Thursday – Oil Inventory Review and Gas Preview + More Earnings

156 thoughts on “Thursday – Oil Inventory Review and Gas Preview + More Earnings”

1. citi upgraded XTO and NFX, downgraded EOG. mostly valuation call

2. The World Has Changed in Credit…

   IG went out at +145bps last night, opened tighter and then tightened from there. There is a party going on in risk-product (corporate bonds, stocks) and everyone is trying to get into the room at once. Shorts — rightly or wrongly — are being trampled by the Thundering Herd (in deference to the old Merrill Lynch brokerage network). Only one word describes this — WOW.

   IG 138 -7bps (after trading as tight as 135 this morning)

   HY 82 +7/8 points

3. BDI +129 2194

   TED 77.54

   And the beat goes on, and on, and on

   Crazy- no more gloom and doom. Happy days are hear again!!

4. GMXR going to explode out of the gate.

   CLR not so much, probably lose a buck at the open there.

   BMO raised price target on PXD … from 13 to 22 … analyst asleep at the wheel.

   Strong ups for many other names including HK where I will take profits on the last of the Mays probably today. Still holding the Junes…letting em run.

   PXP numbers looked strong at first glance.

5. [the last sentence explains the leaky nature of information in this transaction… don’t see self-placed private placement deals very often. But, gotta hand it to mngmt, 75¢ is a pretty good price.]

   Kodiak Oil & Gas Corp. Announces $7.5 Million Registered Direct
   2009-05-07 12:03:56.767 GMT

   DENVER, May 7 /CNW/ — Kodiak Oil & Gas Corp. (NYSE Amex: KOG), an oil and gas exploration and production company with assets in the Williston Basin of North Dakota and Montana and the Green River Basin of southwest Wyoming and Colorado, today announced that it has entered into purchase agreements with certain institutional investors and insiders, including management, for the sale of 10,000,000 shares of its common stock at $0.75 per share through a non-brokered registered direct offering. The transaction is expected to provide gross proceeds of approximately $7.5 million to Kodiak before deducting costs associated with the offering, and will be used primarily for drilling and completion activities on Kodiak’s leases in the Bakken oil play located on the Fort Berthold Indian Reservation in North Dakota, and for other general corporate activities.

   There was no placement agent or underwriter in this transaction.

6. Nifkin – if I have a regret of late it would be not being in NFX…that was pretty easy to see coming and I hesitated. I would not say same for GMXR, just bad timing there. I own the common, oh well.

7. Nifkin – I’m seeing several analysts now say the E&Ps have outstripped the fundamentals but that doesn’t mean they won’t stop running. I would say they outstripped on the downside and this is the result of that. I would say that if multiples go into extensive stretch zone we get the rest I’m looking for. Could be next week as news flow slows.

8. Oil at 58.10

   NG at 3.95

   SP500 919

   Oh what a difference a month makes.

9. Tech Trader says it’s a “low odds” day… meaning, take the forecast with two lumps of salt —

   “choppy day… but sell the morning rally and the rally at lunch”

   That’s all he said.

10. nifkin — just saw you posted the KOG secondary last night. Sorry to repeat the news. Thanks!

11. Crude up $2
    NG making that run on $4 pre storage.

12. Pleasantly surprised that the oil rally is over riding some lackluster production numbers from CLR. Just milking those last few calls at this point.

13. WRES catching a nice, oil based bounce as well. Jury still out on my thinking there, sometimes with these little ones its more of a balance of fundamentals, technicals and the opinion of holders who have been there for quite some time at much higher prices.

    What’s Ben talking about?

14. WRES u have any left ? i just sold mine

15. CLR through $31, call in 10 minutes. I will sell my May calls and then listen.

    GMXR folding on those well results… I think “too far, too fast” coming into play.

    Kyle – I still have 25 of the June and Nov 2.50s and the common I bought at $1.80.

16. Ben talking about how good the Govt is at managing the banks… and how the Govt needs more people to do that… along with some other banking stuff.

