it for some time by paying shut-in royalties but a reasonably prudent operator can’t rest on that for too long. Wise landowners require shorter term shut in periods.

  42. 42
    zman Says:

    Tater – I’d give you the hierarchy of mammals but it would probably offend.

    Oil service having a tough time day 2. Interesting.

  43. 43
    BirdsofpreyRcool Says:

    tater — your thoughts are aways well put. thanks.

    To be perfectly clear here, I am not a cheerleader for the mrkt going higher. Frankly, I don’t see how it can. Earnings are just not gonna grow much from here and there is still a slew of jobs to be canned, I think. So, buy on down days and sell on up. Protect the nuts. Volatility reigns. Don’t marry a position. All phrases to put on a pillow and sit on.

  44. 44
    zman Says:

    Bill – PXP more interesting that I thought, will have something out in the Monday post.

  45. 45
    bill Says:

    jrcc coal is soaring

    ty for dwsn feedback

  46. 46
    zman Says:

    Bill – on the DWSN – its just off top of head, not a big fan of group, nothing against those particular guys, could be 180 wrong there as its not really my cuppa company.

  47. 47
    tater Says:

    Oil service. I’ve been reading from a few people that I respect and they seem to be saying it’s time to be a stock picker vs. playing the macro indices. I feel that the opposite strategy is what is going on.
    SLB didn’t say that love is in the air. I think the money managers are just reaching in to make sure that they can mark their books appropriately.
    Good example from the consumer driven world. I spent the day yesterday playing with SBUX. Take a look at the 60 min chart if you have a chance. Then go read the call (good idea for everybody if you are inclined to share BOP’s view of what may drive the market going forward).
    The craze to buy the open yesterday resulted in one of my best short plays ever. Not that it’s about me being so right (lucky), I just think that the money managers had such a crap 2008 that they need to goof around in order to keep their jobs. I have relatives in NY in the industry. Big nice houses are for sale everywhere.
    Guess I am rambling. I think that the general market controls going forward and service stocks will “ride the winds of change” just like the rest of us.

  48. 48
    bill Says:

    ive been early (feb) and lost money on it but its lagging everybody in the sector.

    That had a huge q4 write down due to low oil prices and high differentials but they get alot of that back with higher prices.

    Since the preaanounced , no q1 write offs, and i know oil and differentials have improved , im sure they got some of those resserves back.

    ng is hedged at 10.. lol after cashing in 1.1 b in hedge monetization and they have puts on 70 % of the oil at 55 protecting downside and they get all the upside if prices rise

    I was playing around with numbers last night and i think they can do between 325 and 340 m in vol for q1.

    Costs are going down lower dda

    1 “problem” lower production in 2009 as they sold some assets to oxy in q4.

    You have a better handle on eploration values in gom and vietnam but they have monetized (sold) in the past

    trading below book ( i like that metric) i know no one looks at it

    anyways, as always, im interested in your views

  49. 49
    tater Says:

    Seems like the wind smells like a fart.

  50. 50
    bill Says:

    re 46 im not that bullish either but took a small position in this one company as i think the negatives have been factored in and they seem to trading at less than 3 times ebitda, below book, cash on hand and no debt

    Doesnt appear to be too capital intensive

    anyways, im not adverse to taking a profit if it pops 20 %..

  51. 51
    zman Says:

    Was the POTUS just on TV (again) or was that footage from yesterday? CNBC headline says Obama takes aim at the hedge fund industry.

    Bill – thanks for that color, agree with your basic premise now more. One thing, aside from the fact that I don’t find write downs for full cost acct very important, why do you think they won’t have one, just because its oilier I’d presume?

  52. 52
    Dman Says:

    Z – you might have missed the last line of #26. Just looking for your color on GMXR here.

  53. 53
    zman Says:

    CLR having a fine day today.

  54. 54
    zman Says:

    D – I did miss it, give 10 minutes, someone just brought me intern #2.

  55. 55
    nifkin Says:

    SWN headlines hit- looks like old data from the 8k filed- sold off briefly in the headlines but has since recovered

  56. 56
    bill Says:

    They pre announced that volumes would be about 80,000 bobp about 56 % is oil

    and i assume its the oil i think they got back some reserves that were written off with 30 oil calif heavy with wide differentials


    see this from q4 earnings release

    The proved reserve additions attributed to drilling success in 2008 were offset by 204 MMBOE of negative price revisions. As required by current SEC reporting rules, year-end proved reserve volumes are calculated using commodity prices as of December 31, 2008. The price of natural gas at year-end 2008 was $5.71 per million British thermal units (MMBtu) compared to $7.48 per MMBtu a year ago. The West Texas Intermediate price of oil on December 31, 2008 was $44.60 per barrel, less than half of the $95.98 per barrel on the last day of 2007 when PXP’s proved reserves were last reported. The SEC also requires that proved reserves be calculated using service and production costs indicative of year-end 2008 levels, which were much higher than could be supported by the lower year-end commodity prices on an ongoing basis.

    The majority of the price related revisions to oil and gas properties occurred on our long-life California oil reserves. The dramatic decline in the price of oil coupled with year-end differentials, which were approximately 86% wider than recent historical averages, were the primary causes of the revisions. Using year-end pricing as required by the SEC and recent historical average differentials rather than year-end differentials as required by the SEC, the reserve revisions related to price would have been 166 MMBOE. PXP sells its physical crude under term contracts to high quality counterparties to mitigate the risk of sudden fluctuations in differentials.

    The table below shows the amount of proved reserves recaptured from the negative price revisions of 204 MMBOE at various NYMEX prices instead of those in effect on December 31, 2008. PXP maintained production costs and well costs at December 2008 levels, recognizing that these costs are expected to decrease significantly.

    Reserve Recapture

    Nymex Prices
    Oil Gas Percent (%)
    $/Bbl $/MMBtu MMBOE Recaptured
    $44.60 $5.71 (1) 38 19
    60.00 6.00 138 68
    80.00 8.00 171 84
    $95.98 $7.48 (2) 204 100

    (1) Using recent historical average differentials
    (2) 2007 year-end prices

    After considering the Company’s reserve adds during 2008, offset by the negative price revisions, divestments, and production during the year, total proved oil and gas reserves were 292 MMBOE as of December 31, 2008. All of these reserves are in the United States and 72% are proved developed (PD). Approximately 61% of the Company’s proved reserves are oil and natural gas liquids and 39% are natural gas.

    PXP’s reserves are long-lived with a total reserves-to-production ratio of approximately 10 years and a PD reserves-to-production ratio of 7 years. The Company’s long-lived reserves, with low relative production decline rates, are particularly attractive in the current low commodity price environment in which industry drilling activity is significantly curtailed.

