07
May

Thursday – Oil Inventory Review and Gas Preview + More Earnings

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I've been raising cash. I will continue to raise cash and trade quickly in this "what have you done for me lately" market. My sense is that the energy names, and more than that, the market as a whole is in need of a rest. I will be happy to take positions in the recently improved E&P segment with these highs in the very close rear view mirror. I think we get that pullback soon as earnings season draws to a close and there is little in the way of "new" news except in a very few names. Names, for instance like PXD, who I expect to drift higher between now and coming news on an important first well for them in the Eagle Ford.

Conference Calls Today:

  • CLR - 10 EST (ugly quarter)
  • GDP - 10 am EST
  • GMXR - 11 am EST
  • PXP - 3 pm EST
  • CLNE - 5 pm EST

In Today’s Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Natural Gas Preview
  4. EIA Oil Inventory Review
  5. Earnings Watch: APC, CLR, GMXR and a bunch of conference call times
  6. Stuff We Care About Today
  7. Odds & Ends

 

Holdings Watch: Busy day, raised a bit of cash. The $10KP tab is updated ($32,000 / 68% cash), the wiki tab is updated.

  •  (HK) -   Added 20 HK $26 calls (HKEP) with the stock at $24.40 for $0.40. The stock was weak early on an increased spending budget but the call is going well. I won’t hesitate to punt these into strength along with the other Mays but for now I plan to continue to hold my Junes taken yesterday. Conference call ongoing.
  • (HK)  - Sold the 20 HK $26 May calls purchased during the conference call for $0.90, up 118%. I don’t do a lot of trades with the intention of them being “day trades”. But that one did what I wanted. I will likely pull the trigger on the remaining 10 May $25s soon and look to reposition on the next big red day in the group. If you haven’t noticed, I’m raising a little cash.
  • (EOG) - Sold the EOG June $70 calls for $8.40, up 169% withe stock up $4.65 on the day at $75.66. I continue to hold the June EOG $80 calls.
  • (CLR) - Sold half (5) of my remaining May CLR calls for $3.70, up 383% since entry last week. I may take the other five off before the call tomorrow and may add some longer dated calls. I’ll let ya know.
  • (PXD) - Sold all (10) PXD $25 May Calls (PXDEE) for $4.00, up 220% since purchase yesterday. Good earnings report, good conference call, will reposition on a pull back into longer dated calls here.
  • (PXD) - Taking an opening position in June PXD calls. We sold the Mays earlier but it seems unwilling to give much of a pull back. Added (10) PXDFF June $30 calls for $2.05 with the stock at $29. If it opens weaker tomorrow I’m likely to add more either then, Friday, or next week. My sense is that analysts will say nice things in their morning first call notes. My second thought is that its a bit extended, though still a cheap name and that it and the group are due for a breather. And my third thought is that it will likely drift higher from currently levels as they approach the well results on the Eagle Ford well. The results themselves could lead to selling, not that they will be bad, just that it should have moved up by then, crude, gas, and market willing.

Commodity Watch

Crude oil jumped $2.50 to close at $56.34 on the back of a smaller than expected build in storage, a strong equity market, and a weaker dollar. As per comments on crude yesterday we are officially broken out. We could see a rally to $60 which if not quickly broken will likely lead to a big bought of profit taking. This morning crude is trading up $1.25 to 1.75 close to $58.

Natural gas rallied $0.27 to close at $3.89 yesterday, a one month high, moving in line with and then better than crude. This morning gas is trading back up into the mid $3.90s ahead of the EIA storage number for the week.

 

Natural Gas Preview:

  • My number: 95 to 105 Bcf.
    • History:
      • Last Week: 82 Bcf injection
      • Last Year: 68 Bcf injection
      • 5 Year Average: 75 Bcf injection
    • Weather: Typical shoulder season, not helpful. HDDs were well below year ago levels and CDDs were not enough to compensate.
    • Imports: Lower by 0.3 Bcfgpd than the prior week and 0.9 Bcfgpd below year ago levels.
  • Street Consensus: 94 Bcf

ZComment: My comments from last week still apply ... everyone knows we are going to get full. This week traders seem to be heading E&P managements who keep driving home the point that the coming decline is "not if, but when". A triple digits injection would likely spoil the rally, short of that, I suspect we are in for a test of $4 in short order, especially if oil maintains its new found momentum.