    Bank “Stress Test” stuff out at 5pm today, I think. Will be good to get that &^% over with.

17. ZTRADE:

    Sold the last 5 CLR $25 May Calls CLREE for $6, up 683%. Didn’t think the results were very good, will listen to conference call in a few minutes.

18. Re 16 – thanks. CLR call in 5; also GDP but I’m not listening.

19. ZTRADE: Sold the remaining May $25 HK Calls with the stock at 26.25 for $1.70, up 130%. I continue hold 5 of the June $25 calls here.

20. KOG migrating back toward the 2ndary, institutional price of 75¢

21. Credit markets giving up a little of the Happy Vibes they felt this morning. Geez, Ben, you sure know how to put a damper on a good party.

    IG 138.5

    But, any spread tighter than 150 bps is a positive. Just picking at nits here.

22. GMXR – getting shelled on the well results.

    WRES – getting unshelled on oil

23. market commentary from a bond strategist… basically, the mrkt is trying to look past stupid (“the beatings will continue until morale improves”) Govt treatment of banks and seeing better times ahead.

    http://www.capmarkets.com/ViewFile.asp?ID1=116733&ID2=320252229&ssid=1&directory=6571&bm=0&filename=05.07.09_Rally_Gains_Legs.pdf

24. Why did HK dive on a dime?

25. Also, my WellsFargo trading platform is down, so the by the time I called to make a trade…..

26. ram — don’t think there is any particular reason HK is down. Reading through comments by brokers, most are inclined to increase their NAV for HK. But, energy stocks like HK and SWN are hedge fund favs… so, they can get whipped around more than some of the other energy kids. Fun on the upside… not so fun on the down.

    Any other reason you can think of, z?

27. Re HK – someone took profits as the broad market came in. Several other names did the same. I don’t know anything about the Wells platform but I don’t put up with that kind of thing more than a couple of times before I start shopping for a new platform.

28. VIX creeping up, bkx off from its highs this am.

29. RBC raised price target on HK from 30 to 35, rating stays outperform.

    Credit Suisse takes target from 23 to 27

    Tristone raises target by $2 to $20, continues with Underperform (sour grapes) rating.

30. IG back over 140 now too. “choppy trading” is how Tech Trader described today. So, can’t make too much of any direction, I think.

    IG 142 bps

31. So it may be the Tristone call Ram.

    Analysts are in two groups at the peaks and valleys of sector moves. The Tristone guy has clearly been caught off guard by the rally and so he pouts out his rating.

32. ram-take a look at tdameritrade-lot of tools, commissions low, acquiring thinkorswim in june-down time is nil, execution is immediate on options and stks.

33. FWIW, i think the mrkt (and energy) could pick any direction today. Tomorrow’s Non-Farm Payroll will set the tempo for the next mrkt move. Today might be a good day to turn off the screens and walk the dog.

    After the nat gas report, of course.

34. Tempted to take puts on HAL, CRR, NBR and another of other service names.

    CLR – I guess that was good timing on the sale.

35. President Obama is scheduled to talk about the U.S. Budget at 10:35am.

36. 95 Bcf, in line number.

37. Thanks, z. Going to walk the dog now…

38. Thanks Choices. WellsFargo system is still down… Customer service is terrible. Time to go.

39. RBC is down right now too…

40. Ram you might try Think or Swim for a trading platform.

41. ZTRADE:

    HAL – Added (10) June $22 puts (HALRV) for $1.21 with the stock down 20 cents at $22.95. Will add more in a bit if it recovers to the days highs, closer to $24.

42. My best estimate is that 3 out of 5 E&Ps are keeping Capex for 2009 at low levels previously announced, with the balance either taking it down or up slightly. This is pretty weak activity for N. America.

43. ROSE catching a big rally, do not know why.

44. Attempted and failed to get CRR puts. Wide spreads, didn’t feel like paying up.

45. NG gave up the morning’s gains just before release of inventories, now going green. Sentiment on gas prices is turning.