  57. 57
    bill Says:

    here is the q4 release


    and q1 presentations


  58. 58
    bill Says:

    so using the strip they get back 38 mboe or 19 % of the 204 they lost in q4 due to price

    wti is up 6 bucks from year end and i think the differentials have improved another 5 bucks

    this offset the gas decline

  59. 59
    zman Says:

    GMXR – still waiting on news on 3 E. Tx Haynesville wells and redetermination of their bank line which should be flat. More people are thinking flat and the stock has run. I’m not going to chase for now. It caught an upgrade yesterday which helped too. I’ll try and see what that guy had to say or saw that made him want to initiate with a $13 buy target in front of earnings. Without higher prices they are going to be hard pressed in the second half to justify their capex spend relative to their cash flow.

  60. 60
    bill Says:

    and thats why i like it
    – oily name 55% to 60 oil
    – well hedged
    – debt under control, no bank debt on 1 billion line, trading below book
    -recent stock offering pushed it down 10 %
    _ and if you like haynesville, they get 20 % of chk play

  61. 61
    bill Says:

    z you must have a big following

    as i wrote this pxp went up 60 cents, lol

  62. 62
    zman Says:

    Good thoughts Bill.

    On those write downs, the Street largely discounts their importance. The rules force you to write them down when prices make the play uneconomic at a point in time (close of the period prices). When prices go back up you don’t flow a gain through the income statement. Ever. Its a stupid accounting rule and of little value and I can tell from having sold shares to the Buyside for a living, they really could care less about the writedowns, at least the smart ones. I see people ranting here and there about non-cash charges being important because they paid for this stuff back in time so why shouldn’t we care about it. The truth is, the stocks will trade on future prospects and not book value of reserves pretty much all the time outside of a purchase and then they trade on the reserves both on the statement and off it.

  63. 63
    zman Says:

    Bill – now that’s funny.

  64. 64
    BirdsofpreyRcool Says:

    z — yeah. It’s open season on Hedge Funds now. The House is setting up hearings to weigh registration. Keeps the little guys out (and the Big Guys can be pressured… like Perella yesterday). This is bad stuff. But, the press has vilified the nasty hedge funds, so no one will fight back. And hedge funds are pretty much prevented (by law) from being too vocal. So, a witch hunt where the accused lack the tools to fight back.

    Bad stuff people. ‘Nuff said.

  65. 65
    jat Says:

    Z, I’m curious, what are your overall thoughts on oil for the next few weeks here? Obviously dollar / equity market direction dependent, so a lot of variables… but I’ve been thinking all morning just about how poor the weekly DOE data has been. Sure, driving season is a-coming, and we can all hand our hats on increased utilization / inventory draw down. But to a certain extent that’s already is a 53ish price. Anyway, know it’s the usual silly question, but I just can’t convince myself to get behind it unless we really see gasoline demand trend back up to a low single digit YoY comp.

  66. 66
    reefguy Says:

    z- Fayetteville leasehold. Corrent prices in heart of play 500/ac. on edge about 100

  67. 67
    BirdsofpreyRcool Says:

    [the last paragraph should send a chill up the spine of any private investor… it shows a complete misunderstanding of who actually takes “risk” as is protected by contracts here. It is a very “Hugo Chavez” type comment.]

    Wash Post: In Chrysler Saga, Hedge Funds Cast As Prime Villain;
    2009-05-01 06:52:54.959 GMT

    By Steven Mufson and Tomoeh Murakami Tse

    President Obama’s harsh attack on hedge funds he blamed for forcing Chrysler into bankruptcy yesterday sparked cries of protest from the secretive financial firms that hold about $1 billion of the automaker’s debt.

    Hedge funds and investment managers were irate at Obama’s description of them as “speculators” who were “refusing to sacrifice like everyone else” and who wanted “to hold out for the prospect of an unjustified taxpayer-funded bailout.”

    “Some of the characterizations that were used today to refer to us as speculators or to say we’re looking for a bailout is really unfair,”
    said one executive who spoke on condition of anonymity because of the sensitivity of the matter. “What we’re looking for is a reasonable payout on the value of the debt . . . more in line with what unions and Fiat were getting.”

    George Schultze, the managing member of the hedge fund Schultze Asset Management, a Chrysler bondholder, said, “We are simply seeking to enforce our bargained-for rights under well-settled law.”

    “Hopefully, the bankruptcy process will help refocus on this issue rather than on pointing fingers at lenders,” he said.

    Political veterans said, however, that it would be tough for hedge funds to overcome their image as villains. Most politicians have a favorite punching bag. Many Republican politicians like to bash trial lawyers. Many Democrats like to take aim at big oil companies. Hedge funds can serve as a safe diamond-studded scapegoat in tough economic times.

    “It’s hard to go wrong right now being tough on those guys,” said Jeff Shesol, a former speechwriter for President Clinton who noted that Obama had been criticized earlier for not showing enough outrage about AIG bonus payments. He said that Obama’s “frustration, while it may be calibrated, is real. And it’s certainly where the public is.”

    A senior administration official said the tough words on hedge funds were born of frustration, not politics. “The president has been pretty hard-nosed about the whole matter,” said the official, who spoke on condition of anonymity. “There was no calculation involved,” he added.
    Obama “was very willing to praise those who went the extra mile to help make this work, and that included financial institutions.”

    “In particular, a group of investment firms and hedge funds decided to hold out for the prospect of an unjustified taxpayer-funded bailout,”
    Obama said. “They were hoping that everybody else would make sacrifices, and they would have to make none. Some demanded twice the return that other lenders were getting. I don’t stand with them.”

    The president’s harsh criticism may play well on Main Street, but it flopped on Wall Street yesterday. There hedge funds — privately run funds that invest in an unlimited variety of securities and which theoretically balance different kinds of risks — are part of the landscape.

    “It sounds like people are being bullied right now,” said Ron Geffner, a partner at the law firm Sadis and Goldberg, which represents hedge funds. “To play the ‘I stand with Chrysler, I stand with families, I stand with the dealers, I stand with the consumers’ — that’s great conceptually, but . . . I stand with the fact that we live in a capitalist society where companies who don’t modify their business plans and stay current die and go by the wayside.”

    Geffner added that Obama’s remarks made it difficult for the lenders that rejected the offer to speak publicly for fear of appearing “anti- American.”

    Indeed, a group of lenders issued a statement yesterday — but did not identify its members. The group said it included approximately “20 relatively small organizations” that represented “the country’s teachers unions, major pension and retirement plans and school endowments who have invested through us in senior secured loans to Chrysler.”