EIA Oil Inventory Review:

CRUDE OIL - Utilization at refiners is coming back to life after a long spring nap. This is boosting demand for crude. End products are not seeing the same level of demand and distillate actually appears to be getting worse despite claims by independent refiners in the U.S. that the export market remains robust. On the gasoline side, demand is falling behind again. Without an increase from both we will see refiners act quickly to curb utilization which will curb oil prices.

 

 

 

 

GASOLINE - Bottom Line: We will have to see more demand almost immediately or the move in crude will likely falter in short order. Demand remains anemic as the unemployed sit at home on their computers instead of commute and shop.

 

 

 

 

DISTILLATES - Same Story, Different Weak. Demand remains behind last year by 18%, production remains too high, and will continue to rise as utilization ramps into the gasoline consuming (driving) season bloating inventories of diesel further still. On the hand, this should be a boon to the economy as transports and agriculture catch a big break on fuel costs.

Earnings Watch:

APC Beats On Higher Than Expected Volumes, Reiterates Volume Guidance

  • I'm not in it at present so I'll be brief
  • The 1Q09 Numbers
    • Production of 54 MMBoe, above the range of 48 to 51 MMBoepd.
    • EPS of ($0.53) vs ($0.62)
    • CFPS of $1.61 vs $1.54 expected
  • Nutshell: this strong quarter despite restrained capital spending probably further supports recently bullish sentiment towards the large cap E&Ps.
  • Guidance for 2009 reiterated.
  • Conference Call: 10 am EST.

 

CLR Reports A Miss on Revenues (both weak prices and softer than expected volumes), Did Not Mention/Reiterate Previous Guidance

The 1Q09 Numbers:

  • Production of 36,808 Boepd which compares to 
    • 36,018 Boepd in 4Q08 (up 2%) ... this may look a little light to analysts as the company had given a higher exit rate for the fourth quarter of nearly 38,000 boepd ... there are going to be some sharp questions on what happened there. Note to management: stuff like this you don't gloss over in the press release. When you quote an exit rate it implies something about the very near term for the quarter.
    • up 22% from 1Q09
  • Revenue of $92.6 vs 112 mm expected
    • realized oil price of $34.99 in the quarter due to fat differentials to an already weak NYMEX price. This should improve substantially during 2Q.
  • LOE down 13% in the quarter to $7.24 per BOE ($1.20 per Mcfe) which is pretty strong.
  • EPS of ($0.03) vs ($0.01) expected
  • CFPS of $0.33 vs $0.37 expected

Guidance:

  • Production:
    • 2009: Was 12.5 to 13.0 mmboe (34.24 MBoepd to 35.6 MBoepd); no reiteration in the press release.
  • Budget
    • Remains at $275mm but they spent $153 mm in the first quarter making the year's activity extremely front end loaded. I'd rather see them have slowed more with the anticpation of drillling and completing more wells once prices had fallen further.

Balance Sheet:

 

  • low leverage, bank debt of $544 mm vs $474 mm mid quarter
  • revolver remained un changed at $673 mm
  • but available credit decreased to $128 mm under the revolver due to the increase in LT debt.

Nutshell: Bottom line is they missed and did not reiterate guidance. There are plenty of operational highlights in the post but none that overcome the previous sentence. I will listen to the call for an explanation but I am not happy with this other than the fact that I've sold 3/4s of my position going into today. I will very likely punt the remain quarter position this morning. 

Conference Call: 10 am EST


GMXR - 11 am EST - Quicklook:

  • Big beat on CFPS, reported $0.97 expected $0.45; EPS of a loss of 5 cents expected came in at positive $0.38. 
  • says transition from CV producer to Haynesville producer is complete,
  • guiding 2Q to higher level after a 3Q sequential decline in 1Q from 4Q08.
  • three more well completions announced:
    • Baldwin #14-h: IP of 9.2 MMcfgpd, 4,200 foot lateral, 13 stage frac
    • Verhalen A 2H: no IP yet, 4,200' lateral, 14 stage frac
    • Blocker Ware 19 H: no IP yet, 4,446' lateral, 14 stage
  • two more drilled but not yet completed
  • So we will be looking for initial production from at least two more wells in short order, maybe 4 total within in a month. Suspicion is that one of the two that have no IP is not as good given managements comment about having drilled the 5 best wells in its history when it already had said it drilled 3 best last quarter and it has add 3. The location and mechanical (not mentioned to be a problem) could be a field limit issue or just a bad well, know way to know but recall HK drilled a little 3.3  MMcfepd IP Haynesville last quarter amonths all the high teens and low 20s completions and that was thought to be a possible limit to the northwest.