46. With #45 in mind, I can say that I’m still not going to be in a hurry to add back my E&P gassy positions just yet. There is the potential for profit taking to take the stocks 10 to 15% off yesterday’s highs. I’ll wait for at least 10% which is probably sometime next week.

47. z-re: #46-what effect do you consider the next week option expiry-probably some games with those stks which have had a big run??

48. Choice – I would imagine pinning post earnings starts a little soon in the week, say Thursday at 10:36 am EST.

49. Z – I assume that you think that HAL is the worst of the drillers.

    Thoughts on WFT?

50. Sd trading over $10 now, earnings tonight, I am not going to play but will listen to the call tomorrow.

51. I don’t think they are the worst of the service companies, I think they have run too far and have the best option spreads. I think they’re stock is up way too much for the current outlook and the EPS will continue to fall.

    Don’t really have any good thought on WFT except that it has run too far as well and is low balling contracts to stay busy…that’s not a new thing however.

52. NG up 2 cents, watching oil which is up a buck plus.

    Nicky, you still thinking $60? I am, probably next week.

53. dwsn is up 15 % to 25 on stronger than expected earnings

    no debt, analyst ask are you planning to become a bank, lol

54. Bill – how are they saying their book of business is going forward? Good call by you on that name.

55. Cannacord raises WRES from Sell to Hold.

56. Its down, but they manage their costs aggressively. They cut back the number of crews and 0 cap spending.

    Doesnt seem to be cap intensive

57. I’ll chime in on WFT: thing you need to be careful of there is that they’re probably the one big service firm that grows internationally in 2010. As for the low-balling contracts, that’s pretty much across the board at this point… they were crucified for pricing a huge Mexico contract in May ’08 but SLB and now even Baker has come down to or below what they were bidding on that work. I agree with Z on OIH generally of course, just pointing that WFT is not the name for me.

58. Hearing rumor on the Street that Floyd can’t resist doing an equity deal up here.

59. Thanks Jat, I’m just not that close to the story.

    Fair warning, I may take profits in those WRES June calls soon. Plan to hold the stock and the Novembers for longer.

60. Tater – can you do an update on the OSX or OIH chart when you get a chance. They have gone up in a “who cares about the fundamentals” kind of way … I suspect at the first sign of weakness in the group, they will fall in a “oh yeah, the fundamentals” kind of way.

61. That Citi downgrade popping EOG for 4%. Much more and I add, probably tomorrow or next week, maybe for a trade later today as well.

62. GMXR call failing to wow the crowd.

63. GMXR said they are switching from ceramic to resin coated proppant.

    Hearing more of this switching as the E&Ps try to cut costs.

64. ZTRADE:

    Added (3) CRR June $35 PUTs (CRRRG) for $3 just under the mid with the stock at $35.65. GMXR just commented they are switching their Haynesville wells from ceramic to resin coated sand and we are hearing this same kind of comment from a number of E&Ps in the shales saying that ceramic is an unnecessary expense.

65. NG up a dime now. Sentiment definitely shifting. If we take out $4 on the close I may start adding some gassier names back again. This has not been much of a pullback and these will likely be quick trades.

66. ROSE started at Johnson Rice at Overweight

67. Redjack – your email box is reading as full. Please advise.

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

69. LINE results this morning continue to be quite excellent, thx again for highliting Z.

70. I totally missed the fact that LINE was reporting. My bad. Call going on now. By the reaction in the stock (nothing) I’d call it uneventful, which is what you want from an MLP. Will read PR and listen to replay and get back to you in a bit.

71. ZTRADE:

    Doubled up on the EOG June $80 calls (EOGFP) for $2.85 with the stock off 4+% on a Citi downgrade and a little profit taking. Natural gas is bounding through 44 this morning at $4.07 after an in line storage report while oil is toying with the $58 level in preparation for a move on $60.