    The funds hold about $1 billion in Chrysler bonds and have turned down the government’s terms. The government would have paid just under a third of the value of those bonds. However, many funds bought the bonds at deep discounts from other investors who feared the bonds might ultimately be worthless.

    A few firms stepped forward to defend themselves openly.
    “OppenheimerFunds sought fair treatment for the shareholders of our funds and we were willing to make very significant sacrifices to reach an agreement,” the firm said in a statement. But it said the government “unfairly asked our fund shareholders to make financial sacrifices greater than those being made by” other creditors. The firm said its bonds “are entitled to priority in long-established U.S.
    bankruptcy law.”

    But other observers said that the hedge funds were oblivious to Americans’ worries about jobs.

    “They’re not getting it in their heads that this is the worst crisis since the 1930s. People are going to have to take a hit,” said Sarah Anderson, director of the Global Economy Project at the Institute for Policy Studies. “It seems rather short-sighted to risk having the auto sector collapse so that they can get a few more cents on the dollar for their investors.”

  68. 68
    bill Says:

    >, they really could care less about the writedowns,

    isnt that whats is going on with the banks?
    non cash writedowns

    I understand your points and are well taken.

    The accounting rule is like lower of cost or market and it imposes conservatism. Next year, the rule changes to something a little more realistic which is strip pricing as opposed to point in time.

    But everybody is playing by the same rules and id rather own a stock trading below book than above book all other factors being equal. But the other factors are never equal..

    ..and your points are well taken, the writedowns havent been a factor in the trading recently with all the energy names going up in the last month

  69. 69
    zman Says:

    BOP – thanks, got your article on the hedgies. It’s just an obvious case of “wrong think”.

    Jat – I’ll be lame and say $45 to $55 like everyone else, maybe a slight upward drift into month end as we approach the 28th OPEC meeting. Guys like Shork have been trying to get oil lower for awhile now. My sense is we are range bound until we see demand do something separate from the seasonal trend. If we hold flat on gasoline in the next 4 weeks we are in trouble. Demand must rally there. If not gasoline will decline and oil will start to get wagged by the tail.

    Thanks Reef. Seems like guys with cash (and not SWN but others) should be adding now.

  70. 70
    zman Says:

    NG up 18 cents. I have a call in with Nicky on some EW work there.

  71. 71
    bill Says:

    bop 64 and 67

    The politicians are experts at deflecting blame from themselves to others

    Ive reached the point, when they speak, the tv goes off

    Im glad the hedge funds didnt roll over

  72. 72
    BirdsofpreyRcool Says:

    bill – bless you!

  73. 73
    Garyinhou Says:

    TGIF… Z.. you liked the clree’s at avg a buck… what are your thoughts of them at 1.60 for a johnny come lately entry?

  74. 74
    zman Says:

    Vice Chair Berkshire:

    Passing cap n trade “Monstrously Stupid”. Guess he’s off the White House Christmas ornament list.

  75. 75
    zman Says:

    Gary – I was mulling taking my $0.75 cent second half of the position off here but holding the first ones I took at $1.25 through earnings next week.

  76. 76
    zman Says:

    That swine flu fyi I posted was a modified version of what the doctor originally sent, we got this from the doctor. He’s concerned by it but not like the post yesterday would have you believe. Ahhh, the internet.

  77. 77
    zman Says:

    HK cut to Neutral at Capital One.

  78. 78
    Garyinhou Says:

    Thanks Z.. what about everyones thoughts for mon/next week.. more/same? sell off?

  79. 79
    choices Says:

    Z-as bill mentioned earlier, JRCC strong today-other coal stks also very strong, NG up, crude up, USD/CAD broke 1.2 support yesterday and down now trading at 1.85 (good for energy)-copper up, gold weak, news bad, seems like an alice in wonderland market-can’t quite understand why the entire energy sector is so strong today

  80. 80
    zman Says:

    Thought on 77 is that that is Southcoast which used to be pretty good shop. I would imagine their note is based on valuation and a lack of catalysts on the conference call. I recall that in the 1Q08 call, they had little to add because they had given an operations update only weeks before which spilled the beans on production and on new well news. The stock was weaker on good numbers due to this lack of new news. The thought had occurred to me that this could be the case with these earnings as well but I think they may have some more news up their sleeve. I still may lighten up a little more given the price action.

  81. 81
    zman Says:

    Coal has been moving in lock step with gas on the down path after a bit of a delayed reaction to the drops in gas late last year. It would stand to reason that it rallies with it too, especially as we enter the AC load season.

  82. 82
    zman Says:

    Gary – just for my part, rally looks too strong in here, I will lighten some load in a few minutes on a number of names, not going away from the earnings ones but taking some cheddar off the table.

  83. 83
    zman Says:

    Anyone hearing that rumor about a sell program again for later today?

  84. 84
    zman Says:

    Wow PQ – just noticed up 9% to 3.30.

  85. 85
    Garyinhou Says:

    Thanks Z..

  86. 86
    zman Says:

    FSLR, backed off to 179, not yet tempted.

  87. 87
    BirdsofpreyRcool Says:

    CRZO — up over 11%. Reef, you there?

  88. 88
    zman Says:

    Just sent around a fair warning ZBLAST regarding a coming set of profit taking trades on this rally. It’s also a test to make sure you are getting the ZBLASTs. If you DID NOT get it, please send me an email at zmanadmin@gmail.com using the address you want ZBLASTs sent to. Thanks.

  89. 89
    BirdsofpreyRcool Says:

    Noon Credit Update

    IG 166

    HY 79.125

    off their highs, but up from the lows, pre-eco #s this morning.

  90. 90
    Wyoming Says:

    Is there a TPH person on the Blog?


    They sure do take the bait whenever I send it down here. Mea culpa?

  91. 91
    bill Says:

    PLLL up 20 %

  92. 92
    zman Says:

    Wyoming – Yes, they have a spy in here.

    Bill – yep, but those little names are easy to push. I knew that story way back, I would not touch.

  93. 93
    BirdsofpreyRcool Says:

    The Bank Stress Test = “The beatings will continue until morale improves.”

    What a completely, ill-conceived, wrong-headed, ignorant move by our own govt to undermine our own banking system. After TARP-ing the banks to save them, this was a Twilight-Zone-weird hoop to make them all jump through.