Other Calls Today

GDP - 10 am EST

PXP - 3 pm EST

CLNE - 5 pm EST

Reporting After The Close: (CLNE), (SD), (KOG)

Other Stuff Today:

KOG prices 10 mm shares at $0.75. This is a good price for them considering they are development stage. Good for them getting it done.

 

Odds & Ends

Analyst Watch:

  • (DVN) target raised by FBR from $60 to $75
  • (RIG) target cut to $111 from $123 at Barclays, remains Overweight

Housekeeping Watch: FYI - if you want ZBLASTS texted to your phone send your username, phone number, and carrier to zmanadmin@gmail.com with text me in the subject line. We should have this up and running next week.

156 Responses to “Thursday – Oil Inventory Review and Gas Preview + More Earnings”

  1. 1
    nifkin Says:

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

  2. 2
    BirdsofpreyRcool Says:

    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. 3
    elduque Says:

    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. 4
    zman Says:

    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. 5
    BirdsofpreyRcool Says:

    [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. 6
    zman Says:

    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. 7
    zman Says:

    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. 8
    zman Says:

    Oil at 58.10

    NG at 3.95

    SP500 919

    Oh what a difference a month makes.

  9. 9
    BirdsofpreyRcool Says:

    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. 10
    BirdsofpreyRcool Says:

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

  11. 11
    zman Says:

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

  12. 12
    zman Says:

    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. 13
    zman Says:

    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. 14
    kyleandy Says:

    WRES u have any left ? i just sold mine

  15. 15
    zman Says:

    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. 16
    BirdsofpreyRcool Says:

    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. 17
    zman Says:

    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. 18
    zman Says:

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

  19. 19
    zman Says:

    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. 20
    BirdsofpreyRcool Says:

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

  21. 21
    BirdsofpreyRcool Says:

    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. 22
    zman Says:

    GMXR – getting shelled on the well results.

    WRES – getting unshelled on oil

  23. 23
    BirdsofpreyRcool Says:

    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. 24
    ram Says:

    Why did HK dive on a dime?

  25. 25
    ram Says:

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

  26. 26
    BirdsofpreyRcool Says:

    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. 27
    zman Says:

    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. 28
    choices Says:

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

  29. 29
    zman Says:

    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. 30
    BirdsofpreyRcool Says:

    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. 31
    zman Says:

    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. 32
    choices Says:

    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. 33
    BirdsofpreyRcool Says:

    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. 34
    zman Says:

    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. 35
    BirdsofpreyRcool Says:

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

  36. 36
    zman Says:

    95 Bcf, in line number.

  37. 37
    BirdsofpreyRcool Says:

    Thanks, z. Going to walk the dog now…

  38. 38
    ram Says:

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

  39. 39
    VTZ Says:

    RBC is down right now too…

  40. 40
    elduque Says:

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

  41. 41
    zman Says:

    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. 42
    zman Says:

    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. 43
    zman Says:

    ROSE catching a big rally, do not know why.

  44. 44
    zman Says:

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

  45. 45
    zman Says:

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

  46. 46
    zman Says:

    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. 47
    choices Says:

    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. 48
    zman Says:

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

  49. 49
    elduque Says:

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

    Thoughts on WFT?

  50. 50
    zman Says:

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

  51. 51
    zman Says:

    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. 52
    zman Says:

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

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

  53. 53
    bill Says:

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

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

  54. 54
    zman Says:

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

  55. 55
    zman Says:

    Cannacord raises WRES from Sell to Hold.

  56. 56
    bill Says:

    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. 57
    jat Says:

    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. 58
    zman Says:

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

  59. 59
    zman Says:

    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. 60
    zman Says:

    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. 61
    zman Says:

    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. 62
    zman Says:

    GMXR call failing to wow the crowd.