72. ZTRADES:

    Both Calls in HK with the stock at $24.75

    Added back (10) May $25 Calls for $0.85 (yep the ones I sold this morning for $1.70). Will be a quick trade.

    Added 5 more of the June $25 Calls for $2.00.

    Rumor going about that HK is going to do a deal. Could be but I once again really doubt it. They said yesterday they were not going to the capital markets but then hedged and said something along the lines of “but you never know”. If they do that continuously, having said their past deals took care of their upwardly revised budget, they will be branded as a serial filer and will be sold down before every Q and on any news. I just don’t see them missing that fact.

73. Tater – thanks much for 68.

74. LINE – brief review

    Production above mid of guidance.

    Per unit lease operating off more than expected as some service savings and the higher volumes flow through.

    EPS ahead and EBITDA ahead of guidance on better than expected volumes.

    Coverage ratio (what they can distribute vs what they do distribute) rose back up to a very comfortable 1.24 to 1. That’s better than most of their peers.

    Hedges: Said almost all hedged 2009 to 2011. That’s slightly different language from past reports. They didn’t take hedges off so I think it is a function of the long lived reserves outperforming (they are producing more than they thought so they don’t have quite all of it hedged). Later in the PR they go ahead and say oil and gas is 100% hedged (at current production levels)
    * 2009 hedged at $8.32 gas and $102.21. That’s just massive. Hate to be the counterparty there.

    Operations: low budget, focused on workovers to optimize/maximize production for cheapest $. Only running 3 rigs vs 14 a year ago.

    Balance Sheet
    * debt to cap unchanged at 37%
    * not out of line with any debt covenants
    * plenty of borrowing capacity

75. bop KOG news release indicated some of the new stock was purchased by mgt. wud be interesting to know how much.

76. GMXR sure sounded like they want to do a stock deal, especially if gas prices increase enough to justify increasing their capx. I missed any discussion of why their IPs were below CHK and HK’s rates.

77. RMD – not as over-pressured, further west than the big producers.

78. Market looks to have fallen asleep, maybe a little fearful of the next government to shoe to drop on our heads.

79. BOP – Good luck with KOG tomorrow.

80. z — #79 LOL. That felt like a KOG kiss-off. But, no worries. I go to fight the KOG dragon on my own. Earnings and conf call after the close today.

    kyleandy — the early rumor was that mngmt was going to take 50% of the deal. But, ya never know until it’s done. Also, rumor had it that there would be warrants included… no mention of those either.

81. BOP – U not alone w/ KOG. 50% pretty strong

82. With you on KOG, BOP, direct offerring with heavy mgt participation have always been good signals for me. Appreciate all your info.

83. BOP – not at all, meant best of luck.

84. Jat – coal file sent

85. Thanks! It’s good to be able to field a team on this name.

    Frankly, unless the acreage on the Rez is a total duster (which it isn’t), KOG will be higher at some point. I heard they are trying very very hard to get the IP results from the 2nd well (from pad 1) for the call today. If they couldn’t do that, I would think the stock falls back, a bit.

    That said, the guys who bought in the direct private placement had to sign a 90-day confidentiality and lock-up agreement. So, they know stuff that the rest of us won’t know for a while… and they still bought at 75¢. A little something to keep in mind, in case KOG craps back to 45¢ or so.

86. z — #83. Understood. And “thank you.”

87. #80… correction. KOG conf call at 11am tomorrow. Usually have with the a/h earnings release (tonight). But, more time to try to get some more info into the call, I would reckon.

88. BOP – u sorta like lebron james on this team. u do all the work and john and i sorta stand around and watch and once in a while u throw it to us for a shot!!! if you a bb fan u will understand this. big compliment!!!

89. kyleandy — yikes! No hi-5s until we make a basket. But thanks… here’s to the Team!

    To continue the analogy, this is like innercity bb… could get ugly before we score. But, nice to have team mates.