    Regulators Said to Plan Stress-Test Disclosures May 7 (Update1)
    2009-05-01 15:55:12.844 GMT

    By Craig Torres
    May 1 (Bloomberg) — The Federal Reserve and U.S. banking regulators will reveal the results of the stress tests on the country’s 19 largest banks on May 7 after financial markets close, according to a government official.
    The government will unveil both aggregate information about the capital buffer required to absorb losses if the recession worsens and firm-specific details, the official said on condition of anonymity. Regulators had initially planned to make their announcement on May 4.
    The delay follows an internal debate among regulators about how best to reveal to markets the health of the biggest banks, information usually reserved for bank examiners. The details may help investors distinguish strong from weak banks, leaving the latter to turn to the government for capital.
    Officials “are trying to whittle the herd,” Joe Davis, an economist for Vanguard Group Inc. in Malvern, Pennsylvania, said in a Bloomberg Television interview. “It is a very messy process.”
    Regulators have said the tests aren’t pass or fail and are aimed at ensuring lenders can maintain a solid capital base and sustain lending during any worsening of the economy. Fed Chairman Ben S. Bernanke, a Great Depression scholar, has said a sustainable recovery isn’t possible without a stable financial system.

    Capital Ratio

    Banks were given preliminary results from the stress tests last week, and have been discussing the findings this week with regulators. Officials favor tangible common equity of about 4 percent of a bank’s assets and Tier 1 capital worth about 6 percent, according to people familiar with the tests.
    Tangible common equity is a measure of financial health that excludes intangibles such as brand names that can’t actually be used as payments. Regulators typically look at risk- weighted assets when assessing bank strength.
    The Fed and the Treasury are trying to get the banking system to build a capital buffer as the worst U.S. recession in half a century reduces spending and jobs. Unemployment rose to
    8.5 percent in March, the highest level since 1983.
    “It is just a cultural clash of epic proportions to have the government tell them they’ve got to lend when they are trained not to lend in a time like this,” said Allen Sinai, president of Decision Economics Inc. in New York. “We could pump money into the banks and in a lousy credit environment they’re not supposed to lend.”

    ‘Social Program’

    Dowd Ritter, chief executive officer of Regions Financial Corp., said in an April 21 interview that the Treasury’s Troubled Asset Relief Program, or TARP, the taxpayer-supported fund the government has used to put money into banks, has become “a way to look at social program implementation.”
    “The rules change daily,” he said. Regions is the 12th largest U.S. bank by assets.
    R. Scott Siefers, managing director at Sandler O’Neill Partners L.P. in New York, said regulators may be conducting an exercise similar to what investors have been doing for months.
    So-called “burn-down” analysis looks at how much common equity will be destroyed if assets are marked to worst performance.
    “The regulatory community seems to be moving toward a heavier focus on tangible common equity,” said Siefers.

    Bank Shares Rally

    The Standard & Poor’s Financials Index, which comprises 80 companies, rose 22 percent in April as officials played down the prospect of nationalization and as the economy showed signs of stabilization. The gauge was down 0.9 percent today.
    Treasury Secretary Timothy Geithner told U.S. lawmakers yesterday that there is no need for new bank bailout money as of now, Senate Budget Committee Chairman Kent Conrad said. That indicates that the stress-test banks won’t need to tap more than the current remaining funds in TARP. Geithner said April 21 that
    $109.6 billion of TARP funds remain, or $134.6 billion including expected repayments in the coming year.
    Still, some financial analysts have warned that a bigger government role may be unavoidable.
    “I don’t think people understand the amount of capital these companies are going to need,” said Paul Miller, analyst at FBR Capital Markets Corp. in Arlington, Virginia. If investors don’t step up, the government will have to increase its stake in several financial institutions, he said.

    Mix of Firms

    The 19 firms include Citigroup Inc., Bank of America Corp., Goldman Sachs Group Inc., GMAC LLC, MetLife Inc. and regional lenders including Fifth Third Bancorp and Regions.
    The banks in the test hold two-thirds of the assets and more than one-half of the loans in the U.S. banking system, according to a Fed study released April 24.
    Scenarios for the stress tests included a baseline outlook of a 2 percent decline in gross domestic product this year, with the national unemployment rate averaging 8.4 percent. The more adverse scenario was based on a 3.3 percent contraction this year with an average unemployment rate of 8.9 percent this year and 10.3 percent next year.
    Fed officials said last week that supervisors will work with banks to maintain the buffer, indicating firms with high- risk portfolios will face a bigger challenge maintaining it.
    Regulators used the market shocks of the second half of 2008, when Lehman Brothers Holdings Inc. declared bankruptcy, as the model for testing banks with trading portfolios of $100 billion or more.

  94. 94
    zman Says:


    Sold the SWN $35 May Calls for $3.20, up 226% with the stock at 37.75.

    Still holding the $40s but looking to sell up soon.

  95. 95
    ram Says:


  96. 96
    zman Says:

    re 95, yes soon. Probably wait for Baker Hughes release in the next 2 hours to see if that can goose NG further. In past weeks it has not but gas was headed down, on an up day traders who are obviously buying may see another down rig count (assuming we get one which I think is probable but not certain for gas rigs) as a reason for high fives.

  97. 97
    Wyoming Says:

    Picture is worth a thousand words. Here are some slides of one of our vendors multi stage completion systems as you were describing yesterday. Heading home but ask any further questions and I will be glad to describe in detail later.

    Slide 1

    Slide 2

    Slide 3

    Slide 4

    Slide 5

  98. 98
    ram Says:

    Just wondering if I need to fire up laptop.

  99. 99
    zman Says:


    Added (50) $2.50 June calls on WRES. Earnings next week, oily, California play. These are $0 bid now and I was taken on the mid for $0.15 too quickly so I could probably have gone lower, am bidding 5 cents now and they went to a dime immediately with no move in the stock. Good story I have tracked for awhile and wanted to be in for results next week. Not a lot of money and if it fails to wow these are toast from the start.

  100. 100
    zman Says:

    Re 98. The laptop should be fired up at all times to consume as much electricity and therefore natural gas as possible. ;->

  101. 101
    zman Says:

    I just blew my planned entry into PXD. Will hope for a pullback there on Monday. Really interested to see plans going forward in the Eagle Ford as they release results there (most likely). Maybe not a big deal at all but they have a good acreage position that could be prospective.

  102. 102
    BirdsofpreyRcool Says:

    Wyoming — thanks for trying to clear the cobwebs in my head. This helps. Especially Slide 5. But, I still don’t understand 1) what went wrong and 2) why/how they think they can fix the technical problem.

    Also, hearing they are producing the partially-frac’d well right now, in order to generate cash flow. But they can shut that in and complete the 7 or 8 frac stages at some point?