  63. 63
    zman Says:

    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. 64
    zman Says:

    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. 65
    zman Says:

    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. 66
    zman Says:

    ROSE started at Johnson Rice at Overweight

  67. 67
    zman Says:

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

  68. 68
    tater Says:

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

  69. 69
    john11 Says:

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

  70. 70
    zman Says:

    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. 71
    zman Says:

    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. 72
    zman Says:

    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. 73
    zman Says:

    Tater – thanks much for 68.

  74. 74
    zman Says:

    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. 75
    kyleandy Says:

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

  76. 76
    RMD Says:

    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. 77
    zman Says:

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

  78. 78
    zman Says:

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

  79. 79
    zman Says:

    BOP – Good luck with KOG tomorrow.

  80. 80
    BirdsofpreyRcool Says:

    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. 81
    kyleandy Says:

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

  82. 82
    john11 Says:

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

  83. 83
    zman Says:

    BOP – not at all, meant best of luck.

  84. 84
    zman Says:

    Jat – coal file sent

  85. 85
    BirdsofpreyRcool Says:

    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. 86
    BirdsofpreyRcool Says:

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

  87. 87
    BirdsofpreyRcool Says:

    #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. 88
    kyleandy Says:

    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. 89
    BirdsofpreyRcool Says:

    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. 90
    BirdsofpreyRcool Says:

    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. 91
    zman Says:

    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. 92
    kyleandy Says:

    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. 93
    zman Says:

    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. 94
    BirdsofpreyRcool Says:

    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. 95
    choices Says:

    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. 96
    BirdsofpreyRcool Says:

    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. 97
    zman Says:

    Crude down 50 cents now, trading with the equities.

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

  98. 98
    zman Says:

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

  99. 99
    jat Says:

    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. 100
    zman Says:

    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. 101
    zman Says:

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

  102. 102
    Alhambra Says:

    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. 103
    Dman Says:

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

  104. 104
    Dman Says:

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

  105. 105
    zman Says:

    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. 106
    zman Says:

    Yep, they reported.

  107. 107
    zman Says:

    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. 108
    zman Says:

    105 was CLR
    106, 107 was ATW

  109. 109
    zman Says:

    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. 110
    Dman Says:

    Z – #108 Yep, got it.

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

  111. 111
    zman Says:

    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. 112
    zman Says:

    Sd – About 70% hedged at just over $8.40

  113. 113
    zman Says:

    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. 114
    zman Says:

    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. 115
    elduque Says:

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

  116. 116
    zman Says:

    Hey man, thanks, you are more than welcome!

  117. 117
    BirdsofpreyRcool Says:

    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. 118
    BirdsofpreyRcool Says:

    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. 119
    zman Says:

    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. 120
    zman Says:

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

  121. 121
    zman Says:

    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. 122
    BirdsofpreyRcool Says:

    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. 123
    zman Says:

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

  124. 124
    ram Says:

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

  125. 125
    BirdsofpreyRcool Says:

    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. 126
    Dman Says:

    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. 127
    ram Says:

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

  128. 128
    zman Says:

    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. 129
    zman Says:

    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. 130
    Dman Says:

    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. 131
    RMD Says:

    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. 132
    zman Says:

    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. 133
    zman Says:

    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. 134
    BirdsofpreyRcool Says:

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

  135. 135
    zman Says:

    Gotcha, thanks.

  136. 136
    occam Says:

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

  137. 137
    BirdsofpreyRcool Says:

    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. 138
    BirdsofpreyRcool Says:

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

  139. 139
    occam Says:

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

  140. 140
    BirdsofpreyRcool Says:

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

  141. 141
    bill Says:

    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. 142
    bill Says:

    im suprised chk hasnt risen with rise in ng

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

  143. 143
    BirdsofpreyRcool Says:

    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. 144
    Dman Says:

    bill – 141

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

    Who do you have in mind?

  145. 145
    Dman Says:

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

  146. 146
    zman Says:

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

  147. 147
    RMD Says:

    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. 148
    Dman Says:

    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. 149
    Dman Says:

    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. 150
    zman Says:

    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. 151
    zman Says:

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

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

  152. 152
    BirdsofpreyRcool Says:

    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. 153
    john11 Says:

    KOG report out

  154. 154
    BirdsofpreyRcool Says:

    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. 155
    zman Says:

    KOG big IPs

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

  156. 156
    BirdsofpreyRcool Says:

    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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