90. more KOG thoughts… the “numbers” on tonight’s earnings release will be ugly. That’s what happens when you spend $$ but have no revenues. It’s all about the potential of a largely-contiguous block of acreage in an area that may run the gammet from “really good Bakken wells”… to “not that great Bakken wells.” One thing to keep an eagle-eye out for in the future is the potential for Three Forks Sandish under their acreage. Could almost double the economics.

91. HAL – I wonder if people are eying that gap just under $21. Lots of gaps in that chart further back including one at $16.

92. bop – one wud think that with the placement before the cc, and u reporting they are trying to get results before tomorrow am, something good is happening!!
    waiting for Z to join the team!!!

93. Don’t read anything into my absence from KOG other than 1) I very rarely play the micro-caps and 2) I very rarely play stocks for well news. And I’ve done both of those things in the past week.

    My best guess is that if they have upwards of 500 bopd in any of those wells it probably spikes to $1. The higher the IP, the more it spikes. If they don’t have an IP available yet I would guess the stock slumps a bit, at which time I will reconsider my lack of position there.

94. kyleandy — the numbers tonight just might shock some people, who bought KOG thinking “hmmm…. oil is going up, let’s just buy a micro-mini player in the oily Bakken.” If they missed the point that KOG has no significant production yet, I would expect some selling tomorrow morning.

    Perhaps z’s evil plan is to pick up some panic-shares sold by weak hands tomorrow morning. Isn’t a bad strategy… one I would do myself. I hate the fact that the conf call isn’t until 11 am. Means 9:30 to 11:00 am could be some wild trading.

95. bkx down substantially, huge reverse from the open-bkx in my very humble opinion has played a large part in driving this rally-maybe buy the rumor, sell the news.

96. Reason for the share sell-off…

    Treasuries Tumble as Bond Sale Draws Higher-Than-Forecast Yield
    2009-05-07 17:24:48.134 GMT

    By Dakin Campbell
    May 7 (Bloomberg) — Treasury 30-year bonds fell the most in about four months as investors demanded higher-than-forecast yields at today’s auction of $14 billion of the securities with the U.S. slated to sell a record amount of debt this year.
    “This is a problem,” said Chris Ahrens, head interest- rate strategist at UBS Securities LLC in Stamford, Connecticut, one of 16 primary dealers required to bid in Treasury auctions.
    “The market required a fairly significant discount to buy the bonds.”
    Yields on the securities climbed to a six-month high as the bond auction drew a yield of 4.288 percent, higher than the average forecast in a Bloomberg News survey of seven bond- trading firms for a yield of 4.192 percent. Demand was below average, judging by total bids.
    The benchmark 30-year bond yield climbed 16 basis points, or
    0.16 percentage point, to 4.26 percent at 1:22 p.m. in New York, according to BGCantor Market data. The 3.5 percent security due in February 2039 dropped 2 18/32, or $25.63 per $1,000 face amount, to 87 10/32. The 10-year note yield increased nine basis points to 3.28 percent.
    The auction’s so-called bid-to-cover ratio, which gauges demand by comparing total bids with the amount of securities offered, was 2.14, compared with an average of 2.24 at the past 10 sales of the maturity. Thirty-year bonds yielded 3.64 percent at the last sale, on March 12.
    Today’s auction began the Treasury’s monthly sales of the so-called long bond, up from quarterly offerings at the end of last year. That means the government will boost sales of the security from $35 billion in 2008 to $120 billion this year, according to Michael Pond, an interest-rate strategist in New York at Barclays Capital Inc., one of the 16 primary dealers that trade with the central bank and are required to participate in Treasury auctions.

    Obama Budget

    Fed Chairman Ben S. Bernanke said in a speech in Chicago the financial crisis showed “serious deficiencies on the part of some financial institutions” in risk-taking, capital adequacy and liquidity planning.
    Details of President Barack Obama’s record $3.55 trillion budget plan, released today, showed he is seeking $81 billion more in spending on domestic initiatives while calling on Congress to trim $17 billion worth of programs, including raising more tax revenue from oil and gas industries.
    The Fed completed two buyback operations this week, bringing the total of U.S. debt acquired to $92.215 billion through 16 purchases. The central bank said in March it will buy as much as $300 billion in Treasuries over six months.