    No hurry to answer… this is a continuous learing curve for me. Thx!

  103. 103
    RMD Says:

    KOG: comment from a skeptical geologist in the Bakken was: KOG with a 2,000 b/d well?? remember they are trying to raise money. FWIW

  104. 104
    ram Says:

    BB is a no no where I’m at. Laptop will be a challenge.

  105. 105
    zman Says:


    Added WRES common for $1.80.

  106. 106
    zman Says:

    Starting small on 105

  107. 107
    zman Says:

    RMD – I think they’d be more than happy with a 600 bopd well, is someone saying 2,000 b/c that is “crazy talk”. If they have it EOG will buy them.

  108. 108
    zman Says:

    Ram – sounds like a no trade zone…I stay utterly away from those, lol.

    I am working on SMS for the ZBLAST though. A person with a blackberry could theoretically trade from just about anywhere.

  109. 109
    bill Says:

    epl filed


    not smart enough to know if the old stock is worth anything but it looks like they get warrants

  110. 110
    zman Says:

    RE EPL – I remember when they came public. They were the stuff you just had to own offshore.

  111. 111
    BirdsofpreyRcool Says:

    RMD — #103 and so right you are! Hearing “money raising” noises as we speak. So, know there is dilution coming down the track.

    Here’s the thing. With what we know publicly, the stock is worth about 50 cents (give or take). So, the money-raising process clearly involves having some private discussions of operations that is providing info-leakage. I’ve seen this sort of thing end badly… and I’ve seen this sort of thing verified, when the whole story comes out.

  112. 112
    nifkin Says:

    u hear anything on nat gas futures halted on the CME?

  113. 113
    zman Says:

    Have not seen that headline, trading fine on NYMEX.

  114. 114
    rseidman Says:

    Z: WRES exploding after your call. Shoulfd I still buy?

  115. 115
    zman Says:

    114 – I’m holding for earnings next week and beyond. I don’t like to see stocks jacked up after I release that I’m buying. I think it is more likely a function of the groups moving fast than this site however. I’m likely to add more but probably not today. Also, I had August call bids out that are not going to trigger now.

  116. 116
    rseidman Says:


  117. 117
    zman Says:

    Hey, don’t thank me. They may do poorly on the numbers or call next week. I just like the story.

  118. 118
    zman Says:

    Boring drilling report:

    Oil down 6
    NG down 1
    Horizontal count flat

  119. 119
    zman Says:

    Anyone got a movie quote?

    More selling by shortly.

  120. 120
    elduque Says:

    z- Drys upgraded to hold from sell by cantor. Only up 17%

  121. 121
    zman Says:

    El-d. I really do plan a sector update there. DSX and EGLE report next week.

  122. 122
    reefguy Says:

    87-BOP, busy, how much do I owe you now??, EPL in drain, who is next??

  123. 123
    john11 Says:

    Was wondering, have there been any follow-ups to ROSE comments from a couple of weeks ago that I might have missed?

  124. 124
    zman Says:

    John – no. There is a half written post dedicated to them on one of my browser tabs. Will have out next week. I still don’t own it.

  125. 125
    BirdsofpreyRcool Says:

    #122 — reef, nothing… yet. Don’t see the results of the bank redetermination. Shareholder meeting musta gone well yesterday, tho.

  126. 126
    john11 Says:

    thx Z, think they have earnings out on 5/11.

  127. 127
    zman Says:

    So much for the Cap One analyst’s downgrade of HK. I am going to take profits there today. If it falls I will reposition for the earnings call next week.

  128. 128
    bill Says:


    As far as im concerned the ceo of drys is a minnie Madoff and i wouldnt invest with him regardless of fundamentals.

    If you like drybulk stocks id look at dsx

  129. 129
    zman Says:

    Bill – I agree completely. Would not touch that self dealing CEO’s company. Been meaning to ask you for your thoughts on the space. Seeing lots of stories saying things are looking up…also seeing lots of parked ships and not a lot of ship buying and selling yet.

  130. 130
    zman Says:


    Sold (15)(which is half) of my May $40 SWN calls for $0.75, up 74% from my average cost. Stock at $38.50 at the time. May sell the rest into further strength today. NG is up 20 cents now and the group just feels a little extended.

  131. 131
    Dman Says:

    Boring drilling report… but it looks like it’s being bought rather than sold into.

  132. 132
    zman Says:

    HK tapping on $25.

  133. 133
    BirdsofpreyRcool Says:

    to throw my 2 cents into the shipping ring (fwiw)… until i see Omar Nokta at Dahlman Rose go positive, i’m neutral. But, when he makes the call, I will go all-in. I’ve seen him correctly call cycles before. He is intensely-good at getting it right.

  134. 134
    Garyinhou Says:

    Here’s one…. given all the con calls etc….

    “Recent research has shown that empirical evidence for globalization of corporate innovation is very limited and as a corollary the market for technologies is shrinking. As a world leader, it’s important for America to provide systematic research grants for our scientists. I believe strongly there will always be a need for us to have a well articulated innovation policy with emphasis on human resource development. Thank you.”

  135. 135
    zman Says:

    Dman – yep, there have been expectations for last week and this week, as laid out on service calls, that managements think a rebound in rigs, however small was imminent. I think NBR said they thought we’d see one in last week’s report. I think that kind of call by them was silly, maybe they are hiring out more rigs but somebody else is stacking even more.

  136. 136
    BirdsofpreyRcool Says:

    Credit market taking off again…

    IG 164

  137. 137
    zman Says:

    Thanks BOP, you like Dahlman more than Cantor for that sector?

  138. 138
    Dman Says:

    This market feels eerily like the one at this time last year: Broad market sluggish, energy green, so broad market shrugs & tags along.

    Followed by broad market red, energy green.

    Followed by sea of energy love.

    Followed by crack in the space-time-money continuum.

  139. 139
    zman Says:


    HK – Sold 13 more HK $24 Calls for 1.70, up 179%. This leaves me holding 10 of the May 24s (HKEO) and 10 of the HKEE calls (which I’m likely to sell and reposition on weakness before next week’s earnings).

  140. 140
    BirdsofpreyRcool Says:

    z — re#137. I know Cantor is very good in the space too. But, haven’t worked with them personally, so only know that by reputation. Omar picked up the phone and called, on the exact day to buy, last time around. So I have a lot of respect for his timing.

  141. 141
    zman Says:

    We definitely like the “sea of energy love”

  142. 142
    zman Says:

    Re 140. Gotcha, thanks a lot.

  143. 143
    bill Says:

    129, i havent followed it as closely as i used too but i would need to see evidence of higher spot rates, still too low but improving.