97. Crude down 50 cents now, trading with the equities.

    NG still up 13 cents, still one of worst performing commodities of the year.

98. TSO down 10% on earnings. Happy to stay away from the refining crowd for now.

99. Z,

    Just spoke with Baldwin from XTO; when they were saying stimulation costs down 30% in April they really did mean April over March. Big market share fight continuing to brew.

100. GMXR – glad I didn’t chase it on into earnings, down 14%, and it does sound like they might do an equity deal not long from now.

101. Jat – thanks and wow. We have not seen a lot of wells drilled yet in this new era of low costs then.

102. WEL (Boots & Coots) gets shelled:
     saying Domestic weaker: Rockies is poor, HS and Gomex is good, their equipment is good for W Texas and Marcellus. Int’l remains strong: especially N & W Africa, looking to focus on growth in ME and India; although Venezuela not paying (subsequently shut 3 units, but optimistic about getting paid), lost tender in Egypt (shut 1 unit).
     Utilization has stabilized around 40%.
     Many dents to small company.

103. Z – how much punishment do you think CLR deserves here?

104. Anyone know what’s beating ATW with the ugly stick? Or just profit taking?

105. Dman – Hard to say, they missed and ran on oil running, which it now isn’t, I’m probably going to hold off for awhile, as they may see a downgrade or two in the morning.

106. Yep, they reported.

107. SP Equity Re cut them to Hold.

     They always give as little data as possible in their pr and I have not listened to the call. I would guess they have not yet got a contract for the Southern Cross and that the rigs that are rolling off this year are not yet contracted. Will grab transcript when available, this is one I tried to buy and miss at 18 but up here I am not as grabby.

108. 105 was CLR
     106, 107 was ATW

109. ZTRADE:

     Sold the remaining WRES June $2.50 calls for $0.30, up 88%. I continue to hold the common and the November $2.50 calls.

110. Z – #108 Yep, got it.

     Do you have a handle on the SD hedging situation (= how levered are they now to NG)?

111. HK – bidding some more off those May $25s now, looking to add around the $24 level, seems a bit overdone given the breakout in natural gas.

112. Sd – About 70% hedged at just over $8.40

113. Looked up the SD hedge numbers:

     2009: 79 Bcf hedged at $8.42 (that’s 69% of expected production)

     2010: 80 Bcf at $7.70

     This was as of early April.

114. ZTRADE:

     Added another 20 HK $25 May Calls (HKEE) for $0.55 with the stock at $24 on equity deal rumors and a down market. Natural gas closed back over $4 and sentiment there may be turning.

115. Z special thanks for all you do and everybody else who contributes. What a gift!!!!

116. Hey man, thanks, you are more than welcome!

117. I second elduqe! z, you’ve made some really fab trades with the 10K portfolio. And you’re sitting on a good chunk of cash. Very smart trading. Lots of hard work. TY.

118. Looking ahead to Friday’s monster employment report (recall, it’s all about jobs, house prices, and consumer sales from this point)… Bloomberg consensus is calling for a loss of 600,000 non-farm jobs. But, whisper number says it needs to come in to meet, or beat, the ADP number. So, if there are more than 491,000 jobs reported lost from the month of April tomorrow, the mrkt will continue the sell off.

     Thanks to Head Trader for scouting around for the whisper number.

119. Thanks much BOP. Thanks for the color on jobs. I was thinking it just need to be sub consensus to show a linkage with ADP and therefore be positive. That 491 is a high hurdle and I don’t know that the two surveys are apples to apples, doesn’t one include govt jobs and the other not?