    Opec seems to be cutting production , so its too early on the tankers as well

    The banks seem to be working with viable entities

  144. 144
    zman Says:

    SWN just on fire, outperforming peers, could be the fact that they are only half hedged for 2009 and have little on in 2010.

    I’m getting emails asking if this is the bottom for gas. I’d point those people to the post comments (which were scant but the same as last week) and in general say, probably not. Not what they mean which is a turn up from here.

    This looks like an early attempt at bottoming action in the June contract. We saw this last month and then headed lower with little support from shut in stories. I think we go sideways from here which is enough to allow for a little CFPS multiple expansion from the E&P crowd which is what you are seeing to day. Bottoming action is volatile, so 20 cents up today might mean 15 or 20 cents down by Tuesday or Wednesday pre the next storage number almost for sure. With that and ready profits in hand, investors, whose hands are nervous by natural but more so by now, will be quick to sell gassy stocks (hedged or not) at the next turn to the red in NG. Just my two cents as I think about what to write for the weekend and how to answer all those emails.

  145. 145
    zman Says:

    Thanks Bill. Keep us posted if you get more enthusiastic on them. I plan to listen to at least one call next week (DSX) and maybe the (EGLE).

  146. 146
    VTZ Says:

    BOP – Two things

    Do you believe the economic data is as “not-so-bad-so-its-amazing” as the ‘analysts’ are saying?

    Do you believe that any rise in the earnings of the S&P will be a function of the devaluation of the USD (good for crude, etc). To me it seems like a rising USD and S&P earnings at the same time is contradictory.

  147. 147
    ram Says:

    Is SWN at Taters major resistance?

  148. 148
    zman Says:

    Ram – It would appear to be:


  149. 149
    zman Says:

    LINE just drifting up to $17. Still a 16.8% yield.

  150. 150
    john11 Says:

    fwiw, LINE ex div on monday

  151. 151
    zman Says:

    Somebody let me know if the fast money guys get all bullish on natural gas.

  152. 152
    BirdsofpreyRcool Says:

    VTZ — I’m a political economist (by training, not by degree), so I tend to be a lot more “Big Picture” than tradional economists. Here’s what I think: 1) Most people still have jobs; 2) most people still make their mortage payments; 3) most people believe that “America is good;” 4) most people think they will not come down with Swine Flu. Analysts take trends and extrapolate from there. People don’t work that way. If this is a cycle, and not the-end-of-the-world-as-we-know-it, then it will have to start to improve, at some point.

    Here’s what I believe: 1) don’t fight the Fed; 2) housing/banks/credit started this; 3) we are a diverse people and a diverse economy. Here are the answers: The Fed finally “got it” at the beginning of this year. Banks are on the mend, the credit iceberg is cracking, and housing is almost at a bottom. The American People will not go along with being homoginized, Europeanized, and herded like sheep. The defeat of mortgage “cram down” legislation and the stance by some “rogue hedge funds” gave me a ray of hope.

    So, yes. The eco-data is looking better than what one would expect by extrapolating recent trends. And — if our own govt can get out of the way — it’s been about 2 yrs, usually time for a turnaround to get its sea legs.

    Thoughts on the USD next.

  153. 153
    zman Says:

    Worst Case Flu Scenario: Just doesn’t sound that bad:


  154. 154
    BirdsofpreyRcool Says:

    VTZ — a larger percentage of S&P500 company revenues are non-US dollar, so the rising $ hurts that way. On the other hand, a falling USD makes it less likely that foreign investors will hold US debt. Since 1994, the only investor to increase their holding of US debt has been foreign countries (as opposed to mutual funds, pensions, US citizens, etc.). So, if the dollar weakens, we risk a lot of govt-financing… meaning more taxes on the private, productive segment.

    Bottom line: the strength of the USD depends on whether the private sector can strengthen from here. The weakness of the USD depends on the actions of our own Federal Govt. Which will win at this point?

    Historically, we have had a rising S&P when the dollar is weak and when it is strong. We have had a rising stock market when interest rates are rising and when they are falling. Like everything else, dollar strength (or weakness) vs. stock market performance is only one piece of the puzzle.

    Not a very succint, precise answer, I know. But, hope this helps.

  155. 155
    zman Says:

    Tater – if you get a chance today, SWN all over your major resistance level, any new thoughts would be appreciated.

  156. 156
    VTZ Says:

    Here’s what I think:
    1) The number is increasing 2) the number is increasing and 1 leads to 2 3) Most people don’t trust Wall St or their govt 4) agreed

    Here’s what I believe: 1) Fed is being fought in the LT bond market 2) OTC derivatives are still all over accounting for over a quadrillion $ 3) true, but financials have been the driver for the past xx years and they are insolvent

  157. 157
    Popeye Says:

    If HK closes above 15, lookout brewpub.

  158. 158
    Popeye Says:

    Errrrr 25.

  159. 159
    Dman Says:

    BOP – I’m a little concerned that your analysis is ideologically driven. I think you’d agree that reality and ideology may have an occasional fling but they aren’t usually together for long. Some points:

    The defeat of legislation had nothing to do with “The American People” and everything to do with the lobbyists who own Congress.

    Similarly, the hedge funds didn’t go around asking “The American People” what they wanted. Why would they?

    If the US economy depends on people believing “America is good” … um … is that an investment thesis? I want my investments to work *whatever* anyone believes!

    My crystal ball is temporarily out of service, so I have to depend on yours!

    I hope you don’t mind my presuming (via these comments) to try to fine tune it 🙂

  160. 160
    zman Says:

    Popeye – knew what you meant. Agreed. I may step up from PBRs to Mexican Martinis this afternoon. My thought is don’t be greedy Z, which I have not been as you can see by my repeated sales of the shares. These guys have a habit of issuing stock whenever the price moves up strongly for a few weeks, I hardly expect a secondary now, as they have done debt and equity recently, but management will be thinking about cheap acreage, an inevitable rally in natural gas yada, yada, yada. So it could happen, especially if they put out some stunner results in the Eagle Ford (so far they’ve been good but not world beater) but they have hinted they want to up spending here and do it this year.

  161. 161
    kyleandy Says:

    popeye maybe u jinxed that over 25???

  162. 162
    BirdsofpreyRcool Says:

    Back to the Twilight Zone… or “How I Killed the Capital Markets Over My Summer Vacation.”