120. Looking at the stocks you would never guess natural gas is up 25 cents or 6.6%.

121. Re 94. Yes, its true, that is one of my evil plans … but I sincerely hope for a 2,000 bopd IP which will cause me to buy in at $1.50.

122. z — ADP and Non-Farm were off, for a long time. But, ADP “did something” to fix their model, so it’s supposed to be closer to the Govt’s report. I think ADP makes assumptions to try to mimic the # exactly.

     Re: nat gas. could the offset be the POTUS’s proposal to soak — I mean “tax” — the energy companies to fund his remaking of America? Just wondering.

123. BOP – LOL, not unless he reiterated that proposal today. I have trouble keeping track of his TV appearances so it might have happened.

124. At least the volume in HK is about half of yesterday.

125. z — i honestly think there is gonna be some panic-selling in KOG tomorrow, pre-conf call. The 1Q09 “earnings” report just ain’t gonna show any. I also think they will say things (positive) on the call that they prefer not to put in a PR. So, could be a tense 1 1/2 hour or so, for us KOG longs tomorrow. We shall see.

126. Z – the gassy stocks have been anticipating the jig in NG for months, so I would say it makes sense for them to sell off on the “news”, at least for a bit.

127. It’s amazing how the service side is still out performing.

128. Yep, they need a break, just playing in HK because I don’t believe the rumor that’s driving its underperformance. EOG off on a valuation downgrade, those generally don’t have much staying power with the market.

129. Ram – yes, year to date amazing there, people say that sector was too beaten down…I think they are overly optimistic about a rebound in prices and activity. At least today the OIH is underperforming which tells me only that people there cannot believe the rally either and are quicker than most to take profits.

130. From what I can see, volume has been ramping in both NG front-month and UNG as the NG rally has progressed.

     Z – does your system confirm that?

131. re nat. gas price expectations: just listened to LINE cc. replay. Co. expects gas to weaken from here and into ’10. Expecting to acq. asstets at “significant discounts”: this from a co. that’s 100% hedged for 3 years and 50% hedged in the 4th.

132. Dman – Re Gas Question.

     Front month volume always picks up as the contract becomes the, um, front month. So a little hard to tell. UNG volumes is the highest it has been since August of last year. I suspect you are seeing short covering in both since we’ve had a net short position in gas for just about ever now.

     RMD – yep, sounds like they are talking their book, can’t blame them as that’s why they hedged. Maybe they own stock in LNG as well. That stock really not working despite all the tsunami of LNG imports stories.

133. BOP – with KOG up 15% and easily a triple off the lows, are you pulling some off in case your assumption comes true and weak hands sell in the morning?

134. z — no. but would shift more cash in that direction if it does fall back to a 50-handle.

135. Gotcha, thanks.

136. BOP – with you on KOG. Seems like a good chance it will be higher after the announcements are digested.

137. LOL — about the opposite of what I tell you to do all the time. Difference here is that it is not an option. No debt and new funding means any “expiration date” embedded in the optionality of the stock has been pushed out. So, all else equal at this point, the stock is more valuable. Unless you think oil is headed south and will stay there in 2010 and beyond.

138. occam — was it you who bought shares at 27¢ ?? I was trying to recall who had the cajones to do that.

139. BOP – That was me. Also a little below that.

140. occam — glory be. Whatever happens in the near-term, that was one terrific buy!

141. 122 POTUS’s proposal to soak — I mean “tax”

     lol

     have you see the new add on cnbc– gray farmer lashes out at evil oil companies for polluting and not paying taxes. Amazing the misinformation thats spewed

     Advertisement sponsered by pre cap and trade interests.. who might that be??

142. im suprised chk hasnt risen with rise in ng

     Aubrey took off 2010 hedges, gives him a chance to reload at higher prices.

143. Goldman Sachs for one. McKinsey for another. Exchanges for a third. There are BIG BUCKS to be made in “cap-and-trade.” Sad thing is, it has little to do with reality… but everything to do with control and money.

144. bill – 141

     I guess you mean “pro cap & trade” interests.

     Who do you have in mind?

145. Oh, looks like BOP has read my mind re. 144.

146. SD on the tape with a couple of asset deals, dollar values look a little lowish.

147. re LNG and #132: friend in New Orleans says hearing noises from LNG about building liquification capability (capx about equal to their existing PP&E) for export. Wonder where they would get the money?? Maybe CHK would do an equity deal to fund it…no, just kidding. I’m inquiring further.

148. BTW, from what I know of it, I think cap & trade is a joke. Good for GS, but I doubt it achieves much else other than color & movement.

149. Z – #132 trying to figure out the logic on LINE/LNG comment. Do you have any reason to think LINE does have LNG stock? If I had their outlook on prices, I’d want to be short LNG!

150. Re 132 Logic

     LINE is hedged.

     They bet it all that prices will stay low. If prices go back up quickly they look a little overly conservative and wrong on the gas call.

     I was just joking re LNG (the company). If LINE thinks prices will stay low as long as they are hedged (out through 2011) it means they buy off on the concept that LNG will flood into the U.S. in ever increasing amounts. Such a concept is supported by (LNG – the company) who has built a massive amount of regas capacity and would stand to benefit from such a wave of gas.

151. 10 Banks must raise $75 billion (total) by November.

     http://www.marketwatch.com/News/Story/Story.aspx?guid={A082CA8A-EF75-4439-BB38-6D0423DA891A}

152. What a completely asinine thing to do to a group of private companies — banks. Guess they brought it on themselves, tho.

     Note to self — never get in bed with the Govt. It will roll over and crush you.

     What blathering BS.

153. KOG report out

154. However, this brings us to the final chapter of the Global Bank Watch. Perhaps not the final paragraph of the final chapter… but we already know what the crimes were and “who did it.” It’s just not that exciting from here on out.

     Low interest rates at the front end of the yield curve + gradually-returning corporate borrowing + perhaps consumer credit card defaults won’t be the Armagedon Scenario + asset prices moving up = bank earnings should contine to trend up.

     So, onto the next train wreck — jobs, housing, consumer spending. That makes tomorrow’s Jobs number all the more important and indicator for where stocks go next.

     Personally, I think jobs will continue to be lost, albeit at slower paces, for a long time. On the other hand, as more and more capital shifts from the private sector into the govt’s hands… more and more people will go to work for Uncle Sam. He is a very inefficient employer… so, will need lots and lots of warm bodies.

155. KOG big IPs

     1,400 and a 700 bopd wells 1 and 2. 24 hour test, nice.

156. thanks, john11. Just read through it.

     KOG — No particularly negative surprises… sorry to see they are still working on a resolution for the 2nd rig (which they don’t need), but I don’t think that will trip them up (like it did, post 4th quarter conf call).

     IP rates on wells #1 and 2 are slightly better than we were hearing, so pretty happy about that. I hope they can say something more about the potential for wells 3 and 4, but until you complete and IP ’em, it’s only anecdotal evidence. That said, the anecdotal evidence there is said to be very strong.

     One negative… average realized oil and nat gas prices in 1Q was $30.04 and $2.83. [cue up sound of someone gagging here] They don’t have any hedges, of course, b/c they don’t have dependable production yet. But, who can make any $$ at $30/bbl realized? POTUS… are you listening???

     I think what they say and the tone in which they say it on the conf call will fill in some blanks. That said, overall about as positive as it could be, at this point. Would like to hear a little more about the TFS potential, tested by other operators in the area. That is quietly a huge positive potential for their reserve base.

     Overall, as happy as one can be… with a micro-mini who screws up their first well in the only play that counts for them. But, if wells 3 and 4 IP at anywhere near the “whisper number” of 2,000 bopd, then that forgives a lot of prior screw ups.

     Kudos to management for raising $7.5mm. Wonder how much was their own $$ (whisper number said 50%, but not confirmed).

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