    U.S. House Plans to Vote on Wall Street Investigation Next Week
    2009-05-01 18:32:33.224 GMT

    By Mark Pittman and Laura Litvan
    May 1 (Bloomberg) — The U.S. House plans to take up legislation next week to authorize the broadest congressional investigation of Wall Street practices since the 1929 stock market crash.
    House Speaker Nancy Pelosi has been pushing for an investigation modeled after the Senate Banking Committee’s 1933 probe into the causes of the stock market crash four years earlier and the Great Depression that followed. Recommendations by the Pecora Commission, named after chief counsel Ferdinand Pecora, led to creation of the Securities and Exchange Commission.
    Katie Grant, a spokeswoman for House Majority Leader Steny Hoyer of Maryland, said yesterday a House vote is expected next week.
    The Senate passed its own plan for a bipartisan investigation of the financial crisis on April 22. Pelosi has said three-fourths of Americans want to know the causes of the crisis. Representative John Larson of Connecticut, the House’s fourth-ranking Democrat, said yesterday that many lawmakers heard that message during Congress’s two-week break in April.
    “People went home over the break and when they were asked repeatedly, ‘How did we get to this point?’ it struck a chord,”
    said Larson, who sponsored one of the first bills to create a commission. “We ought to take a thoughtful look back.”
    Specifics, including how members will be chosen, should be worked out within the next two weeks, said Pelosi spokesman Nadeam Elshami, as lawmakers work to reconcile the House and Senate measures.

    $1.4 Trillion

    The economic collapse, which generated $1.4 trillion in U.S. financial industry losses and a $37 trillion drop in world stock market value since October 2007, has prompted such measures as $700 billion in U.S. taxpayer cash infusions and loans to financial institutions. Wall Street firms have cut more than 180,000 jobs during the worst credit crisis since the Great Depression.
    The Pecora review was, after Watergate, the most important congressional investigation in U.S. history, according to Donald Ritchie, associate historian for the U.S. Senate. Pecora exposed practices that benefited wealthy people at the expense of ordinary investors, such as giving favored clients insider prices on stock offerings, Ritchie said.
    Larson said that to lead the new panel, he supports choosing Elizabeth Warren, a Harvard bankruptcy professor who is chairwoman of the congressional oversight committee for the U.S.
    Troubled Asset Relief Program, the $700 billion bank-bailout plan.

  163. 163
    zman Says:

    Kyle – I think 162 did that. Ugh.

  164. 164
    kyleandy Says:

    z – u letting popeye off ptetty easy

  165. 165
    BirdsofpreyRcool Says:

    Dman — #159 good points. I was typing pretty fast (while dealing with some other things at the same time), so sort of squooshed some comments/thoughts together.

    Basically, capitalism and the belief in self-help requires a natural optomism. If the American People don’t believe in themselves, it’s tough to be capitalists.

    Secondly, “mortage cram down” would give Judges the ability to unilaterally rewrite contracts in BK. If you don’t know what the rules are going to be, you have to get paid more to play the game. So, for the sake of some defaulting homeowners, we would ALL have to pay more for mortgages. But, more than that, allowing the govt to step in and rewrite private contracts opens a Huge Can of the Screaming Uglies. Not enough energy to go into the “why’s” if this isn’t clear. So, if the “lobbyists” were the reason for that success, well then, God Bless the Lobbyists.

    Again, mixed up in my short hand… b/c agreed, Hedge Funds don’t give a sh*t what the American People want. But, thank goodness (again) that they are standing up for their own contract rights. See argument above.

  166. 166
    zman Says:

    Kyle – yeah, I’m pretty easy going on Fridays, lol.

    Still no movie quotes?

  167. 167
    zman Says:

    KOG – just they were cut earlier this morning by Cap One to Neutral. Guess they aren’t on the deal team.

  168. 168
    Dman Says:

    #164 – I definitely blame Popeye 🙂

    Think the market has gone to sleep.

  169. 169
    ram Says:


  170. 170
    tater Says:

    Went to Costco, had to keep my finger off the trigger. Want to short hard into a drop as a momentum play and I don’t want to be early.
    $7.99 for a Watermelon. Thank God we don’t have any inflation.

    SWN – That line is pretty strong at 39 and it proved to be such, but that does not mean it can’t be penetrated. Hate to be of no help, but it really is a tough call when a price runs into a level like that.

  171. 171
    zman Says:

    re 169 ?

    Thanks T – it was on its way to breaching earlier, the 162 hit and everything got all big brother watch-ish.

    Energy looking remarkably strong relative to other sectors.

  172. 172
    kyleandy Says:

    tater u early on watermelon. wait till next month $2.99 the fields down here are full. i couldn’t wait . just shorted some SPG

  173. 173
    BirdsofpreyRcool Says:

    z — #167 LOL. Would be surprised if that wasn’t the truth! Better yet, bet CapOne was advising the JV partner who KOG walked out on.

    But, in CapOne’s defense, given the public disclosure, KOG has gotten way ahead of itself. Problem is, KOG’s got to “do something…” which means talking to outside parties. That process is inherently leaky — especially in the uber-small world of small-cap energy people/companies. To combat that, usually this stuff gets down quickly.

    Would hope KOG comes out with some sort of PR on Monday… can’t see how they can continue to wait until May 7th earnings release at this point. Too many wagging tongues out there.

  174. 174
    zman Says:

    ZTRADE: Probably last of the day.

    Added (5) EOG June $70 calls for $3.10 with the stock at $65.80. Earnings next week.

  175. 175
    Dman Says:

    I suppose it would be too much to ask for Congress to do an inquiry that looked at the thing as a unique event. Instead it’s always gotta modeled on some earlier, famous inquiry.

    Almost as if they think they’re in a movie or something. Did I say “almost”? What was I thinking.

  176. 176
    zman Says:

    I thought there was a Time Magazine issue that laid the blame at the feet of 25 people and institutions. Somebody buy Pelosi a copy and save the taxpayers 10s of millions of dollars.

  177. 177
    Dman Says:

    XRT near LOD

  178. 178
    Dman Says:

    tater, what would be your short vehicle?

  179. 179
    tater Says:

    Thanks Kyle. I’m going to have to use that. “How was trading today?” “Not so bad, except for my early entry on watermelon.”
    My kid can’t live without the stuff. I guess it’s still cheaper than McDonalds in the long run.

  180. 180
    Garyinhou Says:

    Z.. I had a movie quote at 134.. but I don’t think it looked like one..

  181. 181
    zman Says:

    There’s probably a pretty good arb spread between the real thing and watermellon flavored koolaid over crush ice.

  182. 182
    Dman Says:

    Zombie energy market just won’t stay down…

  183. 183
    zman Says:

    Wow – I almost asked you who said that on a call. Sounds like something one of the larger E&Ps would say when addressing the lack of geophysicist and geoscientist talent coming out of our schools. Lots of jobs, not enough people.

  184. 184
    tater Says:

    Dman, SPY puts are at the top of the list, SDS is nicely liquid as well. I also want to go after the biggest gainers, retail and banks, but retail seems like it might be the better play (as per your posting earlier) and the ….people….in Washington who want to convert the banks into …. I can’t even finish the sentence.

    What are you contemplating?

  185. 185
    kyleandy Says:

    tater my kids were all taught the only menu at mcdonalds is the dollar menu. they now ask how many items they can get!!!!! big saver!!

  186. 186
    zman Says:

    I give up, no idea Gary.

    Here’s mine:

    We take Pete’s car, we drive over to Mum’s, we go in, take care of Philip – “I’m so sorry, Philip” – then we grab Mum, we go over to Liz’s place, hole up, have a cup of tea and wait for this whole thing to blow over.

  187. 187
    Garyinhou Says:

    how about…
    “Frank here was staring at a white picket fence. Now he’s single, he’s broke, and has second degree burns all over his body. And I see a spark in his eye that I haven’t seen in fifteen years.”

  188. 188
    Dman Says:

    tater – commercial real estate is one idea, but I don’t know how much is already priced in & the ETFs to play it are dodgy (= huge tracking error = very short term vehicles).

    The banks are hard either way since everything is contingent on govt. decisions.

  189. 189
    Garyinhou Says:

    old school… margaritaville thirty

  190. 190
    BirdsofpreyRcool Says:

    z — it’s that british ZOMIE movie, right?!

  191. 191
    tater Says:

    Shaun of the Dead?

  192. 192
    BirdsofpreyRcool Says:

    can’t remember the name… funny as hell, tho!

  193. 193
    Popeye Says:

    Close enough to $25 for me to bend an elbow.

  194. 194
    BirdsofpreyRcool Says:

    YES! i hate zombie movies (ever since I saw Night Of the Living Dead by mistake as a kid). But that one was funny!!

  195. 195
    zman Says:

    Bingo BOP and Tater!

    Now that was a good week. Have a great weekend, the wrap will be out sometime Saturday.


  196. 196
    BirdsofpreyRcool Says:

    (what’s a “ZOMIE”?…. oops)

  197. 197
    tater Says:

    Having trouble with commercial real estate because the TALF gives the socialists the ability to keep buying and buying. In effect taking my money from me, then entering the market to compete with me directly and driving up my costs of entering and doing business.
    Nice. Thank you to everybody who thinks that’s how America is supposed to work, or actually not work.

  198. 198
    Dman Says:

    tater – forgot to mention: treasuries via TBT is another idea. I’d be interested in your technical take on that one …

  199. 199
    zman Says:

    BOP – you never know when you might need this:


  200. 200
    Dman Says:

    tater – # 197

    are you saying TALF money is going to end up chasing shopping malls and office space?

  201. 201
    tater Says:

    Thanks D. I’ll give that a look this weekend. Time for a few Sierra Nevadas. Take care everybody (and wash your hands!).

  202. 202
    BirdsofpreyRcool Says:

    z — go ahead an laugh… but i am secretly very TERRIFIED of zombies. If the CIA ever wants me to spill the beans, just put in a cell with a zombie. Beats catepillers every time.


    “The Beast With 5 Fingers” set me off of severed hands too. Never could warm up to Thing, from the Addams Family.

  203. 203
    tater Says:

    That’s my understanding.

  204. 204
    Dman Says:

    #200 & 203

    Wow, zombie money chasing zombie shopping malls.

  205. 205
    RMD Says:

    XNG has gone through point and figure downtrend line, FCG is close. This reflects the leading stocks (HK, EOG, RRC, SWN, UPL) having done the same earlier.
    It is an easy guess that the stocks are discounting higher commodity prices and lower service costs way in front of the commodities price recovery.

  206. 206
    VTZ Says:

    Z – re 183.

    If I could pillage the US people, pay myself ridiculous salaries, make a whole boatload of bad trades, and then get paid out out of the pocket of geos/engs/trades because I am really helping them to manage in tough times, then I see no reason to aspire to be a tech guys.

    … has moral hazard found it’s way into high school kid life-choice decision making? Sadly, this generation of children is going to be the completely warped.

  207. 207
    Wyoming Says:


    What went wrong? Probably no one will know. Field guys (Co. Rep or Vendor) may be covering their behinds, CYA in our book. It will be an oilfield mystery, but the fact remains, the well is not as initially designed.

    They will fool themselves into believing that the plan B delivers just as good results (production/economics …) as plan A. A majority of investors are not as informed about the details involved except for the rare person like the people here such as Z, reef, jat or Jay Your typical investor only cares about a metric like cash flow/share or debt to equity, P2 to P1 reserves. They could care less how the company does it just show me the money. Gas and Oil = widget, is there demand for the widget.


    Partially frac’d well. It can be a technique to hold leases by production in the uncompleted wellbores or reducing capex of the new drills. This is not too difficult. All they have to do is pull the production tubing, isolate the Stage 1 interval and then carry on where they left off. The creepy part is them needing the cash flow this desperately to not try and fix what they have to drain the reserves. Hopefully they do not have a liquidity issue and would rather hit the IP during a decent commodity price or perhaps they are working on acquiring leases and would rather not have the offsets know what the wells performance is capable.

    I am not familiar with the operator at all so I don’t know their drivers, just rambling.

  208. 208
    Wyoming Says:

    Meant to post some links yesterday


    Which makes it kind of hard to do this

    Notice the Shell ad looking for idea people

    Finally, the shoe shine boy is talking about the future gas boom.


    Hope everyone has a good weekend, off to soccer.

  209. 209
    zman Says:

    Thanks for the notes Wyoming. Shoe shine boy, lol. Best of luck to the team.

  210. 210
    Wyoming Says:

    Shareholders always have at least 2 options:

    1. Hold
    2. Sell



  211. 211
    Wyoming Says:

    Chu don’t drive no car.


    just great ….

  212. 212
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    ut=83878c91171338902e0fe0fb97a8c47a http://www.garagecommerce.com/businesses/10740014/title-loans-express/title-loans/ca/salinas/93901 http://www.contractspot.com/contractors/company-info.php?PHPSESSID=8qqn5jv7lr0qvt7pb08poioa60 http://www.bizlistonl…

  213. 213
    audi cars failed Says:

    bmw egypt key


  214. 214
    tutors in Arizona Says:

    tutoring in Scottsdale Arizona

    T.G.I.F. | Zman

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